Mastering Marketing Mayhem in a Meaningful, Meticulous Manner

I hope this title captures your attention; I’m trying to make a point about the chaos going on in managing and operating marketing. What marketing needs in 2016 is to manage and optimize its efforts in a more unified manner. This perspective kicks off a new series on the challenges for marketing to automate or execute tasks and manage toward maximum performance. We all know that the craft of marketing is in need of significant transformation, from the CMO throughout the entire marketing organization and all the way out to the experience of consumers and customers. But this may be a fanciful mission, as applications and technology does not really automate marketing let alone manage it. Most marketing automation products are specialized applications that are not used by marketing management, let alone front-line marketing managers; they are for specialized needs in demand generation or digital marketing that personalizes inbound and outbound interactions with contacts for the purpose of advancing dialogue and creating relationships. Marketing automation, like its cousin sales force automation, has been a placeholder category that describes only a narrow slice of marketing, and the term has been co-opted by the industry for its own purposes. Though some observers predict that CMOs will outspend CIOs and other leaders of the business in technology investments, I have debunked this ludicrous idea; even if it were true, that would not make marketing departments much more efficient in their management and operations. To counterbalance the silliness of the marketing automation dialogue, I plan to bring you a series on key areas for investment to start the conversation. Evaluating them should help Marketing demonstrate its commitment to promoting effectively its organization and its products and services. Here is an overview of the many issues in the landscape.

Marketing encompasses a complex set of functions that have been and continue to be separate operations rather than methodically aligned to a common set of goals. Few organizations have an integrated plan that measures these efforts with a common set of metrics or key indicators of marketing performance. Recently, however, newer vendors have begun to advance marketing performance management (MPM) and focus on using a common departmental budget with historical spend and focus on creating forward-looking plans that can integrate a common library of metrics. But there is still much to do to manage Marketing’s portfolio of resources and assets to achieve desired goals and expected outcomes. The first step in such a transformation is to establish a common set of goals and objectives with a continuous plan that links to metrics and monitors progress and becomes the basis for a common dialogue on achievements and utilization of the budget. So far few marketing organizations have taken this step, most are adopting software for marketing analytics yet without it they cannot demonstrate the level of governance and commitment required for marketing excellence. Finding software that can provide consistency and a shared environment for metrics and collaboration is critical; it also should be easy to integrate with marketing budgeting and planning systems. This will be worth the effort: In our next-generation business planning benchmark research more than half (55%) of organizations said that a dedicated application enables them to explore all implications of scenarios; many fewer (40%) said this of spreadsheets. In addition only one-fifth (22%) of marketing organizations are able to drill down to details during a meeting. Thus a capable tool can help optimize execution and facilitate collaboration in the marketing team. At this point, however, only 15 percent of participants said that they manage the marketing planning process very well.

It also is time for Marketing to embrace the digital experience in which consumers and customers interact with websites, communities and even commerce on the Internet. This must be done carefully, as lack of consistency in the digital experience can lead to bad customer experiences and degrade customer satisfaction. Over the past year in reviewing technologies (even the ones we at Ventana Research use) I have been amazed to find how little they are interconnected; lack of integration creates significant impediments to streamlined user experiences in accessing information about products and services along with their supporting content. It impedes not just personalization of the experience but the ability to go from browsing to purchasing of goods and services. Obviously this impacts a company’s revenue and bottom line. The disconnect is not easy to resolve. Some website software includes a content management system (CMS), and demand generation systems offer digital marketing capabilities. Vendors of these technologies talk about simple integration and their partnerships, but almost all require significant customization and consulting resources to actually work.

And for organizations building a community and looking to reduce the inbound load of inquiries and sometimes confusion with their FAQ, the use of a learning management system (LMS) can help their marketers communicate information related to products and services. Our next-generation learning management system research shows that an LMS can help in responding to customer service complaints and issues, which more than one-third (35%) of organizations said is important. Innovative new approaches that use virtualization and video can enable an actual employee to converse with customers are now available and can help reduce questions into the organization.

