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“Gentlemen, the satisfaction of your customers is deteriorating, your market share is shrinking and your share price is plunging”. This is what the blog-ger Jeff Jarvis wrote to the computer manufacturer Dell. Jarvis had disclosed his frustration about Dell’s customer service and products in his blog several months previously. But Dell ignored him. The blog-ger then monitored how his criticism circulated and inspired growing numbers of customers to report similar experiences. Finally the mass media repor-ted on the silence of Dell and Jarvis composed his harsh analysis as an open letter to Dell’s boss.

Only then did it become clear to Dell how its image suffered with each day that the criticism remained unanswered on the Internet. This was in 2005. Dell learned from this. The company completely reori-ented its customer communication. Today it scours all social media channels from Facebook to Twitter, provides customer service via them and even invi-tes customers to submit improvement proposals on Dell products on the “IdeaStorm” platform.

Dell should be realized that communication on the Internet is a source from which it can generate knowledge of its customers. Winter sport outfitter Rossignol has taken this a step further and develo-ped a surprising service for its customers, which in addition provides usage data on them. The French company has developed an app for this purpose with which skiers and snowboarders can save their

descents and share them on Facebook and Twitter with other skiing fans. Rossignol itself can give the winter sportspeople tips on their skills - and gets usage data that helps to improve existing products and develop new ones. In this way, Rossignol saves itself expensive market research to a large extent through the expert use of social media.

Anarchy of information rouses companies

These examples show that the relationship to cus-tomers has changed completely. Whereas compa-nies used to decide for themselves what informati-on they wanted to release, the Internet now generates radical transparency. Customers can find, compare and exchange information. At the same time, consumers worldwide have become accusto-med to ordering from their PC at home – or while they are on the move with a mobile device, at any time and anywhere.

This degree of transparency and availability of pro-ducts is unparalleled. The connection between cus-tomers and companies is becoming increasingly fast and more direct. Evolutionary IT development is not enough to be able to react to market trends at the speed required and establish customer proxi-mity. It must rather undergo transformation in key technologies. This includes almost all analyst com-panies, the disruptive technologies cloud compu-ting, big data, mobility, collaboration and the com-

THE COOPERATION OF CIO AND CMO

IT as the strategic key to more customer proximity

EXECUTIVE BRIEFING

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prehensive subject security. Transformation in these fields is the key to success.

Marketing promoted to the IT champions’ league

Targeted deployment of technologies is thus the decisive basis for binding customers. For example, as the most important interface with the customer, marketing has to be able to evaluate enormous quantities of customer data and measure the effect of social media campaigns. Moreover, in order to be able to react quickly (see the example of Dell), it is also necessary to obtain important information from this data in real time.

This has consequences for company IT, its budgets and not least responsibility for it. According to IDC, the directors of specialist departments are already directly involved in almost 60 per cent of IT invest-ments today, in a quarter of these expenditures they are even the decision-makers. These also in-clude the chief marketing officer (CMO). “Marketing is in the process of developing into a data-driven department within the company,” revealed Rich Vancil, IDC analyst.

Cloud computing is making life even more difficult for the IT department: the easy availability of soft-ware from the cloud, especially software as a ser-vice (SaaS), makes it simple for every department head - and as a result also the CMO – to procure and deploy software without consulting the CIO. Apart from the free offers, money is also available for SaaS-solutions subject to charge: according to a study conducted by Dr Bergmann & Dr Rohde Con-sulting Group (BRCG), 44 per cent of the budget for the solution of operating challenges is located with the specialist departments and only 14 per cent of projects are paid for directly out of the IT budget.

Bad news for the CIO. He must face up to the fact that these solutions fit into the existing IT landscape only to a moderate extent and in some cases not even at all, and that they endanger data security. The CIO has to take action on account of this threat alone. For no matter who gets involved in IT, the CIO has to bear the responsibility in the end. It is for this reason that he should look for ways to support the higher goal: working on the strategic goals of the company together with the specialist departments of the company, at the heart of which is customer-proximity.

Specialist departments intervene in the core expertise of IT

The specialist departments have to react to the market’s demands at the speed required. This me-ans IT has to institute the transformation in the dis-ruptive key technologies cloud computing, big data, mobility and collaboration. This is also because they offer the CIO and the IT department opportunities: they can reposition themselves - away from their traditional role as the contractor of marketing, sales or the personnel department to being the strategic partner, architect of the IT landscape and driving force of business. The challenge is to design con-cepts, programs and methods that make the requi-rements of marketing possible in the first place, for example for more information and proximity to the customer and the market. Data from the web and databases can be merged and analyzed via cloud services – in combination with big data technologies, which can likewise be procured as a professional service. All of this occurs dramatically fast – within a few days instead of in hours or days as before. Consequently, it is essential in the “age of the user” to cooperate closely with the specialist departments. The latter expect appli-cations that are quick to understand, easy to use and accessible to everyone. They even procure their cloud applications – for example CRM solutions or memory space – via the Internet themselves wit-hout consulting IT colleagues. This hits the CIOs in the heart of their core expertise.

