Playing to win: Realigning the CIO-CMO disconnect 2014 CMO-CIO Alignment Survey – China

Accenture Interactive

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Introduction

Despite agreeing on a common digital agenda, it appears that senior marketing and IT leaders in China are struggling to work together. The country’s explosive growth in online and mobile channels, coupled with consumers’ skyrocketing use of technologies, is highlighting gaps in the way marketing and technology departments function in some businesses—gaps that could seriously inhibit growth in the digital space.

In broad terms, chief marketing officers (CMOs) are increasingly focusing on how they can use new digital technologies to support new channels to market.

Should a retailer wish to create an omni-channel experience, for example, then its marketing team—responsible for online sales—needs to deploy the appropriate IT tools to create a seamless customer experience. Chief information officers (CIOs), by contrast, are seeing those new technologies more as a means for transforming the entire business, and do not feel that customer experience is their responsibility.

This year’s Accenture survey of more than 1,100 senior marketing and IT executives around the world, entitled Cutting Across the CMO-CIO Divide, found that this disconnect between marketing and technology chiefs is preventing many companies in China from reaching their full potential.

Specifically, the survey found that insufficient integration between marketing and IT departments has now overtaken technology as the key roadblock to improving marketers’ performance.

It is an issue with challenging long-term implications. Should marketing and IT departments remain siloed in this way, the potential danger for Chinese companies, is that it would be much easier for the next generation of omni-channel brands to rise and overthrow the incumbent leaders.

China: the opportunity

China is experiencing a seismic shift in online consumer behaviour. In many ways, it has leapfrogged the West in terms of its technological ascendance and the country’s ability to innovate quickly in a dynamic digital world is allowing it to scale up as millions of new consumers come online. Leading platforms such as Tmall, JD.com, Weixin and Taobao have rapidly become some of the world’s foremost e-commerce businesses, driven by a generation of ‘digital first’ leaders who understand the fluid nature of a digital marketplace.

China has the world’s largest internet population at 632 million. According to figures released by the official China Internet Network Information Center (CNNIC), the number of internet users in China rose 2.3 percent in the first six months of 2014, up from 618 million at the end of last year.1

Importantly, digital consumption is consistently high throughout the country, regardless of consumers’ income level or location. What is more, information, insights and opinions from friends and family have a tremendous impact on consumers’ buying decisions in China.

A recent survey revealed that more than 90 percent of consumers in China use social networks or micro-blogs to get information about companies’ products or services at least a few times each year.2

As growth continues, businesses in China are developing a more mature approach to investing in the digital space. The rise of internet giants Baidu, Alibaba and Tencent has signaled a new era of transformation through consolidation. With the years of burning money now over, the new way to compete is through efficiency and profitable growth.

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Technology: the new marketing priorityThe digital landscape in China is an ever-changing mix of consumer-to-consumer (C2C), mobile first and now in-store services. While consumers are adept at moving between various platforms, there is a growing emphasis on omni-channel experiences.

In most businesses in China, the marketing department owns, controls and operates the content and e-commerce platforms, on top of their digital marketing activities. Marketing also operates across the interactive touch points that are fast replacing TV and print in China. At the same time, the rise of offline-to-online

(O2O) services in China is encouraging an increasing number of marketers to adopt a more holistic approach to customers’ evolving needs.

Given this backdrop, it’s not surprising that technology is fast becoming a marketing priority for business growth.Results from the Accenture Interactive 2014 CIO-CMO Alignment Survey show that no less than 88 percent of the CIOs and 85 percent of the CMOs surveyed in China see IT as a strategic partner for marketing. In other words, both groups recognize the importance of greater cross-function collaboration within their organizations to help drive an integrated digital business.3

At the same time, combining traditional marketing know-how with IT capabilities—or ‘marketing IT’—has risen to the top of IT priorities for at least a third of both CIOs (37 percent) and CMOs (33 percent) in China, as shown in Figure 1. Both groups agree that the top priority for Chinese marketers is to become more relevant—to reach their market more efficiently with better customer insights, and extract more value from their campaigns and customer data—which requires a renewed focus on marketing IT.

For Chinese companies, this burgeoning focus on technology as a marketing priority shows no signs of slowing. Some 70 percent of the firms we surveyed spent more than

$100 million on marketing IT over the past year, with 67 percent of these expecting their budgets to rise by more than 5 percent in the next fiscal year.

Just over half of the CMOs surveyed (55 percent) said that their digital marketing budget will make up more than 75 percent of the total marketing budget in the coming years.

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Figure 1: CMOs and CIOs rank marketing IT as a top IT priority

Copyright © 2014 Accenture. All rights reserved.

Question: Compared to other IT priorities, where do Marketing IT priorities rank?

