CIO Leadership, Cloud

Marketing Technology Office, really? Here’s four key functions of the new IT office

As Business and IT merge, does IT needs to be split by business unit?

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HP Blogger
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I just read an article advocating the creation of a marketing technology office. The suggestion is that channel and customer-facing technologies would be owned by the MTO, the Marketing Technology Office. Frankly this brings me to two conclusions. Let me share those:

IT = Business and Business = IT

Most of what we do today has information technology embedded into it, and as such, IT is percolating the business. So, do we still need an IT department as we have known it in the past? Frankly, I believe not. As employees get more and more IT literate, as IT becomes core and center to many businesses, all members of the enterprise should be responsible for their portion of IT.

If you look at it, 97 percent of money is bits and bytes on computers. Banking is managing these assets and maximizing their return. Information technology is used to track the financial assets, to make decisions on where to invest them and to record the transactions.

Marketing is not different from that. IT interacts with customers, prospects and partners, and tries to convince them to acquire the enterprise products and/or services. And marketing increasingly uses information technology to do that. The only difference maybe is that most of the technologies used consist in social media and SaaS offerings (Google Analytics, CRM etc.).

IT is working closely with the business to jointly deliver what is required for the bank. Why do things need to be different with marketing? I don’t get it.

Rather than making a special case for marketing, I would advocate we address the integration of business and IT across the board.

IT — the guardian of information and services

The danger of having departments spinning off their own IT environments is that each one ends-up using its own tools and its own information, killing the end-to-end view. We need a guardian of the digital information, and in my mind, IT should play that role, ensuring consistency in information sources and tools, accessibility across the organization and common management and governance mechanisms.

I believe that should be the next role of IT. Four key functions should be performed by IT:

  1. Lead the cross-enterprise governance related to information, tools and associated business processes. Ensure ownership and compliance as far as information is concerned.
  2. Ensure a consistent set of information addressing all aspects of the business is available for the enterprise. This is an expansion of the master data management role IT should already be playing.
  3. Establish an enterprise-wide IT architecture. Source and/or develop consistent tools to manage, analyze and expand the information. Please note, I started with source, as I believe as many tools as possible should be sourced externally and only where none can be found, internal developments should take place.
  4. Ensure cross-enterprise security while exposing the business teams to the information assets and tools available in other parts of the enterprise and its eco-system

Business and IT are merging, but there still needs to be a traffic cop. And that is a role IT should play. About six months ago, I wrote a blog entry containing following equation CIO = CBO + CDO + CTO. CBO stands for Chief Brokering Officer (the sourcing of services), CDO for Chief Data Officer (The I from Information would have been better, but then we were back at CIO), and CTO stands for Chief Technology Officer, as the CIO is the one who should guide the enterprise on the best use of IT across the board.

Conclusion

 I do not believe it makes sense for one department to run its own IT separately as it only fragments IT at a moment it needs to be fully aligned across the company and its eco-system. But IT’s role in the enterprise is changing drastically. And as we forget the term cloud, because it’s just going to be the way IT is done, IT has a huge opportunity to become core and center to the business. Will the IT department in general and the CIO in particular grasp the opportunity? What do you think?

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Discussion
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Goddardd
Doug Goddard 122 Points | Thu, 12/13/2012 - 14:31

Anecdotally, I hear complaints all the time about the centralized decisions that IT makes, especially with regard to the centralization of software applications. Business units spend years, fine tuning a custom application, to fit their unique set of requirements and an IT group, who knows nothing about their detailed business requirements takes it away and shoves an expensive "standard" ERP down their throat, that doesn't meet half their requirements. Centralization only works if good decisions are being made, centrally.

This is a great blog, which touches on IT governance, even if that is not explicitly stated. The reason why is because it discusses who should make decisions about various IT domains and the allocation of those decision rights is one of the central functions of governance. Personally, I don't think there is one way these decision rights ought to be allocated. That ought to be driven by individual corporate strategies.

Christian
Christian Verstraete 394 Points | Thu, 12/13/2012 - 14:49

Doug I take your point about an expensive, centrally driven ERP. I know what you are talking about, and am absolutely not in favour of that. IT cannot make decisions in isolation. But in an increasingly interconnected world, it is key, at least in my mind, to ensure the optimal use of the information and functionality delivered. IT should be the one who makes that happen, but under the guidance of a central governance team. You are absolutely correct.

The cloud and the associated service development capabilities provide us with new capabilities here. As long as we centrally define the information required for the enterprise, so all use the same information, we can have services developed/sourced by entities that tap into that information. But again, governance sould maximize consistency in what we do. Do you agree?

