Fortune 500 CMO - IT Procurement

Part
01
of two
Part
01

CMO and CIO-Digital Transformation Purchases

As CIOs of large companies tend to be the primary decision-makers when it comes to purchasing enterprise IT products and the CMOs are often tasked with the challenge of creating digital transformations and are often increasing the technology aspect of their marketing approach and budget, the relationship between the two is a respectful, collaborative one that allows them to achieve their shared goals and be successful in their jobs. A few CIOs of large companies have made the case that having an authentic, collaborative relationship with the CMO(s) of their company was very important for improving their customer experience and to have their company undergo a successful digital transformation.

RECOMMENDED RELATIONSHIP BETWEEN THE CMO AND CIO OF A COMPANY

  • In order to reach customers and improve their marketing strategies, the CMO and CIO of companies must work closely in order to help their corporation improve its digital marketing and to attract new customers.
  • Large companies like CarMax that have done this have reached marketing success and kept up with their competition, especially online competitors.
  • In order to create a digital transformation in a large company, collaboration between the CMO and CIO (as well as between all relevant personnel) must set a set of desired outcomes and principles when collaborating such as a commitment to simplicity, encouraging collaborative decision-making between IT and marketing leaders, and supporting a culture of confident humility.

TECHNOLOGY BUDGETS FOR CMOS

  • Often times, technology counts as 29% of the marketing budget for a company with IT personnel becoming increasingly involved in digital marketing and transformations. Due to this merge, IT personnel can also help marketers and CMOs select the right enterprise IT services, thus tightening the relationship between the two departments.
  • According to IDG’s 2018 State of the CIO Survey, 42% of global marketing teams specifically save a budget for investments in technology products and services. In addition, 51% of IT leaders share budget ownership for organizational marketing efforts with marketing colleagues.
  • In an international study of IT budgets across numerous companies, it was determined that the primary decision-makers of technology purchases in 32% of companies in North America are COO, CFO, or CMO.
  • Companies that have 500-5,000+ people (in both Europe and North America) are much more likely to have their COO/CFO/CMO as the primary decision makers of technology purchases.

EXAMPLES OF COLLABORATIVE RELATIONSHIPS BETWEEN CIOS & CMOS

  • The CIO of Adobe states that improving customer experiences for Adobe requires perpetual relationships between IT and marketers to enhance customer experiences and the CIO of IPG Medibrands argues that the most successful CMOs he's worked with have their own technology budget that rivals the company's own IT/infrastructure budget and employ their own data scientists.
  • The CIO of Vail Resorts, Inc. describes how he spends the most time with the company's CMO in order to create better digital customer experiences and advises other CIOs to "recognize that strong trust-based partnerships across the executive suite are the key to success".

Research Strategy:

In order to determine the relationship between the CMO and CIO of large companies in terms of digital transformation, we began by scouring reports of companies' IT budgets. The goal was to determine how the CMO might influence IT product purchases or budget. Through this search, we found reports and studies on the IT budgets of numerous companies as well as decision-makers for purchases of new IT products. We also searched specifically at how many companies had their CIOs or CMOs as the primary decision makers of purchasing new IT products.

As these studies included companies from North America and Europe, we also deciphered the companies by their number of employees and location to gain an estimate of how many large American companies had their CIOs or CMOs as the decision makers. Because there was no publicly available information specifically on the IT budgets of large American companies, these studies were the next best source of information. In addition, there were reports that state that CMOs are increasing their technology budget for marketing purposes and that IT personnel were becoming increasingly involved their IT purchases and product set up. These reports indicated to me that due to this budget increase, the CMO-CIO relationship would have to be a respectful, collaborative one as they're more likely to be working closely.

To gain an understanding of the CMO-CIO relationship of large companies, we searched for digital transformations within companies as there were numerous articles on how and why the CMO and CIO must work together in order to implement a successful digital transformation. We also looked at articles that argued why the CMO and CIO must work together to improve their customer experiences as there were several articles on this. We analyzed them to see if there was any mention of purchasing relevant IT services and for examples of actual companies that saw success when their CMO and CIO collaborated respectfully.

