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Customer Analytics: Who Owns the Budget?

At the recently concluded TDWI Solution Summit on big data analytics in San Diego, a discussion topic that percolated throughout the conference was the increasing role in IT purchases of the marketing function and chief marketing officers (CMOs). During a question-and-answer period, an attendee asked sponsor panel speakers for comment about a January 2012 projection by Gartner research vice president Laura McLellan that by 2017, CMOs will spend more on IT than CIOs. Though impressed by the projection, the panelists did not seem surprised by this trend.

Analytics adoption is driving major changes in marketing functions, which in most organizations are empowered with the responsibility for identifying, attracting, satisfying, and keeping customers. Marketing functions are becoming increasingly quantitative; they are replacing “gut feel” with data-driven decision making. Data drives the pursuit of efficiency and the achievement of measurable results. Marketing functions are key supporters of “data science,” which is the use of scientific methods on data to develop hypotheses and models and apply iterative, test-and-learn strategies to marketing campaigns and related initiatives.

In the new TDWI Best Practices Report I wrote, “Customer Analytics in the Age of Social Media” (to be published in early July), our survey found that in the majority of organizations (59%), IT and data management functions are still the owners of the budget for customer analytics technologies and services. TDWI did, however, discover a growing budget role played by marketing and advertising functions. Nearly two out of five (38%) respondents said that this function has responsibility for the customer analytics budget in their organizations. Executive management (39%) is also a significant player in budgetary decisions. (Note: “Big data analytics for better customer intelligence” is the theme of the next TDWI BI Executive Summit in San Diego.)

Whether located in IT or under the aegis of the corporate marketing function, specialists in customer analytics must often consult with globally distributed, departmental marketing teams as well as other business units to understand key business challenges and opportunities that should be considered in the development of models, algorithms, queries, and data files for analysis. In other words, customer analytics professionals must be able to live in both technology and business worlds and work with diverse teams from not only marketing, but also finance and operations, to develop accurate, consistent, and common metrics for evaluating results. The ability to move across functions is important for delivering holistic, or enterprise, benefits from customer analytics that go beyond marketing.

Customer analytics and the budget for analytic processes are often in the middle of tensions between IT and marketing. In interviews for this report, TDWI found that the growth in analytics implementation by marketing functions is putting stress on relations with IT over control of the data and who develops and runs analytic routines. The iterative, discovery-oriented qualities of predictive modeling and variable development don’t fit well with IT’s standard approach to gathering all user requirements at once and owning the development of a solution. “IT would ask us to identify the fields we wanted,” a marketing data analyst interviewed for the report said, “but we had to say, ‘Gee, we won’t know until we can look at what’s available and start playing with it.’”

Analytics is thus rising as a sensitive – and competitive – issue as marketing functions gain a larger share of organizations’ technology budgets. It is imperative, therefore, that CMOs and CIOs communicate effectively about shared customer analytics objectives to avoid letting internal budgetary battles become an obstacle to business success. Functioning in a complementary and collaborative fashion, marketing and IT functions can achieve more together than either could accomplish alone.

Posted by David Stodder on June 18, 2012


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