Goddardd
Doug Goddard 122 Points | Thu, 12/13/2012 - 15:11

Christian, under most strategic scenarios I think IT should have monarchical control over architecture and infrastructure decision stacks and that is about it. Some strategies may give them more. Centralization, for example, is normally associated with a company in trouble, trying to cut costs, not one that is growing.

I would probably disagree with you when it comes to data, for several reasons. I think IT probably has to give up monarchical control over applications and applications tend to be tightly coupled with data structures. Secondly, with respect to data structures, univocal words are a distant pipe dream. When Aristotle talked about how the same words can have multiple meanings, he must have been dreaming about data dictionaries. However, I suppose one could have some centralized data structures, for things like general ledger, but the interfaces to the data will likely need to be open and varied.

jdodge
John Dodge 1326 Points | Fri, 12/14/2012 - 15:31

You say monarhical. I say maniacal-:). Limiting IT's turf to architecture and infrastructure would seem inconsistent with putting the onus on them to drive business value. 

Goddardd
Doug Goddard 122 Points | Fri, 12/14/2012 - 15:39

A monarchy means you have absolute control. There are several other governance archetypes - based on forms of political governance -  that IT executives participate in, where they share control.

Christian
Christian Verstraete 394 Points | Tue, 12/18/2012 - 13:14

When things are used by a community, they need to be managed by that community. Somebody in that community needs to take the lead to build consensus and come up with one consistent approach all can use. This applies to data as it does to key tools used by the enterprise. I never said that IT dictates what tools to use, having defined them in isolation, but you are left with two choices, either go for an approach where all common components (application, data, tools) are common, or you go for anarchy where every-one makes their own choices.

If you choose the first, the real point is how you build the consensus and roll out the decisions, but isn't that precisely what governance is all about?

Goddardd
Doug Goddard 122 Points | Tue, 12/18/2012 - 14:51

One of the most widely quoted definitions of IT governance is “specifying the framework for decision-rights and accountabilities to encourage desirable behaviour in IT." So, it is certainly about the allocation of decision rights. The framework also consists of governance processes, or mechanisms, a kind of IT governance ERP, if you will, that provides the data upon which many of the decisions are made. Those processes include financial, demand and service portfolio management. "Desirable behaviour" is a function of corporate strategy and it varies according to what the strategy is. In other words, the decision rights vary according to strategy. The archetypes used to determine how decisions are made are not limited to a Business or IT Monarchy, or Anarchy. There are also Federal, Duopoly, and Feudal types.

There are two cases where IT may not have the decision rights over IT architecture and Infrastructure. High growth companies are one. In those companies growth is usually seen to be driven by individual business units so they are given a lot of leeway to make decisions, even including architecture and infrastructure. One of the reasons why they are given the leeway is because their business requirements are rapidly changing. The second case is in a company where the CEO has decided to make himself look good by firing as many people as he can, until the company finally shows a profit. In that case, a business Monarchy will even make infrastructure decisions. 

The interesting thing is in those organizations that are considered to be leaders in IT governance, there is a lot of uniformity and the few exceptions there are, are handled through a well-defined exceptions process. However, the allocations of decision rights are across the board in those organizations, because they have different strategies.

jdodge
John Dodge 1326 Points | Tue, 12/18/2012 - 14:37

What if you opt for the second path - anarchy or what some might call freedom?

Christian
Christian Verstraete 394 Points | Wed, 12/19/2012 - 06:38

Both approaches lean to anarchy actually. And if there is a company left in the end, one day, a CIO will be named to clean up the mess as it will become impossible for the enterprise to operate consistently. Sure, high growth business units may have urgent demand. Isn't that one of the reason companies are going to cloud computing? This should give them the agility they are looking for. But it is in that frame of mind that IT needs to force a flexible and agile governance to ensure consistency of the overall information environment.

jdodge
John Dodge 1326 Points | Wed, 12/19/2012 - 15:24

In a perfect world, you're right. In the end, there's just the "integration of business and IT across the board." The reality is marketing types running their own IT (SaaS and social media, as you point out) will likely bypass governance and deploy a mishmash of short term solutions, many abandoned after their use is exhausted. And it will be the CIO's job to clean it all up...like the guys in suits at Chernobyl. Pushing a lot of this into cloud and promising quick and opportunistic app deployment (and de-deployment) to marketing and other units in the enterprise would seem a smart way to go.      

"IT is working closely with the business to jointly deliver what is required for the bank. Why do things need to be different with marketing? I don’t get it.

