<Originally published - December 7, 2006
The topic of aligning the information technology (IT) agenda with the business agenda has spawned literally hundreds of articles, and certainly sensitized the IT community regarding this issue. Despite the progress made regarding the alignment question, chief information officer (CIO) reporting relationships continue to be positioned at a distance from the chief executive officer (CEO) and strategy function. A comparable trend appears to be occurring with the marketing function. The chief marketing officer (CMO) position is experiencing this same distancing from strategy. These two functions should be on the leading edge of strategy formation rather than the receiving end. Organizationally, this is a source of dilution few organizations can afford, yet it is unlikely to change unless these two functions can demonstrate a clear contribution to the CEO's agenda. In this regard, the CMO and the CIO may be more effective working together than separately.
An Odd Association?
The first thought that the title of this article may bring to mind is "what an unusual pairing—the CMO and the CIO?" The next logical association would be to recognize the need for CMOs to justify or otherwise rationalize their function's spending and their dependence on IT systems (the CIO) to support such an effort. Although it is true that CMOs are under considerable budget scrutiny, the thrust of this article is to address the dilution of influence of marketing and technology on organizational strategy, and to offer some suggestions as to how to create a framework that will leverage the potential of these functions, thereby increasing organizational alignment and performance.
Marketing, IT, and Alignment
There is a common management mindset that results in an immediate association with the IT function when the words organizational alignment are spoken. Obviously, there is a legacy of misuse and misdirection supporting this association, and there are reams of literature that address how to correct the situation; however, the reporting relationship of the CIO remains removed from the center of power and strategy.
Ironically, the CMO position is gravitating to a similar position. Despite a history of marketing leading the direction of the company, current trends are strikingly similar to the plight of the CIO. Consider the parallels in the two positions:
- CMOs and CIOs are reporting to executives other than the CEO.
- In most cases, the CMO and CIO are not members of the board or even part of the executive committee.
- The marketing and IT budgets often deal with extended time horizons, and impact results in a manner that may be viewed as intangible.
- Marketing and IT have their own language and concepts that are not understood by other functions.
- The marketing and IT budgets often eclipse other functional budgets in terms of expense and capital expenditures. For these reasons, there is increased pressure to justify spending. However, justification involves extrapolating into the future with minimal near-term visible results.
- In general, with an organizational emphasis on near-term results, the CMO and CIO are not viewed as the "go-to people" to make them happen.
Thus, though it can be argued that these two functions are among the most strategic within the whole organization, they are increasingly isolated from the seat of influence, where they can have the greatest impact.
Is the Answer ROI?
Most management pundits argue that the answer for marketing and IT is to demonstrate connectedness through a demonstration of return on investment (ROI). From the perspective of fending off the challenges of the CFO at budget time, ROI may work; however, ROI does not address the alignment or connectedness issue. The CEO must be able to connect the dots between the executive agenda and the actions of marketing and IT, in both the short and long run. Likewise, the other peer functions must sense (moreover experience) a common feeling of pain and commitment.
For many in the marketing community, the answer is brand equity and ROI. Certainly, brand recognition and the power of the brand are intuitively appealing, but these concepts are difficult to measure as a component of the whole purchase rationale and experience (meaning impact on customer behavior). Therefore, from a non-marketing perspective, it is difficult to rally around the abstraction of brand attitudes and perceptions. Likewise, ROI is often dependent on forecasted impact, which has its own aura of lack of credibility—and utility.
Thus, the discipline of ROI is certainly a positive step toward creating a sense of accountability relative to the decision making process; however, it does not address the issue of alignment or influence—all it does is introduce a sense of constraint, as opposed to contribution.
In Search of a Lynchpin
The most logical common ground for the CMO and CIO is in the area of customer relationship management (CRM). The obvious follow-up to this starting place would be marketing automation, which is an application designed to help the marketing function more efficiently plan programs and assess the corresponding ROI. Success in this area can build the relationship between the CMO and the CIO, and can generate some slack from the CFO relative to budgeting. However, it is unlikely to create much visibility outside these perspectives. Even if it does receive visibility, it is likely to be viewed as justifying one's actions, as opposed to pulling the organization forward.
The more central and relevant issue is the customer. In business-to-business (B2B) transactions, marketing may be viewed as relevant only in the context of promotions, leads, and literature. Typically, the other functions view these contributions as follows:
- Promotions
Promotions may not be timed to match other strategies and needs. Moreover, promotions may produce customer behaviors that negatively impact the other functions (such as spikes in demand that add pressure and costs to operations and customer service).
- Leads
Leads are often considered unqualified (if they are not decision makers, or if there is a questionable decision time frame) by the sales function; this translates into essentially zero follow-up.
- Literature
Because the marketing department is structured into product groups, literature communicates product attributes versus solutions. Customers are seeking solutions, and the sales function must improvise proposals that address customer needs. Product literature tends to be general (30,000-feet level) or detailed (3-feet level), and therefore does not address an audience of mid-level people, who are often decision influencers, if not buyers. The sales function must again improvise to create relevant literature and value arguments to obtain access to decision makers and influence their decision process.
For the CIO, the customer-facing functions may be operating with systems that limit flexibility, require many workarounds, have slow response times, or have data integrity issues. These limitations can impact the ability to scale operations or improve the customer interface.
For these reasons, the customer-facing functions may not have warm feelings for the CMO or the CIO. To be credible, the CMO and CIO need to be seen interfacing with customers in a listening and learning mode. Any help these functions can derive that will make them more productive and improve profitability will be well-received. Key (B2B) issues revolve around various topics:
- Who is buying (customer attributes), and why do they buy?
- Who is not buying, and why?
- What is the customer's buying process, and who are the players (decision makers and influencers)?
- What type of solution is being sought, and how does it fit with the customer's competitive strategy?
- What supplier policies or performance drives them nuts?
- Where are the opportunities to work more closely together?
What should emanate from these discussions is a clearer definition of how to help the customer-facing functions communicate and deliver a value proposition that will drive revenue and profitability, while improving competitive strength. The sales organization should receive tools and programs that help them relate to the myriad of buyers and influencers they must deal with, and the other functions should receive system and policy support that makes the organization easy to do business with. These types of changes will reduce the height of the walls of the functional silos, and set precedents for working together. Moreover, progress in this area will position the CMO and CIO as clearly directing their efforts to eliminate impediments that impact revenue, margins, and profitability—as well as fostering sustainable performance (music to the CEO).
About the Author
Glen S. Petersen is an internationally recognized speaker, writer, practitioner, and thought leader in the CRM and e-business industries. As a visionary and early adopter of sales force automation (SFA), in 1986, Petersen led one of the first successful national implementations of SFA in the United States. He has held senior level management positions with system integration and end user organizations. As a consultant, he developed a number of proprietary facilitation techniques to help organizations better understand technology, and how to rally around a single threaded, phased implementation approach. Prior to founding GSP & Associates, Petersen was senior vice-president at ONE, Inc. and AmeriData. He has authored six books, including Making CRM an Operational Reality, and ROI: Building the CRM Business Case.
Glen Petersen can be reached at gpetersen@competitiveperformance.com.