Underlying the marketing investments for website and community or commerce environment must be intelligence for supporting the inbound and outbound digital marketing efforts that have evolved from demand generation systems and engaging visitors to the sites. Part of which is to directly link to active promotion and targeting of pay-per-click (PPC) and ensure effective search engine optimization (SEO). In practice many organizations interact with customers through separate systems that each manage their own environments such as Bing and Google; Facebook, LinkedIn, Twitter and other social media channels take specialized approaches to create presence and lure visitors into the marketing channels. But we are beginning to see more integrated approaches to digital marketing to simplify automation and oversight, to extract data to apply analytics to and to create metrics to determine effectiveness and return on investment. This is important because, according to our data and analytics in the cloud benchmark research, social media is the second-most important external data source in almost half (48%) of organizations, following cloud-based business applications (61%). And for many organizations they are beginning to use social media ratings of individuals to determine their relevance and for establishing a better approach to responding to consumers and customers as part of multi-channel contact center efforts. The amount of time and resources companies spend should motivate them to look for more efficient methods to manage digital interactions, especially across social media channels.

This point also applies to demand generation, which tries to turn suspects into prospects that can be passed along to sales and is a key part of what Sales expects from Marketing. While marketing organizations have experimented with a variety of email and automation-based approaches over the past few years, not many have succeeded in finding full value from their efforts, often losing some trust from sales and even corporate and finance management in their ability to generate the quantity of viable marketing qualified leads. For this activity many marketing organizations depend on a key person or two who may not have the experience in best practices or systems to know how to apply continuous improvement or when to ditch one technological approach for a better one. This often results in stale legacy approaches that produce a decline in the quantity of quality leads being generated by the marketing organization. Lacking target personas and aligned positioning and messaging embedded in automated nurturing, demand generation is part of why they are not fulfilling its promise.

In some cases, sales organizations seeing this decline have been slowly taking responsibility for achieving the quotas for which they are compensated and evaluating a new generation of inside sales that nurture and interact with prospects directly. I highlighted this in my recent diatribe on the state of sales organizations that outlines the increasing divide between marketing and sales in many organizations. If we expect marketing teams to be more progressive, then it probably will be necessary to link a portion of their incentives and rewards to revenue objectives. In addition most demand generation systems as systems of record are ineffective in applying and presenting analytics and metrics; it requires more software capabilities and people skills to get the appropriate data into the marketing analytics and performance management. Marketing will have to turn elsewhere for analytics; it is one the largest users of data and analytics in the cloud, as more than one-third (37%) use them today, according to that research. Similarly our recent next-generation predictive analytics research finds that Marketing is most often the user of these advanced analytics in almost half (48%) of organizations, and almost one-third (29%) are evaluating it for use into 2017. Predictive analytics for example can help determine the probability of individuals to respond to offers or becoming customers, and it can be articulated in the form of a score or a grade that can be useful for helping nurture or directly engage particular individuals.  Marketing information is used by 44 percent of organizations for predictive analytics, and one-third (32%) plan to use it which indicates its potential.

A positive digital experience is not complete without consistent information about products and services available across the website and commerce systems to other channels of marketing, sales and operations that could range from print, store and channel efforts to the demand and supply chain. Product information management (PIM) systems can support these efforts and can be managed by the marketing and product teams without depending on IT, even though these information assets must be shared and in many cases syndicated across business channels. In organizations where IT has established master data management, this is an infrastructure function and not the focal point of PIM efforts, which require a product master that can be managed within the application environment. For more detail on this issue, see my perspective on PIM Trumps MDM. Having a diverse set of product information that can include images, videos, descriptions, diagrams and even feedback and ratings from others is essential to a full digital experience that can facilitate answers to questions or accelerate browsing to purchasing in commerce or other channels. Many organizations have instituted digital asset management (DAM) to support their website and commerce, but usually these systems are not flexible for managing the entirety of product information. This issue has led to a new generation of PIM applications that blend the technologies. The unification of PIM and commerce systems was critical to almost two-thirds (63%) of organizations participating in our previous PIM benchmark research. It makes sense for commerce and PIM providers to forge partnerships since they have common customers in marketing organizations and businesses. PIM is necessary to eliminate errors and mistakes in product information as well to improve the customer experience; these were two key benefits of a dedicated approach to PIM in our previous research. We expect it to be a key point in the new research we are conducting this year on the next generation of PIM, which must adapt to the roles and specific business processes of marketing and sales organizations.

As business models evolve, many industries need to find ways to support subscription billing and recurring revenue processes. Most commerce systems are good at single transactions and shopping basket experiences but not as good at renting and periodic licensing of services that require subscriptions. In recurring revenue effective dating of when the service begins or fees change and when additional services are added can be complex. Customers also may have a variety of billing methods that can be applied differently for services. Even the largest software companies providing software as a service often lack effective billing to support online payment transfer, which half of organizations (52%) use, second only to credit cards (77%), as found in our recurring revenue benchmark research. Improving the customer experience is the second-most important business objective (68%) of recurring revenue, and half (51%) of organizations see it as a driver for introducing recurring revenue. But once you engage customers, you must continue to engage and promote other relevant services that can enhance the customer relationship and potential revenue contributions. Our research finds that Marketing is interacting with customers in almost two-thirds (63%) of organizations that use recurring revenue, and 20 percent or more of marketing organizations are involved with defining, identifying or evaluating subscription billing systems. Overall the research finds integrating systems to be the top technology challenge to recurring revenue business in half (51%) of organizations.

