Digital Strategy – The role of the CIO and CMO
In this article, and as a follow-on from the original digital strategy article, we take a look at the impact of digital transformation on the roles of the Chief Information Officer (CIO) and Chief Marketing Officer (CMO). We also discuss and propose some changes to help leverage the challenges (e.g. Big Data) and opportunities that are being presented. This is a large and complex topic so please contact us at Korolit for further information at [email protected], call us on +44 (0) 333 444 8944 or fill in the contact form at www.korolit.com.
Introduction
Gartner recently reported that many companies are investing up to 12.5% of their total marketing budgets on digital marketing. Adobe made the headlines recently by announcing that its own digital allocation is 74% percent of total marketing investment. The big question is who controls this spend?
CIO’s and CMO’s have led fairly independent lives and collaboration can present challenges. The thing that is puling the two together is a staggering explosion of data that neither in most cases is ready to cope with. It is estimated that each day we create more than 2.5 quintillion (2.5×1018) bytes of data and many businesses are starting to realize just how valuable this data is.
Wal-Mart Big Data Ecosystem
Wal-Mart has been active in Big Data before the term itself was coined and has built a suite of systems that help it to manage millions of products and 100’s of millions of customers. It is estimated that they currently collect more than 2.5 petabytes of data per hour from customer transactions. They clearly believe in the importance of digital in driving the success of their business!
IT investment has always been the responsibility of the CIO but this is starting to change as CMO’s increasingly their own IT investments. No-one is probably going to challenge me for suggesting that until recently marketing was somewhere near the bottom of most CIO’s list of priorities. This wasn’t for any malicious intent but other projects were probably deemed to have higher value to the business and budgets were tightly managed. In many clients I have worked with the marketing team had became impatient over time and sidestepped the in-house team to contract in IT services to develop their own systems.
This approach accelerated as marketing tools became more automated and were delivered as SaaS or cloud-based tools. As we stated at the top of this article, the spend on digital related marketing activities is rapidly growing and Gartner predicts that by 2017 CMO’s will be spending more on IT than CIO’s.
Big Data
Marketing is rapidly changing as it is faced by a fire hydrant of data that needs to be assessed, categorized, manipulated and reported against. Email marketing automation lets organizations track open rates, see who clicks any links, and what they do when a prospect visits your website. Many even help track email forward rates. That may seem obvious, but remember that a few years ago, this type of tracking was considered too intrusive and most organizations didn’t do it.
Other marketing tools such as demand generation, lead nurturing, campaign analysis, social media automation, mobile marketing, etc. look even deeper into a potential customer’s mindset and behaviours. These tools are quickly becoming critical to businesses.
Marketing today is far more scientific then it has been historically. If you add an extra field to an opt-in form a report can be extracted that tells you how much the dropout rate increases. The same is true for variables on a landing page or sales page. Marketing today is far more data centric.
The CMO challenge
In a recent review IBM had face-to-face meetings with more than 1,700 CMOs worldwide and found that CMOs face “four universal game-changers: the data explosion, social media, proliferation of channels and devices, and shifting consumer demographics.” They found that CMO’s are feeling a lot of anxiety about these game-changers, and most feel unprepared to deal with them:
• 71 percent believe there are unprepared to deal with the explosion of data
• 68 percent are unprepared to handle social media
• 65 percent aren’t ready to deal with the growth of channel and device choices
• 63 percent are unprepared to deal with shifting consumer demographics
• 55 percent don’t know how to cope with privacy considerations
Bridging the chasm
CIO’s and CMO’s need to better understand their respective challenges. CMO’s need to understand that CIO’s need to protect the business from any disturbance and will be responsible for clearing up any mess. CIO’s equally need to appreciate that CMO’s are not a bunch of cowboy’s trying to avoid any controls; they are just trying to do their job efficiently and effectively. Both need each other to be effective!
CIO’s need to come to terms with the implications of having volumes of data outside of the DMZ and should serve as guides, not roadblocks. CMO’s also need to devote more time to encouraging more discipline and this is essential to the successful deployment and management of technology. Overall also need to understand that the customer experience is the top priority.
Customer service is the common ground where organization would benefit from more CMO-CIO collaboration. Bad customer service can sink a company much faster than it ever used to! In the age social-media the back-end of the customer lifecycle, customer service, could serve as the foundation for the beginning of the cycle for another customer. Word-of-mouth recommendations have always been important but today it happens instantly, spreads virally and has far greater reach.
In summary
The roles of CIO and CMO need to be transformed. The CIO needs to understand that IT now extends past the boundary of the company and into a virtual universe that is truly global in reach. The CMO needs to understand this world and to be able to effectively leverage it to help drive more business. This presents both huge challenges and huge opportunities. The CEO of any organization needs to ensure that his CIO and CMO are prepared to work closely together as a team and support each other for the overall benefit of the company. Part of this will require a review of their respective, roles, responsibilities and KPI”s to ensure clarity and minimal overlap.
anthonykking
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