In order to provide insights on the relationship between the CMO and CIO of Fortune 500 companies, we researched accounts of large companies that have seen success when their CMO and CIO collaborate to improve their customer experience and to be able to compete with their digital competitors. This proved difficult to find anything specifically on Fortune 500 companies, so we changed our strategy to look at CIOs and CMOs of large companies. We found an article that contained accounts from three different CIOs on how their work relationship with their CMO helped their company. After independently confirming that the CIOs' companies employed more than 500 people and meet the large company criteria, we decided to use this as an insight as it provided first-hand accounts of actual CIO-CMO relationships and why they are so important. It also led us to conclude that CIOs and CMOs generally work together in a collaborative, respectful way as their goals and desired outcomes are usually the same.


Part
02
of two
Part
02

Marketing Technology Spending

Companies investment in marketing technology accounts for 22% of the overall marketing budget. At least 23% of CMOs are allocated fixed annual budgets that are specifically meant for investment in marketing innovations.

Investment in Martech Spending

  • A 2017-2018 CMO Spend Survey report by Gartner indicates that 22% of marketing budgets are spent on marketing technology (martech).
  • The report indicates that in 2018, martech spending was up to 29% of corporate marketing budgets, which is equal to "3.24% of overall revenue, compared with CIO technology spend of 3.4% of revenue".
  • At least 30% of organizations have some aspects of IT, sales, and customer experience reporting directly to the CMO.
  • According to the Gartner survey report, investment in innovation is a spend-priority for CMOs, with at least 23% of CMOs being allocated fixed annual innovation budgets.
  • CMOs investment in marketing technology and services in the US is projected to grow to $122 billion by 2022 up from $90 billion in 2018.
  • Today, CMOs bear the most responsibility in making most decisions that are marketing technology-related.
  • According to a report by Business.com, 83% of firms rely on CMOs in the selection and management of marketing service providers.
  • The report indicates that 71% of companies tasks CMOs with the responsibility of choosing technology providers for innovations that support marketing initiatives.
  • Additionally, 75% of companies tasks CMOs with the control of the budget meant for "consulting and design of marketing-related software" while 47% of companies task CMOs with the responsibility of procuring software-as-a-service applications required to streamline marketing initiatives.
  • At least 43% of companies tasks CMOs with the control of the budget needed for external hosting of applications and technology that are required to manage and run any marketing-related software.

Drivers Impacting on Martech

  • According to a report by Zylo Tech, one of the primary drivers that have led to the increase in the marketing spending of CMOs stems from the fact that today marketing efforts are more data-driven thus courting for increased need for IT services and support.
  • The growth in martech investments is largely fueled by the need for CMOs to build better customer experiences, automate more marketing processes, invest in the latest technological innovations, and support better interactive forms of mobile engagement.

CMOs vs CIOs role in Martech Investments

research strategy

In order to identify how a company's marketing technology spending fit into the company's larger IT budget, we commenced our research by scanning through survey reports and industry reports related to the roles of CMOs and CIOs in martech investment of companies. We were able to identify various sources that detailed the responsibilities of both CMOs and CIOs in martech. However, most of the reports were not specific to Fortune 500 companies but provided general details of business enterprises in the US. Additionally, the reports did not provide any details of investment in marketing technology in relation to IT budgets of companies, but the data unearthed revealed that investment in martech is primarily funded by the marketing budgets of companies. We have detailed the findings of the reports in the brief.
Sources
Sources

From Part 01
Quotes
  • "In the modern world of business, there is no room for a gap between marketing and IT. As such, marketers and technical staff must work hand in hand to deliver results - and in a matter of years, the relationship will between the CMO and CIO will be so close, it will be nearly impossible to tell the roles apart."
Quotes
  • "Based on our experience, we think the secret to a successful digital transformation lies in going beyond buzz words like “nimble”, “agile” and “fail fast” and focusing on leadership, shared beliefs and culture."
Quotes
  • "In the data-driven world of marketing, the line between CIOs and CMOs continues to melt together, as each of the disciplines are having to think more and more like their counterpart."