For organizations seeking to renovate their digital commerce environment in the presentation of information related to the organization and its specific products and services, addressing many of the previous points is essential. Rather than simply replacing the current system, I recommend considering the needs of the consumer in terms of PIM and the potential of subscription billing and recurring revenue. Organizations that have not developed a refined plan and unified approach to the digital experience before selecting technology may find themselves involved in customization chores and consulting expenses; they should rather look for applications designed to adapt to each other. It is clear to me that marketing leaders will need to be vocal and lead in demanding better approaches to support this mission, as many vendors are focused less on what is needed to simplify their systems than on selling their add-on modules and work with only a few products that come from vendors with whom they have relationships.

I have pointed out how the digital technology disruption is changing business processes and methods for operating, and this is true for marketing. In fact, the majority of new systems operate as software as a service in a cloud computing approach that is rented and available on the Internet. Almost all new software for marketing released in the past five years, including analytics, operates in the cloud. The large numbers of users and data sources in dispersed locations are best served with this approach, especially compared to copying and pasting in spreadsheets: More than half (58%) of organizations see them as unreliable for analytics.

Marketing cannot afford to overlook the advances in mobile technologies and the need to make the digital experience operate seamlessly and responsively for users of smartphones and tablets. This might seem simple, but variances across Apple and Android devices and across three or four browsers make it complex for digital experiences in marketing. In efforts to make Internet-based efforts more responsive, marketing organizations should explore developing native applications on the mobile devices or how to operate across a variety of social and digital platforms, which is important for cross-promotion and -selling. To offer a complete digital experience requires using all internal and external information assets about visitors and customers, including third-party big data sources combined with analytics to provide market intelligence and cryptic data that was not previously available to integrate with marketing data. To manage such a large portfolio will require project management that can encompass all the assets and resources and make them accessible for the entire marketing organization.

It’s obvious that Marketing has a lot to do to compete and prosper in the digital age. My analysis is that CMOs and other marketing leaders will have to get more engaged, take risks and even step outside their comfort zones in exploring and learning. Take a broad view of the processes, information and technology for the entire organization and its people and identify where working together and having consistency of projects, plans, analytics and results will help engage employees and inspire the best possible performance. Marketing is a team sport, and CMO need to not just be a captain but also equip the team to work together and be effective in their roles. As I noted in beginning, Marketing is under pressure to excel in performance and provide tangible value to the business. These steps can help it do that.

Regards,

Mark Smith

CEO and Chief Research Officer

Digital Technology Agenda for Business in 2016

Technology innovation is accelerating faster than companies can keep up with. Many feel pressure to adopt new strategies that technology makes possible and find the resources required for necessary investments. In 2015 our research and analysis revealed many organizations upgrading key business applications to operate in the cloud and some enabling access to information for employees through mobile devices. Despite these steps, we find significant levels of digital disruption impacting every line of business. In our series of research agendas for 2016 we outline the areas of technology that organizations need to understand if they hope to optimize their business processes and empower their employees to handle tasks and make decisions effectively. Every industry, line of business and IT department will need to be aware of how new technology can provide opportunities to get ahead of, or at least keep up with, their competitors and focus on achieving the most effective outcomes.

Let’s review the digital disruptions that are impacting businesses of every size in any industry.

Analytics is at the top of the list. It has become indispensable not just for measuring performance and efficiency but also for guiding effective actions that make critical differences in an organization. Once just an ad hoc part of business intelligence efforts, analytics now can have a continuous role in streamlining business processes. Historical analysis – measuring the past to inform the present – is no longer sufficient; looking forward with predictive analytics can help organizations anticipate future behavior and outcomes. Our benchmark research on predictive analytics shows that nearly half (49%) of organizations expect to gain significant impact from utilizing it, and another one-third (32%) said it can have transformational impact.