CMO (2014) CIO (2014)

Legend:

5 - At the top43

59%

4%

37%

5%

33%

63%

5%

The CIO-CMO disconnect

Despite the need for marketing efforts to keep pace with technology, around 40 percent of the CMOs and CIOs we surveyed had problems implementing their marketing solutions in the last year largely due to a perceived lack of expertise and availability within their IT teams. (see Figure 2).

CMOs say IT departments lack knowledge of the pace of change in the market, and install siloed technology that cannot be implemented across all channel platforms.

Frustrated at their inability to control content, data and experience management, many of these CMOs are choosing to outsource solutions instead.

But while cheap and widely available social technologies and commoditized cloud services may make it easy for marketing departments to simply bypass IT and ‘buy solutions’ if there is no cooperation between departments, the overall gain for the company would still be limited. After all, marketing teams that adopt this kind of ‘self-sufficient’ approach are simply creating yet another silo within the organization.

At the same time, many CIOs feel that their marketing counterparts simply do not understand the complexity of integrating new data sets and cannot be trusted to operate technology, given their lack of skills. Among our survey respondents, nearly 40 percent of CIOs were frustrated at being bypassed by their marketing teams, while 60 percent felt that marketing should be focusing on gaining better customer insights, rather than technology.

While both groups view improving interactions between marketing, sales and channels as a key technology adoption priority for CIOs, our results indicate that the CIOs also place a greater emphasis on improving their operational capabilities than their marketing counterparts would like.

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Figure 2: CMOs in China believe that the biggest issue lies with internal IT given their lack of expertise and availability while CIOs are frustrated with being bypass by marketing.

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Copyright © 2014 Accenture. All rights reserved.

Legend:

Question: What were the biggest issues or obstacles implementing marketing solutions or IT projects to further marketing e�ectiveness?

42%

42%

21%

21%

21%

25%

25%

26%

26%

31%

31%

6%

38%

38%

Lack of expertise and knowledge in IT organization

Time and technical resources not available to help

Insu�cient budget and funding for the project

Wrong solution that was not embraced by users

Marketing bypassing IT and working directly with the vendor

Marketing function not a priority for IT department

No management mandate to push the project forward

Solution complexity and integration di�culties

IT resistance and opposition to solution sourcing 16%

11%Marketing resources taking control and isolating IT

Technology not a priority for marketing

IT keeping marketing out of the loop

13%

21%38%

38%

31%

11%

13%5%

CIO CMO

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Why collaboration works

As we have indicated, Chinese consumers expect to be able to move freely from mobile and tablet devices across all platforms, which means marketers should to offer an integrated, seamless experience when customers go online. At the same time, marketers in China should not lose sight of more traditional channels. Our research shows that while online marketing has a slightly higher level of influence than traditional media in some industries, such as investment products and mobile phones, television advertising of consumer goods is still the main channel of influence for most Chinese consumers.

What this means is that both outside and inside the digital space, CMOs need to know their target customers and how to reach them. Customer insight is crucial, along with a rigorous segmentation approach that lays the foundation for a personalized brand experience—online as well as off.

A more sophisticated approach to segmentation can help companies generate the insights they need to prioritize their channel investments and optimize their offers. This is why marketers in China are increasingly relying more on technology that can offer them deep insights into the characteristics, needs and preferences of buyers, across all channels. Furthermore, marketers are having to integrate all of their businesses’ channels and platforms to reach their goals.

All this means leveraging enormous volumes of data—and for this, of course, it’s critical that marketers are able to draw on IT’s expertise (see Figure 3). Try as a marketing department might to create a seamless customer experience, without the IT team’s input, its digital enterprise won’t achieve end-to-end integration.

By contrast, CMOs and CIOs working hand in hand give businesses a chance to offer an improved customer experience and drive personalized interactions with customers. A global electronics company has, in recent years, successfully managed to launch a social collaboration platform across its central and local brand teams and agencies. This effort has allowed its global marketing teams to share knowledge, documents and creative assets on a real-time basis and through this digital transformation, improve processes and speed to market when it comes to planning and implementing brand campaigns or product launches. None of this would have been possible without the support of the IT department, who had a clear understanding of what the marketing team required both on a global and a local scale.

Reforming marketing and IT responsibilities is no small task, but without the necessary transformation, the repercussions for businesses could be significant. An unintegrated approach stemming from a legacy of ‘technical debt’ inside the company could bring with it the risk that customers will eventually start to fall through the cracks.

Figure 3: Key drivers creating the need for marketing/IT alignment and interaction

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Copyright © 2014 Accenture. All rights reserved.

Question: What do you believe is driving the need for marketing / IT alignment and interaction?

