Follow the Money: Move over CIOs and make way for the CMO

October 30, 2012, Posted by Ron Lissak

If the last couple of decades were primarily about IT spending on infrastructure and applications to make corporations more efficient, we have entered a new era that promises to deliver much more than mere cost efficiency. According to Gartner’s Laura McLellan, CMOs are poised to spend more on IT than CIOs by the year 2017. Yes, if her forecast is even directionally correct, we will see huge shifts in the way IT budgets are allocated over the coming years that reflect one stark reality:

Revenue generation will eclipse cost efficiency as the primary driver of IT budget allocations going forward.

Since this shift is likely to turn into a mega trend, we think it is well worth examining a few of the salient drivers of this emerging shift in spending:

  1. IT infrastructure is a cost: no business generates more revenues by installing a bank of new servers, adding storage, or installing best-of-breed security systems. Sure, no successful organization can afford to ignore these vital investments, but they do not directly produce incremental sales.
  2. The Customer is king: making sure your customers have a positive experience with your company and brand is more important than ever.
  3. Customer experience is key: delivering a personalized experience that is consistent across channels is what today’s customer wants and expects.
  4. Customer experience requires Big Data:  marketers must be able to analyze customer behavior through massive investments in data analytics and other customer-centric technologies.
  5. Marketing is going digital: the convergence of social, mobile and cloud computing have given way to new technologies around digital marketing that are only now beginning to scratch the surface—this will take years to mature.
  6. “Marketing is the new Finance”: because digital marketing spend can be measured with granularity from initial impression all the way through to closed sale, ROI can be measured, tracked and proven.
  7. Relationships trump transactions: through increased technology investments, CMOs today can develop relationships with their customers – something the CIO could rarely achieve.
  8. ROI means new clout for CMOs: because of the old adage, “if you can’t measure it, you can’t manage it” CMOs have long had an adversarial relationship with the CFO. Now armed with proven ROI as a result of investments in digital marketing technologies, leading CMOs are not only partnering effectively with the CFO, but also garnering a larger piece of the budget pie.

As this inevitable shift of budget power gains momentum, it’s clear that CMOs and CIOs  must work together as never before – becoming true partners as opposed to polite acquaintances at the C-staff table. Capturing, quantifying and analyzing the ROI on marketing initiatives ultimately increases the credibility and effectiveness of both Marketing and IT across the organization.

About the author

Ron Lissak is the Managing Partner at Catapult Advisors, an investment bank providing M&A and capital raising advice to leading software and internet companies.