However, to develop continuous analytics organizations first must prepare for use the data to be analyzed. Typically this requires significant amounts of time from analysts, data and operations professionals – time that could be used more productively. Today they can regain that time by using data preparation tools designed for this purpose. In 2016 we will perform in-depth market research on data preparation to assess the variety of ways in which it is used and where it can offer the greatest benefit to analytics and operations. Our research in 2015 found that preparing data for analysis is the most common impediment in the analytics process for more than half (55%) of organizations, as it has been for the past five years. We also will conduct and publish new research on the role of analytics in the sales, finance and human resources functions. In these and other lines of business we assert that organizations must develop competencies in analytics and begin using them continuously to improve their performance and competitiveness. Look at your own organization to determine if you have made analytics a priority and is being used effectively.

Another precursor to continuous analytics is collecting and processing what is commonly called big data, the huge volumes and broad variety of data that organizations encounter. Advances in computing technology including in-memory processing and storage of big data are now cost-effective and can be readily accessed and used through cloud computing. Because not all data is the same, ranging from structured data to unstructured content, documents and text, how businesses manage their information assets is just as important as the guidance they receive from analyzing them. To further investigate the impact of big data on business, we will perform new benchmark research to determine where investment can have the greatest impact in terms of value and time savings. Managing data effectively enables organizations to optimize their information, and there are other sources of data that can add to what they know. My colleague Robert Kugel has named this “cryptic data”; typically it is out of reach of business users, tucked away on the Internet and in external sources, but accessing it could enrich the value of existing information and analytics. Last year our data and analytics in the cloud benchmark research found that Internet information sources are important to 42 percent of organizations.

It is important to remember that big data is not just about data management but also about how it is interconnected and used for business purposes. Industry jargon that isolates it in “data lakes” and other ridiculous terms do a disservice to its full potential for analytics and any range of applications, extending even to advances in the Internet of Things (IoT), which connects whole networks and myriad devices to each other.   Beyond this data science has intersected with expert systems to produce cognitive computing systems that can learn from past and present decisions and interactions to answer questions in natural language and guide decisions to optimal results.

In the excitement over big data and analytics it’s easy to forget that they are useful only when people work with them, and businesses rely on their people to interact and collaborate to reach agreement or better understand opportunities and situations to be resolved. Through a new generation of digital technologies, workers and managers alike can engage in discussions interactively online, through videoconferences that can share applications and presentations and with mobile technologies that make it simpler to collaborate at any time from any place. Our next-generation learning management benchmark research found that social collaboration is critical for more than half of organizations to share learning socially through activity streams. Technology enables even digital “town hall” meetings in which workers anywhere on the planet join in interactive discussions. But collaborative technologies must be used in context of business processes that rely on business applications in which information must be shared, assessed and acted upon to achieve specific goals. Thus the idea of embedding collaboration in business application is taking hold among large application providers, although some just make it available separately. Our research in the past several years has identified collaboration as one of the most widely recognized digital technologies to advance business processes; for example, more than one-third (38%) of participants in our data and analytics in the cloud research are using it, although fewer than that (30%) are satisfied with how they collaborate, which is not surprising when many are still using email as the primary mode of collaboration. The good news is that new methods are gaining traction: Almost half (47%) are planning to use or are evaluating discussion forums, and nearly as many (48%) are interested in wall posting. New research we’ll produce in 2016 will identify the further adoption of collaboration and best practices in contact centers, sales, human resources and finance groups. Furthermore, to better engage workers in the organization, a new generation of digital feedback techniques used in consumer applications for easy-to-rate feedback is migrating into business. In general collaboration using digital techniques is still one of the most underutilized methods in organizations, but it can have large returns on investment since it engages and should motivate workforces to interact with others and management.

Another major new digital technology that has reshaped the way organizations use information is cloud computing, which enables applications or services to operate beyond an enterprise’s own premises. It can help organizations simplify access to and use of software by removing barriers of resources and skills, allowing any size of organization to exceed its previous computing capabilities. Simplifying the ability to onboard a range of software whether business applications or other tools and to manage them easily in any area of business in conjunction with IT policies provides a radically faster time to value. We have also seen this in the use of analytics, as almost half of organizations in our data and analytics in the cloud research already use cloud-based analytics in some manner and another one-fifth (19%) will use it in the next year. Now organizations are shifting to integrating business applications in the cloud and in the enterprise, a process that requires integration software designed to help streamline interoperability. Underlying this transition of business computing is a movement toward the platform as a service (PaaS) and messaging that interconnects business and consumers in a range of cloud environments – public, private and hybrid. The enterprise architecture of the future is centered in the cloud; much of the software industry has shifted to this approach, and business organizations will be required to adapt or be left using and managing their own software. It is only a matter of time until they will not have a choice as new applications are rapidly becoming available only in the cloud.

