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Co-Innovation is the Key

Now is the time for retail CMOs and CIOs to take the lead – together

By Mark Ledbetter, mark.ledbetter@sap.com

There's a season for everything, and that's no less true for retailers. Merchants have historically enjoyed a central position in the retail universe, driving everything from pricing to availability. How quickly things have changed. Today, try telling a 19-year-old that she can't get a discount on the slightly frayed jeans she found on the discount rack. She'll buy a similar pair online and Tweet about it so fast, it will make your head spin!

This dramatic change brought on by the consumerization of IT has acted a lot like a one-two punch, stunning retailers in both their internal and external processes. In the same way that store associates and managers are learning to adapt to their shoppers’ growing influence, retail organizations are learning to adapt to the growing influence of their marketing department.

Now, marketers find themselves acting as the digital interface of a retail organization, acquiring insight into customer behavior, driving growth opportunities, and connecting with shoppers in ways that keep them coming back. It is a power shift that retailers are still adjusting to, and it's having a dramatic impact on the way they choose, invest and roll out new technology. All this can cause some tension between two critical roles in a retail organization’s executive team – the chief marketing officer and the chief information officer.

This has received a lot of attention lately, especially following a projection by research firm Gartner that CMOs will be spending more on IT than CIOs by 2017. Whether that trend comes to pass or not, it is absolutely imperative that the two executives and their departments work together before their competitors do it first. Here are three suggestions on how they can work together toward a solution:

Leverage each other’s assets.
The simple truth is that marketing departments generally have a larger discretionary budget than their IT counterparts. Spending is shifting from traditional advertising media to digital investments that overlap with the CIO’s domain. The CMO is also blessed with extremely creative teams who are operationally less constrained and free to make quick decisions. Meanwhile, the CIO’s team is often focused on optimizing performance and cost reduction at a global level. This produces a depth and breadth of innovative, big-picture thinking that their marketing colleagues would be remiss to neglect. All in all, this should be a cause for celebration rather than envy. CMOs and CIOs should look at this as an opportunity to split the bill and go on an IT shopping run together.

Play to your strengths and rely on your teammates. There should be no doubt in anyone’s mind that the customer is the CMO’s domain. No one knows customers better than a marketing team, but no one understands technology like the IT department. Even though marketing enjoys a plentiful budget, that shouldn’t mean they make important technology investments without consulting the experts. A resourceful CIO can help marketers understand the long-term sustainability of a solution, not only evaluating the initial price tag but the total cost of ownership as well. This ultimately helps CMOs avoid the costly mistake of investing in technology that’s all flash and no substance, creating nightmare integration and support scenarios. The bottom line is that these departments must look for opportunities to work together on a single objective rather than fight over domain responsibility, placing customer needs first.

Establish clear areas of responsibility.
To avoid stepping on each other’s toes in IT spending and decision making, marketing and IT departments ought to consider the customer differentiating factors within a retailer’s business processes:  

  • Senior leadership teams need to prioritize global optimization of horizontal, noncustomer-facing processes based on improving the total cost of ownership. Examples of global optimization, such as financial management, human resources and other corporate operations, can include support of real-time retailing during integration or the offloading of system maintenance and compliance reporting to vendors.   
  • Other business processes only enter the customer’s field of vision when they go wrong, such as planning, warehouse management, forecasting or fulfilment. These areas need best of breed functionality and have to be able to support customer interaction in real time.   
  • For the CMO and CIO, the litmus test for marketing leadership in IT expenditures will really come down to what customers see, feel, and – for better or worse – remember. This virtual territory forms the highly differentiating, highly innovative foundation of a new digital partnership in which their collaboration and joint budgets can build a great customer experience.

I firmly believe 2013 will be the year in which our two executives demonstrate joint leadership to build outstanding customer engagement models. Together, these executives will be expected to make creative and sustainable investments in technology that take into account how:

  • Individualized shopper insight drives the demand for massive amounts of real-time customer data.
  • Growing numbers of younger shoppers expect to be engaged digitally through their mobile devices.
  • A population accustomed to living an extension of their life online expect to be heard and responded to via social media.

Make no mistake, the race is on. Retailers need to craft an integrated strategy to reach and retain customers like never before. Organizations in which the CMO and CIO do not just coexist but co-innovate together will lead that charge and reap the benefits.

Mark Ledbetter is global VP for retail strategy, SAP, whose enterprise application software, helps companies of all sizes and industries run better. For more information, visit SAP.com. Ledbetter can be contacted at mark.ledbetter@sap.com.


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