46%

41%

43%

35%

53%

23%

39%

39%

39%

39%

38%

50%

50%

45%

Leveraging enormous volumes of data is increasingly important

Marketing budgets are shifting from o�ine to online which demands greater IT collaboration

Global complexity of marketing programs and channels needs IT innovation

Marketing is more about Digital now which requires more technology

Privacy and security considerations around customer data and brand protection demand it

Reaching and engaging the market has become more technology driven

Technology now underpins and shapes the entire customer experience

Digital transformation of our business is driving need for cross-functional cooperation

Relevancy in marketing is now powered by analytics 28%25%

Technology is more available and can be applied to marketing in new ways

Access to customer insight and intelligence is critical to competitive advantage

Marketing automation is a priority and critical to process improvement

35%

Legend:

CMO CIO

33%

33%

20%

38%

Marketing operations can't keep up with the increased volume due to the demands of digital

There is an inability to find adequate solutions from external

IT is now less of an platform and more strategic

15%20%

17%8%

There is increasing pressure for revenue growth and performance e�ciencies

26%

26%

26%18%

28%

17%10%

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Recommendations

Companies should look at establishing an internal framework that can help with managing the collaboration process. Setting a shared vision where CMO and CIO objectives are combined with business goals, KPIs and budgets is a great way to help build a common platform so teams can develop initiatives together. It also provides a channel for more frequent and meaningful communications. (see Figure 4).

Often, this new vision would help cut across key priorities in ways that require both CIOs and CMOs to collaborate. Strategic initiatives that converge across user experience, commerce and content can provide a good basis from which to begin to mesh marketing and IT teams.

Our research shows that compared to their global peers, both CMOs and CIOs in China are more confident in their ability to exploit the opportunities that digital marketing channels present. Companies in the fashion and luxury retail sectors, for instance, already expect their teams to have a wider range of skills in this area, from marketing and business know-how to technical expertise. All this bodes well for the future, when both functions will need to be working closely together in order to address increasingly sophisticated implementation issues.

But what’s the starting point? How should organizations begin to go about building a more enhanced, collaborative relationship between marketing and IT?

Here are some of our recommendations:

• Establish a shared vision

• Find an executive sponsor

• Be flexible

• Implement Digital Decoupling

Establish a shared vision

Figure 4: Current collaboration priorities of Chinese CIOs and CMOs

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Copyright © 2014 Accenture. All rights reserved.

Establish a Chief Experience O�cer who owns the customer with responsibility for a combined team of IT, marketing, sales and customer service

Align CMO & CIO goals, objectives, KPIs and budgets

Create an IT lead within Marketing and a Marketing lead within IT

Combine Marketing and IT under single leadership

Make IT a service center with ability to work on agile solutions as well as longer term projects Outsource IT to external provider

Train marketing and IT together in emerging marketing technologies and platforms

Co-locate marketing and IT teams

Establish a digital marketing function with IT and marketing resources

Establish a strong CEO mandate and governance structure

Outsource marketing to an external provider

Legend:

Question: What were the biggest issues or obstacles implementing marketing solutions or IT projects to further marketing e�ectiveness?

Outsource IT to external provider

42%

45%

35%28%

28%

28%

26%25%

13%

13%

39%

38%

48%

23%

24%

24%

15%

17%

38%

9%

41%

28%10%

45%

CIO

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Such shifts would also require teams to take a fresh look at budgets and how these are controlled interdepartmentally. Most survey respondents in China placed supporting marketing IT budgets in the hands of the technology team,

a trend that resonates globally. CIOs surveyed say that they control the lion’s share of the marketing IT budget, with about 45 percent of CIOs

in China saying they control more than 75 percent of the budget, as compared to 37 percent of CMOs (see Figure 5).

Instead, companies should ensure that any new digital strategy has agreement across both the marketing and technology functions. It’s not just about leadership from the top—any solution should have ‘buy in’ from all parties, and a committed team of internal and external stakeholders.

A further recommendation would be to develop an ‘experience blueprint’ demonstrating customer experience capability. Providing a great customer experience has long been understood as a driver of competitive differentiation.

A customer experience blueprint can lay the foundations for delivering a differentiated customer experience that is effective, affordable and delivers real business benefits.

Figure 5: CIOs control the lion’s share of the marketing IT budget

Copyright © 2014 Accenture. All rights reserved.

Question: Who controls the technology budget that is spent on marketing?

Legend:

Marketing 75%IT / Marketing 50%IT 75% Marketing 100%

CMO (2014) CIO (2014)

15%

45%

40%

4%

22%

33%

41%

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Many large global companies have addressed the marketing–IT disconnect by encouraging their CEO to get involved in creating a more collaborative environment. We have also seen that the most successful collaborations across IT and marketing functions were those that have the support and visibility from the CEO or an executive steering committee.

