Alignment: IT versus Marketing

Tom Shelman feared the worst. Without consulting him, the marketing department at Northrop Grumman had struck a deal with a client that required Northrop’s engineering department to upgrade its entire IT infrastructure?hardware, software and dozens of desktop workstations. Shelman, Northrop’s CIO, knew that the company’s bid for the job did not begin to cover the cost of those improvements. He also knew that his IT department didn’t have the resources to honor the agreement.

“There was no way the rate could absorb that kind of investment,” says Shelman, who still winces at the memory a few years later. “Nor did the company understand the kind of investment that was going to be required. Things like that are a multimillion-dollar investment.”

Northrop would have lost serious money on the contract if Shelman had not immediately notified the CFO of the financial bombshell in time for the company to salvage some profit from the deal. This wasn’t the first time marketing had done an end run around the IT department. But this time, Shelman decided he had had enough: From that point on, he insisted on working with his marketing counterparts to make sure that marketing never again made IT promises the company couldn’t keep.

Northrop learned the hard way how to bring its IT and marketing departments together. Throughout much of corporate America, however, marketing and IT departments still work in separate, noncommunicating spheres, with opposing strategies and goals. Gung ho salespeople make deals that IT can’t support. Marketing professionals want sexy new features installed on their companies’ webpages immediately. Companies lose deals because marketing’s glossy image doesn’t always accurately represent IT’s back-end capabilities. And IT professionals don’t always have the communication skills or clout in their company to withstand marketing’s demands.

As technology becomes more and more central to the operation of many companies, it is increasingly imperative that IT and marketing heal this longstanding rift. And don’t expect the other party to do all the work. Understanding what makes your marketing colleagues tick is essential for any CIO.

Polar Opposites

The root of the problem is that CIOs and marketers have strikingly different job mandates and personalities. Marketers think about opportunities: raking in revenue with new accounts, promising new and more exciting services, dreaming up bold new images for the company. CIOs, by contrast, constantly deal with limitations: a nagging lack of IT resources, financial barriers to implementation of new systems, the frequent need to sacrifice exciting new projects in order to keep legacy systems up and running.

“Marketing’s charter is to go find new channels for sales,” says Amber Niven, vice president of IT at Arch Communications, a provider of wireless communication systems based in Westborough, Mass. “They don’t come to IT first and say, ’What are you capable of doing?’ They more often go to the customer and say, ’What do you want?’”

And CIOs, by necessity, are the first to ask, “What do you really need?” CIOs worry about whether a particular job can be accomplished, given the limitations of staffing and technology. Finding good IT professionals is still difficult, and software implementations are almost always expensive and time-consuming. Plus, any new technology project a CIO undertakes has to be integrated into a company’s current technology infrastructure?never an easy task. Where marketers see opportunity, CIOs see constraint.

“We are the IS department; we have to build with the known world,” says Allan Ditchfield, former CIO at MCI. “The marketing guys don’t give a rat’s ass about those barriers.”

Personality differences also come into play. CIOs tend to be more cautious and methodical than marketers, according to CIOs and those who work with them. They are always on the lookout for potential obstacles that might throw a monkey wrench into ambitious IT projects. Marketers are much more likely to throw caution to the wind; they think impulsively, using potential roadblocks as reasons to get fired up about a project rather than rein it in.

“Sales and marketing guys love objections?they’ll continue to fight until you light them on fire and throw them out the window,” Ditchfield says.

As Ditchfield’s sarcasm suggests, it wasn’t easy for him, as CIO of MCI in the late 1980s, to learn how to play nice with marketing.

The MCI Wars

Today, the MCI Friends and Family calling plan is widely recognized as a marketing triumph. But it almost never got off the ground because of a feud between the company’s IT and marketing departments. The idea for the calling plan, which sprang from the marketing department, was to set up a web of discounts for each customer who signed up a relative or friend for the MCI phone service?a fledgling David trying to take on AT&T’s Goliath. According to marketing’s plan, customer A could get a discount when calling customer B, and customer B could get a discount when calling customer C. In addition, customer A could get the same discount for calling customer C. But Ditchfield recoiled at the idea, fearing that his IT staff would not be able to adapt its architecture to accommodate the complicated algorithms and database needs the plan would require. He and his IT staff responded with a watered-down version of marketing’s idea.