Rather than making a special case for marketing, I would advocate we address the integration of business and IT across the board."

Goddardd
Doug Goddard 122 Points | Wed, 12/19/2012 - 12:51

Some high growth business units are opting for Cloud services today, or outsourcing, or making investments internally. A few years back, they were the first to embrace things like wireless networking. In many cases, their innovations ultimately became accepted as corporate standards and some had their early investments paid back when they became standards. 

According to the second law of thermodynamics everything is moving toward disorder and chaos, but I'm curious why you think a decision authority composed of senior IT executives and senior members of a single business unit, senior IT and members from several business units, or one composed of the CIO and the CEO, all examples of governance archetypes other than IT monarchy and anarchy, are ultimately doomed to chaos and failure, whereas the decisions of an IT monarchy are not? 

A flexible and agile governance framework is one that puts decision making authority where it makes most sense, from a corporate strategy perspective, expects to make exceptions and prepares ahead of time to handle exceptions, efficiently, I would argue. As I noted previously, this approach seems to actually lead to a remarkable level of order and consistency, rather than the disorder one might expect. That is likely the result of IT being more closely aligned and in tune with the business, as opposed to jealously defending it's turf, and monarchy, at all costs.

 

 

Christian
Christian Verstraete 394 Points | Fri, 01/11/2013 - 17:25

Let me give an analogy. A long time ago we had an issue at HP as every design engineer decided which parts he or she wanted to use, so we ended up with a miriad of different parts and little consistency. We implemented a governance body involving R&D, Procurement and Manufacturing and got them to decide the standard parts to use. The catalog was widely published. As a design engineer you were still allowed to use another part, but before procurement helped you to source the part, you had to go in front of the governance board andexplain why you needed that part. The fact of doing this very quickly created discipline as most engineers did not want to have to go to the governance team to explain, in other words, they did not really need a different part. The ones who did passionately explained and got the go ahead. We could do the same here. If, as a business you need a specific functionality and want to source it from the cloud, no problems, convince the governance board you need it. I believe this will create discipline quickly. 

Goddardd
Doug Goddard 122 Points | Sun, 01/13/2013 - 16:18

Christian I'm not sure what argument(s) your analogy is designed to make with respect to the previous dialog in this thread. For example, your example demonstrates that the governance group was made up of people from multiple departments, outside of IT, and yet they managed to instill discipline, rather than anarchy. I thought your argument was discipline is not possible if IT is not making all the decisions?

With respect to a standard catalogue, that is not unusual in well governed organizations. However, services are always being added and removed from the catalog, granted in the age of the extended enterprise we now talk about federated service catalogues, due to the uniqueness and variety of the supply chain and outsourcing contracts. The items in the catalogue would largely be measured from a financial perspective, i.e., should we be producing this product at all, from a revenue point of view, as opposed to what the components of the product are, or, are there cheaper ways to do the same thing. However, they might be interested in the cost and quality of the product components as it relates to the competitiveness of the final product.

On the topic of the Cloud, if the consumer is buying a total package from an external cloud provider, including the support and continual maintenance of the service, hosting and customization, I would think that would make it even easier to go outside the organization, without any risk of the internal group having to clean up a mess, or inherit something they know nothing about. That is of course unless they want to bid on the work themselves and can do it cheaper, with a better warranty, than the Cloud provider.

jdodge
John Dodge 1326 Points | Fri, 01/11/2013 - 21:36

I'd like to make two points, Christian. What's the difference between what HP did to get engineers to source common parts and what IT does or used to do in being technology gatekeepers, which contributed much momentum to the BYOD movement. Maybe, gating parts or technology works in some circumstances and not in others, no?

Your point about a mishmash of tools is an excellent one. I just interviewed two CIOs from General Electric. One oversees GE Intelligent Platforms where the number of ERP systems is being dramatically cut from about 20 to 2.

Here's the link: http://www.enterprisecioforum.com/en/blogs/jdodge/simplification-commonality-goals-ge-unit

The second which I just posted was with Jeannine Abele, supply chain CIO for GE Aviation, which incidentally has seven CIOs (!!). She talks about an integrated tool environment for its manufacturing execution system. And separately, I spoke with Dave Busiek who heads up GE manufacturing software. He makes the larger point about the CIOs enjoying more influence on the factory floor. Here's links to both those interviews.

http://www.enterprisecioforum.com/en/blogs/jdodge/change-management-bigg...

http://www.enterprisecioforum.com/en/blogs/jdodge/time-ripe-cios-influen...