Monday, April 29, 2013

TAKE NOTE: Shifting Sands in Technology Decision-Making

Corporations everywhere in the world are now in the midst of a transformation with respect to information technology.  This is not necessarily about a revolution in technology processing power, but rather a fundamental change in the power of technology process – an internal shift in responsibility over IT decision-making within organizations, away from its traditional center, the Chief Information Officer, to the Chief Marketing and Chief Financial Officers.

The trend was signaled in a Gartner Group study, which found that Chief Financial Officers alone authorized a whopping 26% of all IT spending decisions at their organizations, as opposed to just 5% by CIOs.  And a related, more recent Gartner study predicted that by 2017, Chief Marketing Officers will outspend CIOs on information technology.

These watershed changes pose both opportunities and threats to those who sell enterprise technology.  At a minimum, it means that they must re-evaluate the very premises of their customer interactions in order to stay relevant to the new sources of decision-making.

The internal shift in control over IT responsibility is occurring for a couple of reasons.

One has to do with the growing importance of e-commerce in any company’s financial outlook, and the increasing role of social and mobile media in that equation.  Today, the big money in IT spending increasingly lies in tools to mine social media for product ideas, in mobile applications to enhance products, and in creating social interactions with customers to build brand loyalty.  CMOs have claimed all these responsibilities as strategic marketing/communications imperatives; they are driving the technology decisions to make these tasks possible, often leaving the CIO in the back seat.

Second, an expense-conscious global marketplace has rendered IT even more of a cost center, inviting closer financial oversight.  Enter the CFO.  As American Banker has reported, “With limited funds available for investmentCFOs are inserting themselves into the [procurement] process to make sure each IT project provides value.”   Not surprisingly in this climate of tight ROI accountability, Gartner noted that at roughly half of mid-sized to big corporations, CIOs report directly to the Chief Financial Officer.  It’s a trend that will increase over time.

– Selling Tech to the CMO and CFO –

Thus, selling technology to the CMO and CFO demands a more strategic business orientation.  CFOs for example, generally misperceive IT as a commodity – even while they are desperate for it to serve that role.  Seventy percent, according to Gartner, do not think technology is providing business benefits.  Only a little more than one-third see it as a strategic driver of business performance, and only eight percent view IT as a key contributor to the enterprise’s competitive position.

Both CFOs and CMOs speak the language of Return on Investment.  They want to know not only how the performance of a solution will be measured over the lifespan of a project, but what assumptions you are using to make that evaluation.

We are not suggesting that IT sales representatives must magically morph into IT consultants.  But providers must be able to engage a CMO or CFO at the place where consultants operate:  strategy.

Finally, despite their new responsibilities overseeing technology decision-making, few CMOs and CFOs are technology experts.  They need objective guidance.  Suppliers plus the CIO can fill an important role here.

Taking a new step is often what people fear most.  But for those who can address the needs of a newly empowered CMO and CFO through fresh marketing and sales strategies, a world of opportunity awaits.

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