“We came back and said we could sort the top three to five customers and give them a discount for [calling each other],” he says.

Marketing replied, “Did you not hear us? It’s a relationship chain.”

Ditchfield now realizes that his initial reaction was wrong. But so was the marketers’ counter-reaction?if IT couldn’t build what marketing wanted, the company would find an outside consultant that could, thereby threatening the credibility of the IT department.

Ditchfield was the one who finally broke the impasse, gathering the best employees in IT and marketing to meet and work out a plan. Deep down, he knew the Friends and Family plan held tremendous potential; it could, after all, be MCI’s first real chance to break competitor AT&T’s dominance in the residential calling market.

And sure enough, seated together in the same room, the IT and marketing professionals began to compromise. IT discarded the notion that marketing’s relationship chain idea would be impossible to implement. The marketers came to realize that they would have to sacrifice some of the extra features they wanted, such as the number of people who could be included in a discount chain. When the multidisciplinary group began to hash out details of the plan, harmony won out over discord. Infected by marketing’s enthusiasm, the IT staff even became excited by the challenge of such a groundbreaking project. From then on, Ditchfield says, things went more smoothly.

“It really appealed to the primal lust that systems people have,” Ditchfield recalls. “It was that type of breakthrough that we needed.”

What Ditchfield learned during this exercise was the value of bringing IT and marketing employees to the same table and how important it was for IT to speak the marketers’ language. He discovered that when he and his IT staff talked in terms of the impact that excessive demands for new technology might have on the bottom line, the marketing department listened. Instead of saying that IT didn’t have the servers to support a project, Ditchfield learned to say that the project would be too expensive and would hurt the company’s profitability.

“We used to explain [technology] to the point of pain,” he adds. In the Friends and Family campaign, he and his IT staff learned to talk about sales first and software second. “You have to stay at the business level with [marketers] most of the time,” he says. “Once I became more of a business person, I could go to my people and say, ’I don’t want to hear about architecture [when dealing with marketing].’”

Marketing’s Partner

Misunderstandings between IT and marketing not only threaten major deals and revenue campaigns, as Northrop and MCI discovered, but can throw a monkey wrench into everyday business operations. Recently, for example, an important customer of Arch Communications’ requested a change in the way the pager company was totaling customers’ bills. Marketing immediately agreed to the request. But the change required Niven’s IT team to move the customer’s data from an AS/400-based legacy system that couldn’t handle the new billing process to a PC-based system that could.

Niven’s team is getting the work done, but it’s not easy; the complex project has put a strain on Arch’s developers, many of whom are also involved in a separate initiative aimed at moving away from the company’s legacy billing system.

“The large customers want customization,” says Niven, who oversees the IT team from her office in Jackson, Miss. “It impacts the developers’ day-to-day work?they have to juggle projects around. Something has to give somewhere.”

Niven knew that she needed to honor that particular customer’s request or risk losing it in a competitive environment. She handled the extra workload by reaching outside her company. While her in-house team handled the customer’s billing request, she brought in consultants to help complete other time-pressured assignments. Indeed, reaching out to consultants is one way for IT departments to ease the pain of unrealistic marketing demands. But ultimately it is not the best solution. Outsourcing, on an even basis, has its pitfalls.

“It has to be positioned very well with the staff,” Niven says. “If you bring consultants in to do the nifty new stuff, and the [in-house] staff only gets to support a legacy billing system, that’s not very popular.”

The key to avoiding future mishaps, Niven concludes, is to make sure IT is involved in the decision-making process. IT professionals at her organization now accompany salespeople to “pitch” meetings with prospective new customers. She calls the meetings information-gathering sessions; they help her department determine up front what resources will be necessary to support the new account.

Blowing Up the Walls

Going on sales calls with marketing gurus is one thing. Actually merging the two staffs is a far more radical approach. But for Thomson Multimedia, the manufacturer of home entertainment products and parent company of RCA, it seems to have worked.

