By Tom Sloan
Recently a joint survey by Gartner and the Financial Executives Research Foundation found that 42% of the IT organizations top person - the CIO, reports directly to the CFO. The percentage increases to 60% at smaller businesses - those defined as companies with revenues between $50 - $250 million.
In addition, the survey pointed out that CFOs approve 26% of all IT investments, while chief information officers approve a mere 5%. This is most likely due to the current state of the global economy as in recessionary markets the CFO must keep a close eye on all expenditures.
Do CIOs resent reporting to the CFO? Possibly, because the same dynamic has been at the center of the CIO-CFO relationship for years. This very discussion seems to keep coming back to life but now it is stimulated by the ongoing shift in cloud computing.
When CIOs ask for more money, CFOs are asking for more justification. This action just makes more work for the CIO who knows their purchasing decision based experience is the right action at the right time for the organization. Why should they have to go through another step of documenting the justification for their decision.
At best, such a relationship is organizationally dysfunctional but more likely it is a real competitive disadvantage.
CIOs have always maintained the traditioanl reporting relationship with either the CFO or CEO. The biggest issue for CIOs comes from the fact that most CFOs will forever see IT as an expense item and a support function that's essential but not a true competitive differentiator for the organization.
This image of the CIO needs to change and many successful CIOs are making some progress towards this effort. IT needs to be much more, especially as companies put technology directly in front of their customers, via mobile apps, e-commerce, and social networking.
The CIO - CMO relationship needs to change as well. To make IT the revenue driving force it should be in today's organization, CIOs need to make the chief marketing officer their new best ally in the C-Suite.
How will CIOs accomplish this? Well, if the IT organization wishes to embrace the CMO, they need to think like CMOs. Most IT organizations still see themselves as cost cutters and process improvement specialists.
When CIOs are asked about their innovation plans, the IT leaders will typically cite cutting costs and making business processes more efficient as their top priorities. Today's competitive CIO will enbrace introducing an IT-led product or service in order to create a new revenue stream or business model.
So how can CIOs help the CMO?
CMOs today are under increasing pressure to provide quantifiable evidence of how their marketing expenditure is helping the organization achieve its goals. They also have to hire people with the right mix of financial, technical and digital skills and become savvier in such areas themselves.
IT leaders have a ways to go to win over their marketing peers as many CIOs believe their relationship with the marketing team is poor or just ok at best. The same is true about their relationship with the finance team.
Data-driven marketing and social networking analytics are places where marketing and IT groups should have a natural bond, as well as in mobile apps and websites.
Here are some supporting insights from a recent IBM survey of 1,700 CMOs.
1. 71% of CMOs feel unprepared to deal with the data explosion over the next five years.
2. 68% feel unprepared to deal with social media.
3. 65% feel unprepared to deal with the growing number of channel and tech device choices.
4. Overall, technology is the No. 2 external force affecting their companies, CMOs say, trailing only "market factors." That's well ahead of macroeconomic factors (fourth) and globalization (sixth).
5. CIOs shouldn't sit around waiting for the CMO to ask for help, they should be more proactive in providing it.
6. 49% of the CMOs IBM surveyed rank cross-CXO collaboration as key to their success over the next three to five years. And when CMOs want technical help, they’re more inclined to turn to outside agencies than the internal IT department.
We have seen this trend repeatedly play out over the last year as many marketing departments will bypass IT when selecting a cloud based vendor for providing both SaaS and PaaS solutions.
Some companies are creating joint marketing-IT councils or steering committees for their digital marketing efforts. IBM cites Nissan as an example. Starbucks is navigating these waters by creating a Digital Ventures business unit that works closely with digital marketing and IT teams.
Gartner recently predicted that by 2017, the marketing organizations at high-tech companies will spend more on IT than the IT organizations at those companies. IBM has made its bet on the marketing technology segment clear with acquisitions such as Unica and Coremetrics . Marketing tech budgets are growing two to three times faster than other IT budgets and marketing is making IT a larger percentage of its total budget.
If IT wants to deliver real value to marketing, it needs to zero in on what people can do with their vast stores of big data. This may include analysis of social network sentiments, the rate of abandoned shopping carts on a website, or activity on a company's mobile app.
Some areas where IT can really assist the CMO is by asking is there a Facebook rumor we need to counter, a promotion we can offer on the website to close more sales, or an e-commerce option on the mobile app we're missing?
IT organizations are in a better position to understand their companies’ customers and the people who buy their products, more so than any outside agency.
Here are som questions for CIOs and CMOs to consider while working together on digital marketing initiatives:
1. How do your current marketing tactics and IT investments work in sync to create and grow a pervasive and innovative total customer relationship?
2. What steps are you taking to connect customer insights with product and IT service
development, and to stimulate your customers to become brand or company advocates?
3. How are you collaborating with your C-level peers to activate your “corporate character” across all touch points and experiences?
This is how the CIO can stay relevant amid the rise of digital marketing and appease the CFO while embracing the CMO.
Published by myITview.com
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