Does the Rise of the CMO Threaten CIOs?

Investments in IT have long been the domain of the CIO, but all of that is changing as CMOs increasingly make IT investments in this cloud and data-driven age. Many times these investments are ones IT didn’t approve and doesn’t even know about.

“Ten years ago, marketing was always at the bottom of IT’s to-do list,” says Kristin Hambelton, vice president of Marketing for Neolane , a marketing technology provider. “IT wasn’t discriminating against marketing, but IT usually has five or 10 projects going at any one time, and marketing was always at the bottom of the list.” As a result, marketing pros got tired of waiting and sidestepped IT.

As marketing tools became automated and were delivered as SaaS or cloud-based tools, marketing had more leeway to consume technology as a service. “When you can fund marketing software from a travel budget, it’s easy to go behind IT’s back,” Hambelton said.

[Feature: 6 Ways CIOs Can Make Peace with CMOs]

However, it’s not just the fact that technologies can be consumed as services and are dropping in prices. CIOs must also realize that marketing is claiming more and more of the enterprise’s overall IT budget.

“Marketing is now the central engine of growth for many companies,” said Laura McLellan, a research VP with Gartner. Gartner predicts that within five years, by 2017, CMOs will be spending more on IT than CIOs.

With Data Comes Power

That Gartner prediction may sound like a stretch, but think about how much marketing is changing. Email marketing automation lets organizations track open rates, see who clicks any links, and what they do when a prospect visits your website. Many even help track email forward rates. That may seem obvious, but remember that a few years ago, this type of tracking was considered too intrusive and most organizations didn’t do it.

Other marketing tools–demand generation, lead nurturing, campaign analysis, social media automation, mobile marketing, etc.–delve even deeper into a potential customer’s mindset and behaviors.

These tools are quickly becoming mission critical.

What this all boils down to is that the CIO can no longer dismiss marketing as unscientific. Today, marketing is more of a science than an art. The CMO can speak in concrete terms now. For instance, if you add an extra field to an opt-in form (say, asking for a title, or the size and type of your organization), the CMO can measure exactly how much the drop-out rate increases. The same is true for variables on a landing page or sales page. The CIO can no longer dismiss marketing’s intel as smoke and mirrors. It’s based on data.

And as the CMO gathers the power of data, expect CMOs to gather more organizational power too.

With the C Comes Marketing Power

Let’s step back and remember that the CMO is a fairly new position. (Actually, if you take a long view of business history, the CIO is too.) Being elevated to C-level gives marketing executives more clout within organizations, and organizational power is often considered, rightly or not, a zero-sum game.

“All of our data says that CMOs must urgently move into new spaces, such as social media and mobile,” says Carolyn Baird, global director and co-author of IBM’s 2011CMO Study. “They know that they must embrace new trends, and the must cope with the increasing complexity that accompanies those trends, but less than half of the CMOs we surveyed felt prepared to deal with that complexity.”

The majority of the trends Baird talks about were technology trends, the exact things that CMOs should be turning to CIOs for help with. Yet, often they are not.

IBM based its findings on face-to-face meetings with more than 1,700 CMOs worldwide and found that CMOs face “four universal game-changers: the data explosion, social media, proliferation of channels and devices, and shifting consumer demographics.”

IBM found that CMOs are feeling a lot of anxiety about these game-changers, and most feel unprepared to deal with them:

• 71 percent believe there are unprepared to deal with the explosion of data
• 68 percent are unprepared to handle social media
• 65 percent aren’t ready to deal with the growth of channel and device choices
• 63 percent are unprepared to deal with shifting consumer demographics
• 55 percent don’t know how to cope with privacy considerations

Clearly, CIOs and IT will be critical in helping CMOs navigate all of those challenges.

“Will CMOs and CIOs work together?” Baird asked. “Let’s look at social media. CMOs don’t necessarily need IT, but if you start collecting piles of customer data, issues arise around privacy, security and data management. If the real goal is to not just capture data, but to put it into the systems where you can actually do something useful with it, IT’s knowledge is critical.”

