IT sourcing strategy guide for enterprise CIOs
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You've seen the clever commercial -- the encyclopedia company that ramps up orders ("We're back!") when in fact...
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imagined increased demand stems from a baby pressing an online ad -- over and over. Digitization has put an end to the traditional divide between IT and the "creatives" over in marketing. If a company's marketing strategy has any chance of working today, it had better have a head of software behind it -- from CRM to predictive analytics -- and a strong CIO/CMO alliance.
At the recent Fusion 2014 CEO-CIO Symposium in Madison, Wis., a panel of IT and marketing executives deconstructed the attitudes, processes and skills that separate IT and marketing. For starters, IT can stop believing it has a monopoly on data-driven results. And marketing will need to start believing IT can move as fast and effectively as the outsourcing providers they've relied on for so long.
In this SearchCIO tip, Greg Pfluger, vice president of information systems at the Madison-based American Family Insurance; Tim Balliet, director of technology for the Belleville, Wis.-based Duluth Trading Company; and Jonathan Martin, senior vice president of corporate marketing for Hopkinton, Mass.-based EMC Corp., offer advice on building a strong CIO/CMO alliance.
What fuels the disconnect between IT and marketing?
Greg Pfluger: If you talk to your average IT person, they frequently say, "We are not at all like our peers in marketing." [IT sees itself as] data-based, process-based and very practical. [IT sees] marketing as these "creative types," which shows a fundamental lack of understanding about marketing. More than likely, the people in marketing are some of the most data-driven people employed by your company … more data-driven than your finance people. There are a couple of reasons for that.
One, marketing, for a long time, has done its analysis on its own databases, frequently externally sourced. A lot of times, marketers are trying to find new customers, so the data and all of the systems you support can't help them; they are buying that data from other sources. …
Two, marketing has been outsourcing a lot longer than IT has. Any of you watch Mad Men? What is that all about? They're giving creative services away for free in order to outsource media buys. That's what advertising has been based on for as long as it has existed. So marketing departments naturally think of everything in terms of outsourcing, whether that's data analytics or the actual media buys. They are working with partners who have very deep expertise and they [turn to] those providers traditionally, not to internal IT organizations.
What needs to change to build a CIO/CMO alliance?
Pfluger: At American Family … we frequently go through a cycle of marketing going down its own path, and not looking to IT [first]. That's one of the things I'm trying to change. A lot of time, marketing doesn't think it needs us because it isn't a big integration project they're working on; it's something more like managing our Facebook or Twitter presence.
Inevitably, however, integration is needed, because, first of all, the role of marketing is to convert to a sale, so [that data] is going to be moving over to a website or to our agent system at some point. But there are a myriad of other issues marketers run into -- data security, vendor management, availability management. So there's a tendency to either have the marketing department build something themselves or to have an external provider do it, and then it goes through a cycle where it reaches some kind of road block and they need to bring it into IT. That's the methodology we need to change so that marketing includes us at the beginning and we can provide better IT service.
Jonathan Martin: I have a great CIO, Vic Bhagat, at EMC. Two years ago, I remember the conversation that, from his point of view in IT, I'm the customer. But I don't want to just be a customer. If I'm just a customer, IT is just a supplier, and I can procure their services more easily through other suppliers than I can through them. What I want is I want a business partner. …
We built a new function two years ago called marketing technology. … The [small team] has a particular focus on IT: It stays close to the VC [venture capital] community, understands where they're investing and the types of technology they're investing in, but it's also able to understand what we're trying to do in marketing. Their primary role is to bring creative ideas about how new technology could be used to solve business challenges.
How can CIOs start to build an IT/marketing partnership?
Pfluger: It starts with understanding what marketing's really trying to accomplish. I'll give you an example. At American Family, shortly after I joined the company, I learned marketing was interested in purchasing lead management software, most likely a cloud-based approach, to get monetized leads and to track the efficacy of certain lead sources.
At the same time, one of the things I was charged with is putting in CRM software, which should [include] lead management [tools]. So I started talking to marketing folks, and I said, "We've got a couple of different options: Either I can figure out how to integrate the lead management software you're thinking about into [the new] CRM software, or we could replace whatever solution you choose now a couple of years later, but ultimately I need to know what you want to accomplish."
I realized they didn't understand some of the [CRM software's] capabilities, when we talked about customer data management, or what IT could really do. So it became an evolutionary discussion about the capabilities we could offer them beyond what third-party lead management software could provide. Surprisingly, they agreed to put the lead management effort on hold, even though we were a year or two away from being able to service them, because they recognized there was so much more power [in the CRM solution] that it didn't make sense to invest in a short-term solution. But we had to have a deep understanding of what they were trying to accomplish, and they had to have an understanding of our roadmap and capabilities.
Tim Balliet: At Duluth, I have the benefit of [working for] a smaller company, and our culture is such that we communicate often and the doors are always open. What I don't have is the ability to produce solutions as fast as marketing wants us to produce them.
So what I am putting into the entire IT group is changing their sense of urgency -- secure the data, maintain that integrity, but … get things into the cloud. Forget about the time for hardware and waiting for skill sets in-house; move everything out so we can remove the roadblocks. When we do sit down with marketing, and they've got these great ideas -- and some of them are great ideas -- we have the ability to do it in an R&D environment and I don't have to say it's going to be weeks.
What new IT skills are needed to turn data into a competitive advantage for marketing?
Pfluger: The term "data scientist" is overused, but it's the best terminology we have. You need people who have a more sophisticated understanding of data and a probabilistic understanding of data. We talk a lot in insurance about predictive modeling and we've used that for years. Those same concepts are applied not just to marketing processes, but throughout the sales and services processes. … In IT we need more people who can help business users understand how you build systems to support [analytics] and how you make systems that aren't one-size-fits-all but are probabilistic in nature.
Martin: We set up something called the Marketing Science Lab, where we went and hired data scientists. We hired two types of people: statisticians and programmer modelers. We paired those together, and that became a data scientist. We started to aggregate more and more data and then we realized that the sales team was doing the exact same thing; the services team, they had data scientists, and the business units, they had some. We were all trying to get to the same data. I didn't just want access to marketing data, I wanted access to sales data, services data, telemetry data, or any data I could get my hands on -- as did sales and so on. A seminal meeting with IT was when they stood up and said, "We are going to own BI as a Service."
More on the CIO/CMO relationship
Zipcar CMO taps data-driven marketing to personalize the business
The business value of the CIO/CMO partnership
At HoneyBaked Ham, IT and marketing follow the same menu
The IT team would own four things:
- Integration of all of the data
- BI as a service platform
- Procurement of a core set of analytics tools
- Data scientist job function
All businesses have peaks and troughs, and when you need data scientists, there are very few agencies you can go to procure those skills. … What the IT team decided was to staff a team of data scientists to work on IT-related stuff when there's nothing going on, and act as surge capacity to the business units, to the services team, to the marketing team.