CMOs, Not CIOs, Now Control 11 Percent Of Retail IT Spending

Written by Frank Hayes
August 7th, 2013

Almost 20 percent of the $60 billion in annual North American retail IT spending isn’t under the CIO’s control. Who’s spending most of that $11.6 billion? The chief marketing officer, according to a report that IHL released last Friday (Aug. 2). And instead of being just a few limited solutions areas, it looks like CMOs are using their 11 percent of total IT spend to dive into traditional IT operational areas. Translation: Yes, they’re buying and running hardware, not just paying for software and services without IT’s OK.

That kind of rogue IT activity isn’t new, and IT departments in and outside of retail have been dealing with it for decades. What’s different is the scale. “Hardware” used to mean a leased minicomputer sitting in a closet, running some specialized application cheaper than what IT would charge. Now CMOs are spending enough to create their own miniature IT shops, and the first the real IT shop will hear about it is after a catastrophe so bad that marketing can no longer hide it—which, with an in-department IT budget that big, can be one heck of an IT catastrophe.

Let’s skip over the usual hand-wringing about separation of responsibilities because, let’s face it, IT is traditionally very big on telling departments “no.” It’s not very good at explaining clearly why “no” is IT’s favorite word (followed closely by “expensive”), and why vendor sales people can always offer a much, much lower estimate for what some IT solution to a complicated marketing problem will cost.

What it comes down to is that when marketing people hear “no,” they’ll take their budgets and go looking for someone who will say “yes.” And IT vendors who’ll say “yes”—to almost anything—aren’t hard to find.

What to do? IHL has its own advice, which includes advice to vendors for selling to CMOs (thanks ever so much, guys). Given the CMO’s clout, it’s unlikely that retail CIOs would be able to stomp on rogue IT spending, especially when it appears to be working fine (and it will, until the day that disaster arrives) and it’s selling merchandise.

There is, of course, an easier way to find out the scope of the problem: Just declare that it’s not rogue spending, it’s OK with IT, and you’d like to see what they’re doing.

Then wangle a tour of marketing’s IT effort. Take notes. And when the tour is over, don’t make a peep about how they should have done 90 percent of this through IT and why it’s all wrong.

A month later, ask for another tour, to make sure you understood everything you saw the first time. Chances are you’ll see even more, because you didn’t kneecap the CMO after the first tour. Make sure you understand what they’re using, how they’re using it and how they see use of each set of systems expanding going forward. And still don’t make a peep of complaint.

Two months after that, ask the CMO what’s new, and get another tour. And that’s about the time you’ll be in a position to offer to help out if anything goes wrong or marketing needs to connect to systems under IT’s control.

Meanwhile, knowing what marketing has makes it possible for IT’s operations and security people to spot the most likely pain points in advance. There may be nothing IT can do in advance to prevent a disaster, but at least IT can be prepared.

Remember, in a turf war, IT will lose. The CMO’s big under-the-radar IT spend probably isn’t under the CFO’s radar, which means the CFO has already said yes. Forget trying to turn that into a no. Given a little time, you can offer the CMO solutions at a range of costs, along with explanations for why those solutions cost more than the vendor’s price and what the benefits are. That, after all, isf how you could have headed off that rogue IT spending in the first place.

And if all else fails, you can always flip the situation by buying a small slice of a marketing consultant’s time to tell you how to sell IT’s services to the people who should be its customers. After all, marketing is spending on IT. Reversing the situation just seems fair.


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