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Randy Shattuck, founder of the marketing firm The Shattuck Group, says he believes that much of the current tension between CMOs and CIOs boils down to one thing: the cloud.

Shattuck gives an example of a CMO who has to get ready for a board report, goes to his director of marketing and tells him to pull information from a cloud-based tool. Then, the director finds that the cloud service is down.

“Marketing will go to IT and say please tell me why this system is unavailable. A junior-level IT person will say, in a smart-ass way, ‘We don’t support that. We didn’t even know you bought it,” he said. “They throw the problem back over the fence and have started a turf war.”

Bridging the IT-Marketing Divide

As CMOs navigate the cloud and marketing automation, they should take a step back and realize that CIOs are really in a tough position. If a cloud system outside of IT’s knowledge is hacked and the organization suffers a data breach, IP theft or picks up malware that slips its way inside the firewall, IT will be largely responsible for cleaning up the mess–and IT may get stuck with the blame.

Conversely, CIOs should realize that marketing isn’t intentionally putting the organization at risk. They’re just trying to do their jobs effectively. This should be a familiar tune to CIOs by now. Employees who brought Wi-Fi, USB drives, smartphones, tablets and cloud storage in through the backdoor weren’t trying to be malicious. They were simply trying to do their jobs efficiently and effectively.

[Column: Can We Get A CIO-CMO Do-Over?]

CIOs obviously need to come to terms with the implications of having volumes of data outside of their DMZ, but they should also consider that they would be more productive serving as guides, not roadblocks.

“The problem is only going to get worse,” says Sonal Puri, vice president of sales and marketing at Aryaka Networks, a cloud-based WAN optimization startup. “For our organization, the desktop isn’t really that important anymore. Our most important tools are in the cloud.”

CIOs should be proactive about this, training their teams on cloud and SaaS tools so that they can provide guidance. “Consider as an example that some marketing automation tools integrate very well with certain CRM solutions and others not so much,” said Richard April, vice president of marketing at AG Salesworks, a B2B teleprospecting and marketing services firm. “Even with cloud-based solutions there are still technical considerations that need to be taken into account and that should fall under the purview of the CIO.”

To bridge the CIO-CMO divide, Hambelton of Neolane recommends that CMOs devote more time to process discipline, which is essential to the successful deployment and management of technology. And on the flip side: “CIOs should learn that the customer experience is non-negotiable,” she says.

Customer Service Is the Common Ground

That points to common ground where organization would benefit from more CMO-CIO collaboration: customer service. In today’s hyper-connected world, bad customer service can sink even the best run company, while good customer service is easy for customers to overlook.

“In every communication you have with a customer, you should look for an opportunity to engage them,” said Lisa Dreher, vice president of marketing for Logicalis, a managed service provider.

Endless phone mazes don’t cut it, nor does a sales pitch during a service call. In fact, in the social-media age, the back-end of the customer lifecycle, customer service, could serve as the foundation for the beginning of the cycle for another customer. Of course, this has always been the case with word-of-mouth recommendations, but today word-of-mouth happens instantly and has far greater reach.

So does the rise of the CMO threaten CIOs? The answer is an unsatisfying maybe. CIOs could face all sorts of problems, from security and privacy issues to turf wars. If your organization is plagued by CIO-CMO in-fighting, don’t be surprised if a competitor takes a more collaborative path and leaves you breathing their exhaust.

Proactive CIOs and CMOs will figure out how to work together productively, and as a result, both should be in a much better position to prove their value to the organization. After all, they’ll have more data to prove their worth, and as that data continues to pile up, who else is going to manage the explosion?

Jeff Vance is a Los Angeles-based freelance writer who focuses on next-generation technology trends. Follow him on Twitter @ JWVance. Follow everything from CIO.com on Twitter @CIOonline, on Facebook, and on Google +.