The blue and gray building that houses Thomson’s Indianapolis facility sits like a box in a flat, industrial section of the city. Inside the building an open lobby and a wide spiral staircase showcase some of RCA’s newest innovations in high-definition television and entertainment systems.

Two years ago, IT and marketing were housed in separate parts of this four-story building. But after years of strained communication between the two groups, Thomson literally blew up the walls. In what used to be a space reserved for private executive offices, the company installed a series of sun-filled cubicles, now adorned with sports logos from Big 10 universities. The space hums with the noise of ringing phones and urgent discussions?the sound of IT and marketing professionals working side by side.

“We literally blew up VP offices all down one wall, and the chairman’s office was moved,” says Ken Greer, Thomson’s manager of e-business marketing, sales and trade management for the Americas. “We had a concept that originated in sales called a pod concept where you put people with different functions into a pod. When we pulled together our e-business team, we integrated them into the same type of pod concept.”

Greer’s primary responsibility is marketing, sales and trade management, but he sits near the company’s B2C IT manager, who functions as its overall e-business manager and chief systems guru. “I get calls internally and from external partners asking, ’Can we do this?’ I say, ’Just a second’ and turn around [to consult with someone from IT],” Greer says.

The arrangement has helped Greer learn not to make promises to customers that IT can’t uphold. He now understands how IT works and what IT can and cannot do. Sitting in the company of IT professionals has helped Greer find a balance between his marketer’s impulse and an IT professional’s sense of reality. Conversely, members of Thomson’s IT staff have learned to speak marketing’s language. And Douglas Pileri, Thomson’s vice president of e-business worldwide, says improved communication between the two groups has boosted esprit de corps.

“From an emotional standpoint, there’s that single rallying point that says, ’Let’s get on with [a project] and make it happen,” Pileri says.

Greer, for his part, has welcomed the more direct, bottom-line messages he now hears from IT. “I’m not here to learn the intricacies of the technology,” Greer says. “I need to have a good firm understanding of what it is?but the intricacies are not what I’m looking for.”

The close quarters proved successful for Thomson when the company launched the RCA eBook late last year. It began developing both the actual eBook technology and the marketing strategy at the same time in April 2000, with the goal of launching the product in September. Both Pileri and Greer credit the new IT-marketing alignment in large part for the successful launch.

Greer’s and Pileri’s employees, for instance, joined forces to create a CRM application that collected the names of customers who wanted to order eBooks over the Web and automatically e-mailed them dates for the product’s availability, shipping the product to them as soon as it was available. The CRM effort was critical to eBook’s early sales. In the fourth quarter of 2000, the first quarter in which they were available, eBooks accounted for 50 percent of the sales on RCA’s website.

Sharing the CEO’s Ear

Space is one way to bring IT and marketing together. Another way is to set up cross-disciplinary teams that work closely together and evaluate new and existing customer accounts. As a result of Northrop’s close encounter with a contract disaster, IT and marketing are required to stay in constant communication on new customer matters and current projects. But to make sure that happens, a marketing executive actually reports directly to CIO Shelman and indirectly to the vice president of business development.

Furthermore, Northrop’s system mandates that any expenses that will affect the IT department must meet the approval of the IT executive in charge of the business unit in question. This system helps IT leaders understand marketing’s goals and prevents marketing from taking off with deals IT can’t support. And the system appears to be working. External audits have found that Shelman’s IT department operates at 35 percent of the budget at which it would have operated without an IT-marketing accord.

Shelman is responsible for keeping Northrop Grumman’s CEO up to date on how effectively the IT-marketing collaboration is working. In the past, he says, marketing and IT would compete for the CEO’s ear on matters of scheduling and spending. Now, the CEO has bought into the need for alignment, and both IT and marketing heads have discovered that the best way to grab the CEO’s attention is to share it. Shelman includes in his reports input from the marketing executives who report to him. Shelman believes the benefits of collaboration go far beyond the fact that marketing no longer plays fast and loose with IT’s resources. The two departments’ teamwork, he says, has led to more comprehensive and accurate sales pitches.

“Marketers are out winning business, and you want them to go win business,” Shelman says. “At least we’re viewed as being part of that team as opposed to a bottleneck.”