IT and Marketing Juxtaposition

Posted: March 30, 2011 in CRM, Technology
Tags: , , , ,

Thumbing through the current issue of Wired, I came upon a multi-page ad spread from Microsoft and I saw what looks like an interesting juxtaposition, though there was nothing in the ad itself that made the connection.  I have also been interviewing some of the industry’s best and brightest recently on the subject of revenue performance management or RPM and the combination provided the source of my fascination.

The Microsoft ad is about the “Cloudcycle, A Hybrid Model” which discusses both private clouds — an oxymoron as far as I am concerned — and public clouds, private clouds’ counterpart.  The purpose of this piece is not to discuss whether clouds should be free or if it’s even logical to privatize a cloud.  I’ve written on this before.  My interest in the ad is in the middle by the fold — it’s the 70/30 shift in which Microsoft says, “…seventy percent of the IT budget is spent on sustaining and running basic IT operations and thirty percent for increasing business value through IT innovation.”

Seventy-thirty is about right and it’s a ratio we’ve been familiar with for a long time.  Microsoft is right in highlighting that with cloud computing, “…CIOs and IT leaders can spend less time keeping the lights on, and devote more time to driving innovation to increase business value.”

What I find somewhat ironic and interesting is that where IT is becoming more strategic and creative, departments like marketing are becoming more tactical and quantitative (which can drive strategy!).  In interviews with Phil Fernandez, CEO of Marketo, Bruce Cleveland a VC with InterWest Partners and former Siebel executive and Thor Johnson, the pioneering former CMO of Eloqua and leader of his own Team Thor Marketing, all three tell the same story about marketing.

It’s rather simple, marketing and marketers need to learn to speak the language of the C-suite about revenue, ROI and investment in order to take a seat at the table with these executives.  The language of clicks, impressions and booth space, is still relevant but it’s not something the C-suite ever got comfortable with.  Marketing’s big job is to build bridges to the other side with talk about cost per lead, revenue per lead and revenue from specific programs.  As Phil Fernandez told me:

“When a marketer appears in a CFO’s office and uses language like that the CFO first thinks, “Who are you and what did you do with my head of marketing?!”  But the second thing the CFO thinks is, “Wow! This is incredible, let me open my mind to investing more and to how those investments are actually driving revenue.” It’s transformative for the way an organization can work.

Indeed it is.

So the interesting point for me is that at this moment IT and marketing (and other front office departments too) appear to be going in opposite directions.  Marketing is becoming more quantitative and IT is becoming more flexible, strategic and creative in its own way.  But look a little deeper and the two are in violent agreement.  Each is striving to think outside of the box and deliver something new that is more flexible and provides more business agility.

Even more interesting to me is that much of this is driven, at least to a degree, by tight resources.  IT has learned that the budget is not as elastic as their applications need to be and marketing is learning the same thing plus value of quantitative analysis.  In the face of those necessities, if you can call them that, innovation is blooming.

I hope these shifts are permanent — better, faster and cheaper usually are — but they are just shifts and they eventually lead to new equilibria.  As a new IT equilibrium is reached we can expect shrinking IT budgets (in inflation adjusted dollars) but for a long time there will still be a similar ratio of expenses going to support the existing infrastructure against expenses for innovation, at least because we’re comparing a high cost on-premise regime to low cost SaaS.  In a so-called private cloud, all bets might be off if the cloud is owned by IT or its costs are equivalent to in-house systems.  But what would the world look like if the ratio actually flipped, if IT spent more on strategy and innovation than on keeping the lights on?

The same is true for marketing.  Marketing’s creative side isn’t going away, it can’t.  As Fernandez said later in our interview:

“I sometimes worry that all this talk about the quantitative side of marketing is losing sight of the creative dimension of marketing, which is important too…you still have to deliver content to the customer because that’s part of the equation of what marketing has to sell.  Marketing doesn’t have widgets to sell, it has ideas.

Much the same argument can be made for sales and service in the front office and what we’re left with is IT in some ways catching up with the way we work in the front office while the denizens of sales, marketing and service learn to be better corporate citizens.  It is ironic and wonderful that this invention is driven by basic necessity.

 

Comments
  1. cfulbright says:

    Denis,

    It is a rare and wonderful thing when marketing execs start to measure and communicate in revenue-oriented metrics. But often the rest of the C-suite can’t comprehend the shift or the new orientation, and keep trying to fall back on old and outmoded tools that Marketing traditional has used. Perhaps it’s because Marketing has trained CEO’s and CFO’s to use these old metrics, and now we suffer from it.

    For example, for eleven years at various companies I’ve been emphasizing Marketing’s contribution to pipeline, and using as a primary measurement “pipeline generated per demand-gen dollar spent”, both at a macro level and at program level. As pipeline encompasses both qualified leads and revenue objectives, I believe it’s the best way to measure the goal of outbound marketing programs, which is to generate deals for sales to work and close.

    Yet CFO’s at several companies continued to ask about cost per lead, or perhaps cost per qualified lead, as if Marketing’s objective was just the sheer volume of contacts dumped onto Sales. And at a large and successful growth company, the CEO and I debated whether to prioritize the number of leads (his focus), or the pipeline generated (my focus) to support the small business sales team, which relied entirely on inbound demand. I often said, “Do we care about how many deals we do, or how many dollars we close?” but the CEO looked at me like I had two heads.

    So while I agree with you that Marketing should be expected to speak about revenue and ROI, the rest of the C-Suite also needs to expect that language, and to accept Marketing’s quantifiable and proven role in generating business for the company.

    Cary

  2. Denis,

    The issue of marketing accountability has taken center stage for awhile, with the ultimate direct metric being cost per sales accepted lead, and indirect metric being closed revenue. Marketing must participate throughout the sales funnel…in deal maturation and nurturing…to improve close rates and accelerate deal velocity. IT can support this active role in many ways using marketing automation, analytics, and RPM toolsets, and many departments do this.

    What concerns me about your piece is the potential conclusion that marketing’s role is solely to drive sales accepted leads…as if it was a service arm to sales. While this is a very important function, it is myopic. Phil Fernandez rightly points out that there is a creative component and a content component that contribute mightily to leads performance. But thinking more broadly, let’s not lose sight of the fact that Marketing also must contribute to business strategy and direction as the expert on the customer and the market. It must understand all facets of the competitive and industry landscape, and how that can impact product and service prioritizations. And perhaps of greatest importance, it must serve as the primary catalyst for brand…an holistic construct representing a promise of value to a customer and directly influencing sales, products, services, call centers, partnerships, and the behavior and actions of all in the C suite.

    The move to accountable marketing has been greatly aided bu the advent of web marketing with hard metrics and the increasing sophistication of IT tools to facilitate this movement. But let’s be sure we do not diminish marketing’s contribution to only represent what field marketing does…an important subset of the total marketing equation. Too many tech executives think this way. Trust me, the greatest marketers like Coke, P&G, Nestle, Disney, and others who top the brand valuation rankings go well beyond that thought process.

    Andrew

  3. andrewboyceschultz says:

    I enjoyed the connections you made in this article. CRM has, obviously, had the ability to give marketing quantitative data for a long time, but for some reason that functionality was never really utilized in most organizations (at least in my experience). If the economic changes are prompting marketing’s changing mindset, that’s another thing they have in common with IT – the cloud’s maturity has certainly been strongly influenced by the global recession.

    @andrewbschultz

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