At the same time, their task is more important than ever: the knowledge of the ICT experts comes into its own at the interface between business and more secure and highly available technology. It makes customer proximity possible in the first place and compliance-compatible - i.e. SharePoint instead of Dropbox or WebEx instead of Skype. The integration of smartphones and tablets in business processes makes secure management of these devices and operating systems (mobile device management) ne-cessary, also under the aspect of bring-your-own-device (BYOD).

Only the IT experts in the company have the know-ledge on how the company applications can be transferred to the cloud and existing systems can be expanded with cloud resources. Only the data ana-lysts are in a position to evaluate and link huge quantities of new, usually unstructured information from the social media applications in order to answer questions like these: what products will our

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customers demand from us in the future? What further developments are expected? What services do we need to provide for this purpose?

How the IT department affects the transformation in the cloud, how it supports the mobilization of the business processes and integrates the new channels of communication will decide whether it can rise to be the driving force in development or become the deadweight holding back business.

Approaching each other: focusing on joint goals

How do CIOs and CMOs now evaluate the current state of customer proximity in the company? A quantitative analysis by Karmasin Motivforschung on behalf of T-Systems Austria provided interesting details on the views.

Views differ on how close the IT department already is to the customers. Among IT bosses about 80 per cent claim that the IT department is more or much more oriented to customers. However, according to the study by Karmasin, only about half of CMOs tend to think the same. This confirms that the speci-alist departments are simply closer to their tasks. But it also shows that dialogue between CIO and CMO is inadequate. Both still do not know enough about each other and often do not cooperate on the strategic objective of customer proximity.

What is the biggest problem in marketing? In the first place, CIOs often judge the benefits of IT appli-cations in the specialist departments in a way that is similar to their colleagues from marketing: accor-ding to Karmasin, both CIOs as well as CMOs agree that IT applications help in collecting more informa-tion about customers and maintaining the customer dialogue.

CMOs want more precise figures

However, the opinions diverge when CIOs and CMOs evaluate precision and transparency: many CIOs are certain that the available applications al-ready provide more precise figures and assist in more transparency. However, far fewer marketing bosses see it that way. This indicates that the IT de-partment can improve its offering here. This is es-pecially true of campaigns. Here the marketing di-rector is always under pressure to document campaigns’ effects, the return on investment – of-ten no easy task, as IDC analyst Rich Vancil says.

What arguments do CIOs and CMOs draw on if they believe the IT department is not providing enough customer proximity? If access to customer data is missing or only possible here to a limited extent, many marketing directors believe this is due to the lack of analytical tools. However, only one in four CIOs is of this opinion. Several CMOs also think that IT systems are incompatible when there is a lack of analysis options. No CIO sees things this way. From their point of view, the specialist departments often do not specify any requirements or they formulate them unclearly. Here it is once again evident that the dialogue is still insufficient.

Out of the comfort zone: there is no alternative to closer contact

Specialist departments do not have to develop IT knowledge themselves, but the translation of requi-rements from the business perspective into de-mands on the IT department has to work – and this can only happen via an adequate dialogue and a common language.

In past years, IT managers have faced criticism from all sides for juggling with technical expressi-ons instead of speaking the “language of business.” A similar appeal can be made today: the CMO has to make his marketing slang comprehensible for the IT director, the CIO has to translate his IT strate-gy for the marketing manager. Hence for Joseph Pucciarelli, head of IT, financial and company stra-tegies at IDG, direct contact, the personal relation-ship between CIO and CMO and their respective teams, belong on the agenda of both decision-ma-kers.

To reinforce communication it is also useful to see what the other occupies himself with and how he goes about it. This makes it easier to understand why the other does something just the way he does.

Cushion cultural shock: develop sensitivity for differences

Marketing decision-makers want to achieve strate-gic goals: launch new products, boost sales with marketing campaigns – and they must increase their customer knowledge as the basis for this. Therefore, the CMO has long been accustomed to handle data from external sources, according to Pucciarelli. In this respect, the CMO sometimes also operates in a “nebulous area” where it is not quite clear who owns what data and who controls them.

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The fact that the CMO is sitting on top of real trea-sure and has masses of “primary data” is something he at most knows. But the idea that it is now possi-ble to recover this treasure quickly, precisely and af-fordably with technological assistance is new to al-most all CMOs.