Another solution currently gaining momentum in China is to create a hybrid role, such as a chief marketing technologist or a chief digital officer. Appointing someone who can operate between both IT and marketing functions and plug gaps in terms of integration can have many positive results, including creating a better customer experience and shortening time to market. Success, however, requires defining clear reporting structures

for the role, and closely mapping goals and KPIs to the company’s desired outcomes and culture.

For instance, by hiring marketing technologists, a leading retailer in China has been able to blend IT and Marketing to provide a better customer experience and quicker time to market. Operations and roll-out have also proved smoother following the involvement of IT in the company’s marketing campaigns.

In other firms in China, IT and marketing have been combined within specific departments—such as e-commerce—to good results. Yet while this drives home the point that customer experience know-how and operational excellence can co-exist, a potential downside is that it can create a silo between that department and the rest of the firm.

Find an executive sponsor

Keeping pace with the fast-changing nature of digital marketing is becoming ever more critical to the success of Chinese firms in the digital age. Rigid organizational structures and job descriptions can cripple a company in an era where agility is a vital organizational resource. After all, each business initiative requires a special formulation of skills—dominant, supporting, or otherwise—and it is the understanding of this fluidity as well as the speed of change in the marketplace that would help companies to shape successful teams.

Be flexible Implement Digital Decoupling

The digitally decoupled operating model is about consolidating digital production activities (including content management, brand services and campaign management) within a central team, while keeping creative design services flexible. This model allows scale and efficiency while not compromising on creative flexibility. It has been successfully implemented across many global brands, and is now starting to be seen as an important tool in a company’s arsenal to help bridge the CMO-CIO divide.

We recently worked with a leading global consumer goods company in China, for example, who consolidated all production on one platform, before outsourcing their content management and platform localization.

In this new age of digital collaboration, connecting the core functions of marketing and IT is becoming a vital new focus. There can no longer be a balancing act between the two. But executive-level cooperation is not enough; a restructured organization is also needed. Companies should look at establishing an internal framework that can help with managing the collaboration process, and enlisting support from the CEO or an executive steering committee to get this new approach off the ground.

Equally important is the ability to rethink rigid organizational roles and consider configuring new, hybrid ones, such as a chief marketing technologist.

At Accenture Interactive, we help organizations understand their customers’ requirements and growth objectives. With deep knowledge of technology platforms as well as a consumer-centric approach to digital, we can help you identify the cross-capability solutions which provide a great engagement platform across marketing and IT teams. Our experience in helping clients shape their digital vision in a way which better aligns technology and marketing means we are well positioned to help organizations realign the CMO-CIO disconnect and play to win.

After all, it is only by working together that CMOs and CIOs can ride the wave of opportunities presented by digital transformation.

Fit for the future

Copyright © 2014 Accenture All rights reserved.

Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

References1 China Internet Network Information Centre, CNNIC released its 34th statistical report on internet development in China, July 2014, http://www1.cnnic.cn/AU/MediaC/rdxw/2014/201407/t20140723_47471.htm

2 Accenture, Global Consumer Pulse Research: China, October 2013, Accenture-global-consumer-pulse-research-study-2013-key-findings.pdf.

3 Accenture, Cutting Across the CMO-CIO Divide: Digital drives a new wave of collaboration, July 2014, http://www.accenture.com/us-en/Pages/insight-cmo-cio-alignment-digital-summary.aspx.

About the researchGlobally, 1,147 respondents from 11 countries and 10 industries completed the online survey between November 2013 and January 2014.

Accenture interviewed 46 CMOs and 40 CIOs from China-based companies with at least $500 million in annual revenue, across various verticals.

See the full survey here or scan the QR code below:

About AccentureAccenture is a global management consulting, technology services and outsourcing company, with more than 305,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$30.0 billion for the fiscal year ended Aug. 31, 2014. Its home page is www.accenture.com.

About Accenture InteractiveAccenture Interactive helps the world’s leading brands delight their customers and drive superior marketing performance across the full multi-channel customer experience. As part of Accenture Digital, Accenture Interactive works with over 23,000 Accenture professionals dedicated to serving marketing and digital clients, to offer integrated, industrialised and industry-driven digital transformation and marketing services.

Follow @AccentureSocial or visit accenture.com/interactive.

This document is produced by consultants at Accenture as general guidance. It is not intended to provide specific advice on your circumstances. If you require advice or further details on any matters referred to, please contact your Accenture representative.

This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks.

Learn moreFor further details, please contact:

Jason Chau Managing Director, Accenture Interactive, Greater China Jason.h.chau@accenture.com

Irwin Lim Director, Accenture Interactive Irwin.lim@accenture.com

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