- Construct a technology road map based on business drivers to guide investment
- Consolidate applications into a platform with data and process level integration to improve efficiency and effectiveness
- Work to integrate marketing technology with the enterprise infrastructure to reveal deeper insights into customers, partners, and market opportunities
- Establish inter-disciplinary teams and processes to combat the silos point solutions can create
- Learn to leverage corporate IT to improve vendor management, due diligence, and governance practices
IDC’s CMO Advisory Service recently completed our 12th annual Tech Marketing Benchmark Survey and just last week had our client and participant webinar readout. With the results in, tech marketers should be excited; there are clear signs that marketing is gaining more respect, more responsibility, and more budget! For the first time since 2006, Tech Marketing Budgets will increase at the same rate as revenues (3.5% increases for budgets, 3.7% for revenues.) Coupled with this, the absolute number of companies increasing their marketing budgets continues to rise. Party time, right?
Well, maybe not quite.
The tech industry has hit an inflection point around the 3rd platform (cloud, social, mobile, and big data & analytics.) In fact, IDC is projecting that within the next 5+ years the 3rd platform will cannibalize revenue growth from the 2nd platform. Meaning, not only will 3rd Platform driven products account for all the revenue growth within the tech industry, but they will take market share from what was previously 2nd platform revenue.
What does this mean for marketers?
A lot actually, tech marketers are in the fortunate (or fortuitous) position of being smack in the middle of this shift to the 3rd platform. Not only are the technologies being marketed transforming, but the day-to-day job of a marketer is being greatly affected. This is because the true impact of this shift is within next generation types of applications, industries – and ultimately – capabilities that the 3rd platform provides. Moving forward every marketer and every marketing organization must be updating skills, technologies, and processes. A lot is at stake and budgets are a clear indicator; 3rd platform marketing organizations are being funded at 6 to 8 times greater than 2nd platform organizations (see image below). The largest tech companies in the world are shifting to the 3rd platform and often (as they should be) the marketing organizations are exerting significant energy to be a large part of this company-wide shift. IDC sees moving to the 3rd platform as mandatory and marketing is no exception.
What can a marketing organization do to make sure they succeed in transforming rather than succumbing to turmoil?
- Understand which parts of the business are 3rd platform: These are the areas that should be supported with stronger marketing spend. These are the areas to integrate new marketing technologies and processes in first. These areas will make or break your entire company. Use this opportunity to position marketing as a driver for the company’s future success!
- Invest in 3rd platform staff and programs: Supporting 3rd platform products is key, but marketing also needs to shift the way it operates. This means investing in 3rd platform technologies and skills like: marketing technology, sales enablement, content marketing, and data & analytics. These areas create leverage and efficiencies for the entire marketing organization. In short, putting the right people, in the right positions, with the right tools gives your marketing organization its greatest opportunity for success.
- Have a plan, but be realistic and be patient: The larger the company the more time should be allowed for this organizational shift to the 3rd platform. Marketing leaders must definitively set the end vision for their 3rd platform marketing organization, but at the same time must have the patience to see the entire process through. The path may be non-linear and there will certainly be failures and misdirection along the way, but despite the time and effort needed, the end results will pay back the marketing organization (and company) many times over.
If you are interested in how your company’s marketing organization stacks up as this shift to the 3rd platform continues, reach out to me directly at smelnick (at) IDC (dot) com.
You can follow @SamMelnick on Twitter
- Unsustainable complexity: Point solutions have come to market independently leaving it up to marketers to assemble them into rational infrastructures. This is a highly inefficient market model for buyers and sellers.
- Transition to platforms: The consolidation of point solutions into platforms has already begun. Many noteworthy acquisitions have been made by major vendors such as Adobe, IBM, Oracle, salesforce.com, and SAP. However, this phase of market development will not last long as markets move rapidly from platforms to “… as a Service” models.
- Digital and creative coming together:AdAge recently named IBM the number one global digital agency in the world. IBM is rapidly hiring from the agency world to build out its creative services. Adobe has deep and long standing technology partnerships with many top agencies. The agency world needs a value proposition that will allow them restore margins and regain strategic relevance.