Until recently many businesses have worried about the security of systems they don’t deploy and control themselves. Our data and analytics in the cloud benchmark research shows that lack of confidence in security is still the most frequent impediment to deployment cloud-based analytics, in more than half (56%) of organizations. Arising from these worries is new digital technology designed to ensure cybersecurity and protect intellectual assets (systems, internal data and customer information) from being hacked and compromised. More than a few large-scale incidents have shown that such attacks can significantly impact not only financial profitability but an organization’s credibility. Alert organizations now realize that just protecting the network that connects their computers and systems is insufficient to ensure that the full range of threats is mitigated. For example, most organizations have not effectively inventoried and assessed their IT assets to identify outdated software that might have known cyber exposures that can create wormholes that work from inside the organization to the outside. Building on IT asset management is the ability to identify legacy systems that increase threats and put data at risk in databases or from systems and tools that access them from more than one location. Such vigilance requires a sophisticated set of technology that not only detects and responds to threats but can recommend and even act on cyber exposures before situations reach crisis levels. The data within databases and analytics also needs to be secured. This challenge will require a new generation of cyberintelligence that is managed directly by the CIO’s office and understood by business management.

As if all this was not complicated enough, now we have the Internet of Things (IoT) emerging. Devices, machines and networks that are interconnected to the Internet through sensors and messaging are no longer just for monitoring but also for interactive dialogues that notify and take action on threats or malfunctions. As we evolve to this technologically sophisticated world, even things we wear, from watches to certain types of clothing, also can provide information on business and personal activities that range from responding to requests to the wellness of individuals. The underlying connectivity comes from the use of Bluetooth and RFID for cellular or WiFi connections directly onto the Internet. As we find ways to miniaturize and embed sensors and related technology that can provide data, we also find that the processing is operating at the edge of the network and within machines, even automobiles. These Internet-level bots do not just operate at the edge of the network but can also transport themselves to where processing needs to happen. IoT will require applications that can monitor systems and also be used to manage monetization as in subscription to services and interact across any range of services. Such a change will require advanced skills in IoT analytics and capabilities for real-time processing; we call this the next generation of operational intelligence and are conducting new market research to determine the rate of innovation and emerging best practices in adoption of the technologies.

As we all can see, smartphones and tablets are everywhere, connecting people and the Internet. The potential for businesses is enormous, and it will be a necessity for them to equip and support their workers and managers with applications that can easily operate on these devices. Unfortunately so far many business software applications and tools provide only lip service to using their capabilities; few of these vendors have a “mobile first” approach to supporting workforce effectiveness. Working across devices from Apple or Android has plenty of nuances, and many applications require a lot of “pinching” to interact with them rather dynamically sizing in response to the device on which it operates. Additionally, a new generation of notebooks that operate through touch screens and tablets that use Microsoft Windows is emerging. Giving ineffective software to mobile-enabled workers can lead to employee dissatisfaction and become a factor in why they leave an organization. Ensuring that mobile apps provide a contemporary user experience and easy usability is more important than just the app’s capabilities; don’t listen to analyst firms that rate them on the number of customers or amount of revenue they have generated. Such recommendations have led many organizations to select the wrong software and weaken themselves for years to come. With new research in 2016 we will continue our decade-long analysis of the mobile revolution and its impact on business; we advise that embracing mobile-ready applications is essential to maximize the value of the workforce.

Mobile technology advances have paved the way for a new generation of wearable devices, most evidently the new kind of watch, which is now ready for businesses to use to consume and act on information and make decisions. Wearables can support business productivity by increasing the responsiveness of individuals in any role. A new generation of smart watches that are easier for technology providers to integrate with business applications is available and will begin to establish new workflow and interactivity capabilities. Our upcoming research into the new generation of human resources management systems (HRMSs) and into workforce management will assess the demand for these applications. This generation of wearables will come with location information that can be used to promote situational awareness and be optimized for a variety of uses. For many organizations and workers, using wearables provides immediate visibility on the wellness of individuals that not just helps the individual maintain personal health but helps organizations ensure that workers are able to conduct their job responsibilities in ways that minimize risk and ensure safety.

As you see, this will be a big year for technology and potentially just as big a one for business in learning to take advantage of these advances. We have put together a formalized set of research agendas covering all of these areas for more depth on our direction in 2016. Please rely on Ventana Research to help guide you in understanding the challenges and making the decisions that will serve your organization best.

Regards,

Mark Smith

CEO and Chief Research Officer