Evan Schuman's StorefrontBacktalk

Several industry analysts have stated that they believe the CMO will have a larger technology budget than the CIO in the next seven years. I personally think that is a false argument. First, I don’t believe you can say that the CIO has a budget if it is a set percentage of sales ever year or if the CIO reports to the CFO. In this case, I would say that the CFO has a technology budget, not the CIO. Second, it implies that the two organizations will remain separate silos, which is not a practical reality.

With the greater technology budget will come additional technology resources. The CMOs will not just be given a check to purchase technology from anyone on the street. Some rules will still need to be followed when it comes to guidance about corporate security, data portability, service levels and pricing/costs. These are all things CMOs and their teams are not equipped to deal with today. This migration of budget from “Traditional IT” to “Marketing IT” will bring with it an influx of technologists working for the marketing department.

These resources will be more like Business Analysts than Network Engineers. These folks will need to be expert at vendor management (dealing with all the cloud providers that the marketing team is going to want to use), service-level management (making sure all those startups realize they have to build reliable, highly available infrastructure that can scale to meet the retailer’s needs), data architecture (so they can figure out who will both share data with these new providers and pull the new data back into the corporate infrastructure) and contract negotiations (almost everything sold with the new breed of cloud-based providers is “per-store” or “per-user” based, which can lead to ridiculous costs when scaling to meet retailer needs compared to traditional on-premises solutions). Even those worried about information security have to admit that dealing with PCI compliance is a heck of a lot different than dealing with SOX compliance.

I personally believe that we are rapidly approaching a time when IT will fracture into the distinct customers the department supports. Although I do believe that building a strong relationship between the CMO and the CIO is important, the idea that a cross-functional steering committee gets to determine if an operations project or a marketing project is the one to get the limited company resources is ridiculous no matter how you look at it. I imagine a world where satellite IT organizations are created within Operations (for retail technology) and Marketing. This approach would leave traditional IT within the finance and accounting organization, which is as good of a place as any considering the department’s new, reduced function.

The core technology that needs to be put in place for this vision of the organization to work is an enterprise service bus (ESB). Companies need to define and design an information architecture (IA) that supports a distributed IT environment. Once a good IA is put in place, it will enable organizations to manage their data portability and sharability (the number-one challenge retail IT organizations will face in the next decade).

Not ready to blow up your IT organization? Can these distinct groups work if they roll up to the CIO, rather than for each business unit? I think it would be possible if two things are in place: First, the CIO cannot report to the CFO and must be an equal member of the C-suite. Second, each department within the CIO’s organization must be given the ability to run as separate P&Ls with a “zero-based budget”. For this to work, I think each business unit needs to have dedicated resources to meet its needs.

What do you think? If you disagree (or even, heaven forbid, agree), please comment below or send me a private message. Or check out the Twitter discussion on @todd_michaud.