25 Mar. 2014 | Comments (0)
A global telecoms company recently decided to do what many companies are doing: figure out how to turn big data into big profits. They put together a preliminary budget and an RFP that asked vendors to take the data the company had — customer call and payments behavior, online searches, social network activity, billing, etc. — and identify opportunities.
Vendors salivated at what essentially was a blank check to collect and analyze everything. Two months later, the bids were coming in 400 percent over budget. The solution? Cut back the scope. But no one was sure what to cut and what to keep because the goals had not been clearly enough defined. Months of wasted time and money later, the company is no closer to a big data plan.
Variations of this Big Data story line are being played out in executive offices around the world, with CMOs and CIOs in the thick of it. CMOs, tasked with driving growth, are pounding the table demanding that the surfeit of customer data their companies are accumulating be turned into increased revenue. CIOs, tasked with turning technology into revenue, are themselves pounding the table demanding better requirements for Big Data initiatives.
In all this table-pounding is a central truth in today’s Big Data world: both the CMO and CIO are on the hook for turning all that data into above-market growth. Call it a shotgun marriage, but it’s one that CMOs and CIOs both need to make work?especially given that worldwide, data is growing at 40 percent per year. To do that, both executives will need to change how they work?and how they work together.
“Most CMOs have woken up to the fact that technology is fundamentally changing what marketers do and we can’t treat IT like a back-office function,” says Jonathan Becher, CMO of SAP. “The CIO is becoming a strategic partner that is crucial to developing and executing marketing strategy.”
The pain of getting this relationship right is absolutely worth the gain. Companies that are more data-driven are five percent more productive and six percent more profitable than other companies. Given the $50 billion that marketers already spend Big Data and analytics capabilities, the pressure is on to show significant above-market returns for that investment.
The CMO and CIO are natural partners: the CMO has an unprecedented amount of customer data, from which s/he needs to extract insights to drive revenue and profits. The CIO has the talent and expertise in infrastructure development to create the company’s Big Data backbone and generate the necessary insights.
The relationship, however, has often been a fractious one. Marketing’s growing data demands of speed, availability, and agility in rapidly changing customer behaviors don’t align with IT’s modus operandi of developing and maintaining hard coded, legacy systems. The need for speed alone is a massive shift from “business as usual” for IT, which needs to develop new notions of data recency, availability and accessibility as they relate to helping the business improve its analytic decisions.
That impasse has led to expectations of the CMO’s IT budget outstripping the CIO’s by 2018, according to Gartner, a dangerous trend that can lead to duplicate spending and effort. Recent research also suggests that most CMOs today see marketing as the natural leader of big data efforts, while most CIOs see IT as the logical lead.
While the difficulties of the relationship between the CMO and CIO is a popular topic in trade journals and blogs, what’s needed is a more practical approach for addressing the issues.
One of the most important factors for success in Big Data and advanced analytics, for instance, is understanding what you want…precisely. When you’re looking for a needle in the haystack of big data, you really need to know what a needle looks like. A successful partnership, therefore, begins with the CMO being able to define business goals, use cases, and specific requirements of any data or analytics initiative. What the CIO needs to provide is feasibility and cost analytics around requirements based on use cases. That requires clearly articulating trade-offs and options in terms of cost, time, and priorities.
CMOs and CIOs can take other very practical steps to improve communication. At one company, the CMO and CIO have taken the step of having offices on the same floor. At Nationwide, a global insurance company, the CMO and CIO host a dinner for their leaders each quarter with the explicit goal of building camaraderie and trust within their teams.
Shared goals and proximity, however, cannot overcome the common the stumbling block: the lack of a shared vocabulary. “Marketers and technology people speak very different languages, so there’s a need on both sides to become bilingual,” says Becher. We have often seen two very intelligent people completely misunderstand each other. When it comes to defining use cases, for example, the CMO will often mean a few clear sentences. The CIO, on the other hand, is expecting 10 pages of single-lined details for each one. Frustration will quickly erupt unless both the CMO and CIO take the time to explicitly bridge the expectations gap.
In addition to clearly defined, goals, empathy, and a shared vocabulary there are five other imperatives necessary for CMOs and CIOs to make their partnership work:
1. Be clear on decision governance. An effective decision governance framework makes clear how the CIO and CMO, and other members of the leadership team, must work together and support each other. This is much more far-reaching than a data governance framework, as it covers every stage in the journey of translating data into value — from setting strategy, to the construction of use cases, to the deploying of budgets and capabilities. Teams need to be explicit about who will make what decisions, when. This can be a particular stretch for the CIO, as it gives a key business user — the CMO — a direct role in the design of data systems. Nationwide has developed a Business Transformation Council to explicitly tackle governance issues.
2. Build the right teams. The two executives must lead a common agenda for defining, building and acquiring the advanced analytics capabilities required to support the effort. In our experience, that often requires the creation of a Center of Excellence (COE) where both marketing and IT people work together. They must also agree where those critical capabilities will be located – in the COE or distributed across functions and locations — what the lines of reporting are, and whose budget will pay for them. To help make this decision, map out the stages of the “Big Data value chain” — from data architecting to delivering the message or product – and describe the necessary capabilities and responsibilities for each stage. Assign roles with the understanding that there may need to be multiple roles for a given stage and that each stage will often require someone from both IT and marketing. One important lesson that Nationwide has learned in bringing their marketing and IT organizations more closely together is that in analytically-oriented companies, skill sets become indistinguishable in business, marketing, and IT.
3. Bring complete transparency. The CMO and CIO (and potentially the CTO) must bring complete transparency to the process. Not only must they sit down at the start to define data use requirements with precision, but they must then meet regularly — bi-weekly or monthly — to review progress and keep the effort on track. Each quarter they need to sit down and have a frank discussion on the CMO-CIO “State of the Union” — and how to strengthen and sustain it as big data plays an ever greater role in business growth, and changes in technology create new opportunities to deliver more, faster. Develop a single scorecard that tracks progress and identifies breakdowns. Addressing these issues cannot be about assigning blame — that will quickly create a toxic work environment – but should be about having clear accountability and working collectively to fix the problems.
4. Hire marketing/IT “translators.” Goodwill, effort, and clarity will go a long way to bring the CIO and CMO together. But the reality is that few CMOs or CIOs have the right balance between business and tech. What each needs to do is hire “translators.” The CMO needs to hire someone who understands customers and business needs but “speaks geek.” The CIO needs to hire technical people with a strong grounding in marketing campaigns and the business. “Business solution architects,” for example, put all the discovered data together and organize it so that it’s ready to analyze. They structure the data to ensure it can be queried in meaningful ways and appropriate timeframes by all relevant users.
“At SAP, we have a Business Information Officer (BIO) for each business unit, including SAP Marketing,” says Becher. “The BIO must understand and translate business strategy into an IT enterprise architecture strategy and help guide technology investments.
5. Learn to drive before you fly. The CMO and CIO can’t hope to turn things around over night. In fact, that’s a recipe for disaster. Instead, they need to identify and focus on a few small pilot programs to test team compositions and new processes for collaboration. This approach allows teams to develop best practices and valuable lessons that can then be used to train other teams. Don’t be afraid to fail, but keep the projects and teams small enough at first to both fail and learn quickly.
Effective use of Big Data is already separating the winners from the losers across a wide range of industries. But there are no short cuts to getting it right?and the CMO and CIO share total responsibility for success or failure.
This blog first appeared on Harvard Business Review on 2/4/2014.
View our complete listing of Mission&Purpose@Workblogs.