Several times a week the IDC CMO Advisory Service gets inquiries from tech company clients about how to shift their company mindset to a new and different buyer. IDC’s IT Buyer Experience Study shows that business buyers have 53% of buying influence in the earliest part of buyer’s journey and their influence stays high throughout the entire process. The tech buyer’s influence, while still important, is comparatively waning.
A successful shift to a business-buyer approach will accelerate if you understand what’s behind it.
Front office automation has more business risk than back office automation. The 2nd Wave (as IDC calls the client-server era) was mainly about automating things inside your company. The 3rd Wave (as IDC calls the current era of cloud, mobile, social, and big data) is about automating your connections to the outside world (I call it the company “skin”). When tech problems happened deep in inside your company, it was frustrating but not devastating. The worst business tech problem of the 2nd Wave was being too slow to adopt new technology leaving competitors or upstarts to sail past you with business process advances. That problem is still a concern today. However, add the horror of screwing up in front of customers, investors, influencers, indeed, the whole world! Just ask the CEO of Target. Business executives are forced to pay attention to technology today – whether they want to or not. IDC forecasts that business executive budgets for technology will outstrip IT budgets.
Technology is easier and prettier now. Back in the day it took a real expert to understand the ins and outs of information technology products. The products were intimidatingly gray and beige and filled with exposed wires and chips. They hummed, got hot, and sparked out with regularity. No wonder the finance and marketing execs wanted to leave those suckers alone. Now most of those wires and chips are moving to the “cloud”. Doesn’t that sound nicer? Devices you touch are smooth and have pictures. Better design makes technology 99% invisible (to quote the title of one of my favorite podcasts).
Business executives are smarter and more confident about technology. Back in the day, technology was a startling thing that business people in the prime of their careers had never seen, much less used. I remember one intelligent, capable, and admired, C-suite executive who used to have his administrative assistant print out his email because he wasn’t quite sure how to use it. Now, anyone younger than 60 came of age with PCs and programmable everything. Information about technology is available at everyone’s fingertips and accessing opinions from your professional network is incredibly easy. While a portion of the population will always be skeptical or frightened about the next new thing – it’s not likely to be IT that they are scared of (drones, anyone?).
Here are some steps you can take to accelerate the shift to a business-buyer focus:
- Bring focus on the business decision-maker up to par with the technology decision-maker. This is the Goldilocks strategy – not too much but not too little. For most new tech installations, IT will no longer instigate nor approve nor pay. However, at some point the business executives will want to bring in their IT partner to take over some aspects of the decision. Keeping adjusting your investments in content, campaigns, training, etc. until you’ve reached a balance in results. Because this is a change you will have to overinvest in activity to achieve new results.
- Take clues from the shifts described above. Focus value propositions on front office business problems. Build in cloud, mobile, social, and big data messages and capabilities (IDC says 90% of IT growth is coming from these areas). Make the “ugly” of tech 99% invisible – in your customer engagement, your sales discussions, and in the products themselves. But that doesn’t mean be fluffy. Much of what is called “thought leadership” is astonishingly useless. People are trying to solve real business problems.
Challenge for Marketers in 2014: Finding the Right Areas that Should Receive More Marketing Budget
Despite the fact more companies across the tech industry are increasing marketing budgets than decreasing, budgets at the aggregate levels are flat to slightly negative. IDC expects Marketing budgets to decrease 0.5% year-over-year from 2012 to 2013. So that leaves us with an interesting juxtaposition, more companies are increasing budgets than decreasing, but at the aggregate weighted level the data shows a slight decrease in overall budgets. Three reasons we are seeing this:
- The largest companies within the Tech Industry are seeing flat to declining marketing budgets due to continued transformation within the industry. This brings the weighted levels down.
- Hardware companies (as seen in the above graph) are the only sector where more companies are decreasing marketing budgets than increasing. Companies within this sector are typically larger and the Hardware industry is feeling more affects from the industry’s transformation.
- 3rd Platform companies and other high growth product lines and business units are driving much of the revenue growth and in turn are receiving much of the increases within marketing budgets. These companies are smaller, so they add the “n” value of companies increasing, but do not affect the weighted average as heavily.
- More companies are increasing (vs. decreasing) marketing spend. (This is good news!)
- There is not enough “Peanut Butter” to go around… (so an even spread will not work this year)
- Marketing Investment will inevitably find growth areas: products; markets; segments; or geos. (So, work hard to find those areas and invest wisely)