For CMOs, IT is in this respect a means to an end – which they deploy pragmatically. That is to say, if the deployment of all kinds of mobile devices, perhaps from the private stocks of the employees – bring-your-own-device – or insecure consumer tools such as free web storage facilities promise advantages from the point of view of marketing managers, they will be used, according to Frank Heuer, Experton Group analyst. And this without really going out of their way to seek ITs permissi-on. Marketing is after all often under time pressu-re.

The CMOs – like many other employees – are ac-customed to using tools that are easy to procure and operate from their private life and conse-quently would also like to use tools that are as easy to use professionally. As a result, they simply procure them as they do in their personal lives as well.

The CIO retains an overall perspective

Hence from the CIO’s point of view, the marketing department exposes the company to risks: in its en-thusiasm for innovative solutions the marketing de-partment also introduces applications into the cor-porate network, which the CIO regards as technically immature and insecure, according to Pucciarelli.

For the IT manager, this development raises the question as to how he can still guarantee data pro-tection and whether the companys operations are legally secure. “What does it mean from a gover-nance point of view, if internal data is mixed with external data and how can an international com-pany do justice to the different regulations in se-veral countries?,” Pucciarelli said in explanation of the potential problem areas. As a result, the CMO can easily consider the CIO to be a brake on pro-gress, who insists on rigid rules, as Heuer from the Experton Group has observed.

Many CMOs also think that IT directors deal prima-rily with innovations. Yet CIOs still use up most of their budget to keep IT operations running. But this

operation is increasingly moving outwards thanks to the advance of cloud technology and also in the specialist departments, which are increasingly res-ponsible for IT deployment.

The CIO is needed as IT architect and strategist

Although the influence of the specialist depart-ments is growing, every company needs a CIO, as Mike Cooke, business consultant at Booz, sees it. Cooke cooperated on an analysis by Booz, which had the characteristic title “The Death of Traditional IT.” In future, the task of the CIO will be to develop company-wide IT guidelines and lay them down for the specialist departments. As a result, CIOs will as-sume the role of a business architect and solution and data architect, according to Cooke. Moreover, he is the only one who can integrate the new solu-tions in the existing IT infrastructure and afford the transformation for example in the cloud.

CIOs can position themselves in this respect as stra-tegic partner of the specialist departments and is-sue a new paradigm: information is more important than processes. Whereas it used to be a question of standardizing processes and sequences, the new goal is to be able to analyze and use data quickly and intelligently.

The analysts at Booz do not assume that all decisi-on-makers in the specialist departments already have the IT knowledge they need. Consequently, IT directors should first check where the specialist de-partments stand and to what extent they have in-dependent IT solutions.

Jointly create new customer proximity

The British-Dutch consumer goods group Unilever has shown what close cooperation between CIO and CMO can achieve. In order to be able to conti-nue on its path as a global company, Unilever nee-ded real-time information. The goal was to be able to reach well-founded decisions from a worldwide perspective. One driver here was marketing, which had to analyze multinational marketing success quickly, as the T-Systems magazine “11 von uns” re-ported.

“The fact that the data was filed in local and regio-nal storage units was a great obstacle in this res-pect,” Willem Eelman, CIO of Unilever, revealed.“This is why we decided to store all data in a global enterprise data warehouse (EDW) and to automate the data input from our internal core system. In its

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final stage, the data warehouse will store over 200 terabytes”.

Furthermore, Unilever invested in a business intelli-gence system in order to be able to evaluate exter-nal data on a large scale. For example, it made use of electronic data from customers from the world-wide points of sale. “This makes it possible now to be able to operate very close to the customer worldwide,” Eelman explained. “In this way we’ll be able to configure the future of retailing from the perspective of the consumer and customer”.

The CIO on the way to shaper of the company

According to the analysis of the “2013 Gartner CIO Agenda Report”, “CIOs have spent the past decade tending to IT operations in a world of tight budgets, limited technology innovation, cost cutting, out-sourcing and control”.*

“But over the past 18 months, digital technologies, including mobile, big data/analytics, social and cloud, have reached a tipping point with their busi-ness executives, changing IT’s business and techni-cal context,” according to Gartner*.

This has increased the pressure on CIOs. They have to further develop their IT – pure concentration on cost reductions is a dead-end.The modern CIO is concerned with how he can contribute to adding value through innovations and simplified processes. He is looking for new IT-driven business models and even new sources of revenue.

Hence, in Gartner’s view the CIO has to develop a technology vision – based on corporate business goals. This is because modern companies need a strategy for integrating IT in their value creation chain.

©IDG Business Media GmbH, Germany 7/2013

* Gartner, “Hunting and Harvesting in a Digital World: Insights From the 2013 Gartner CIO Agenda Report”, January 2013