Why CMOs are the key decision makers in technology spending today

IT spend decision makingAcross enterprises, marketers are increasingly being involved in decisions regarding which technology to invest in. Gartner had correctly predicted in 2012 that come 2017, Chief Marketing Officers (CMO) will be spending more on tech than Chief Information Officers (CIO). The prophecy has come true. In 2016 CMOs allocated 3.24% of revenue to technology spending, strikingly close to the 3.4% of revenue CIOs earmark for IT. CMOs are now more involved in tech decision making compared to CIOs.

A Revolution or a Change?

The internal shift in responsibility away from the traditional CIO to the CMO and the Chief Finance Officer (CFO) is not the fallout of some revolution, or even owing to any changes in the corporate power dynamics. The change owes itself to how marketers engage with customers. Marketers know exactly what their customers want. And as enterprises try to cope with macro-level changes related to the customer, it has heralded this internal shift in responsibility for IT decision-making.

This change is being accelerated by marketing itself. Digital marketing is now dominated by data. The pervasive nature of social media, deep personalization, the central role of analytics, and other tech-driven trends force marketers to gain technical competency. The rise of IT consumerization, owing to initiatives such as BYOD (Bring Your Own Device), and an increasingly tech-savvy workforce accentuate the trend. In the process, marketers edge out the specialist tech guys to a more passive support role.

Coping with Changing Customer Preferences

Marketing technology is now central to the core technology powering a business. The proliferation of Internet among the masses has changed customer preferences in a big way. Customers have increasingly turned digital, and self-direct their buying journeys. They ignore push marketing, and research products on their own. They make extensive use of social media to identify genuine users of the product, and interact with them. For example, more than half of all US electronics consumers adopt web-based research to narrow the choice of brands, and largely ignore the advice of the sales staff.

The onus is on marketers to understand customer preferences, and make positive interventions in the customer’s buying journey. The CRM suite, which tracks the company’s interactions with the customer, and automates many routine processes, is now one of the most critical software of the enterprise, and arguably the software that helps to generate maximum revenue. As such, a prime focus of IT spending now is on tools to mine social media and other sources, to gauge customer mood and sentiments. Such insights become the basis for new product ideas, to enhance existing products, and to create social interactions to engage with customers.  All these responsibilities are strategic marketing imperatives, making CMOs the focal point of decision making.

Reconciling with Increasingly Pampered Customers

In an age of heightened competition, enterprises strive to deliver top-notch Customer Experience or UX.

UX, according to Gartner is “the competitive battlefield,” and a key source of competitive advantage for enterprises. Technology is central to such UX, to create personalized experiences for the customer. Marketers increasingly rely on analytic tools to pull in data related to the customer from various sources, including the in-house CRM, social media accounts, and more, to predict customer preferences, and position their engagement. Likewise, they reply on various tech tools to decide on the timing, channel, and content of each engagement with the customer. 

Marketers also have a central role managing the content management suite (CMS). The bulk of the content an enterprise generates is aimed at satiating customer wants and preferences, which is again the marketer’s forte.

Marketers as such have a direct stake in several of the key customer facing touchpoints, be it the e-commece suite, customer-facing apps, digital kiosks, or others.

Read: Contextual Marketing – Building Experiences with Sitecore Cloud

Managing Complexity

Enterprises are saddled with complexities brought about by multiple customer segments, an increasingly fragmented media space, and multiple distribution channels. The CMO is again at the forefront of managing such complexity. Analytics is crucial to ensure the collection and analysis of data needed to make good decisions on which channels to adopt, which segment to cater, and to make other critical trade-offs. The investment in technology is often tied to such decisions.

Enterprises need to integrate different channels, to facilitate a seamless experience for customers across channels. For instance, retailers have a pressing need to integrate kiosks with their physical brick-and-mortar stores, and also sync different web-based channels. The role of the CMO is critical to identify which channels to focus on, and how to forge an integration to offer a seamless experience and delight the customer.

The fragmented digital marketplace also poses a challenge of what channel to invest in. Many new media may seem promising and tempting, but may not scale enough to yield returns. The decision on whether to invest in a new channel needs to be taken by the CMO, keeping in mind the extent to which customers are likely to patronize the channel.

The role of the CIO in such a scheme of things is increasingly becoming advisory, to assist the CMO and CFO on the technical front, and finally implement the decisions made by the CMO.

CMOs Win the Perception Battle

Last but not the least the CMO and the team of marketers trump the CIO and the team of techies on the perception battle.

About 70% of CFOs, who hold the purse-strings, perceive technology is not providing business benefits.  Only 33% of CFOs understand technology is a strategic driver of business performance, and just 8% of CFOs see IT as a key contributor to the enterprise’s competitive position. Since IT is widely seen as a cost center, and worse, as naysayers, driven more by process than business need, CIOs are less likely to gain support for new initiatives. On the other hand, both CFOs and CMOs are on the same page, and both speak the language of Return on Investment. Both understand the importance of the ends justifying the means, and the fact that performance of a solution will be measured over the lifespan of a project. As such, the CMO is in a better position to get tech projects approved.

In such a state of affairs, the CMO is often seen as the natural candidate to herald the changes reflecting the evolving customer needs. The fact that technology is central to such change shifts the ground from under the CIOs feet.

Successful businesses change and evolve over time, responding to market and other macro-level conditions. Successful businesses also value teamwork, rather than ply turf wars. The need of the hour is a strategic alliance of a marketing-savvy CIO and a tech-savvy CMO.


Author : Nayab Naseer Date : 28 Dec 2017