Zero One: Digital Transformation, a Runaway Train
Digital transformation is like a runaway train hurtling toward a tight corner. The stakes are high, the need for speed great. Who’s driving? With hands gripping the controls, line-of-business executives (LOBs), such as finance heads, human resource leaders and chief marketing officers, have become the new buyers of digital transformation technology.
“The aggressive push toward digitization and cloud computing, for one, has greatly emboldened business unit executives and staff to vet, choose and implement their own solutions,” said Carolyn April, senior director of industry analysis at CompTIA, in a research report on the new IT buyer.
Too bad they don’t really understand how it all works.
The rise of the LOB tech buyer coincides with the rise of digital business transformation – a phenomenon unlike anything we’ve seen in tech. Over the next three years, IDC predicts companies will spend an unconscionable $6.3 trillion on digital transformation. A Gartner survey found that half of all CEOs expect their industries to be transformed by digital.
The spend is great because a company’s survival depends on making a successful transformation to the digital world. “Digital is the main reason just over half of the companies on the Fortune 500 have disappeared since the year 2000,” Accenture CEO Pierre Nanterme famously said.
At the heart of digital transformation lies the customer experience, the lifeblood of practically every business. Increasingly, digital marketers have become the custodians of the customer experience, making marketing a bellwether of digital transformation.
Along these lines, the CMO has emerged as the biggest LOB buyer of technology. Gartner reports the CMO’s tech budget will surpass the CIO’s this year. All tallied, worldwide corporate IT spending funded by non-IT business units will reach $609 billion this year, up 5.9 percent from 2016, IDC said.
“No role has changed as much as the marketer,” said Doug Pepper, managing director at Shasta Ventures, speaking at the MarTech Conference last week. “They now lead the digital transformation of business.”
If marketing is the bellwether of digital transformation, then the runaway train metaphor is apropos. There are more than 5,000 marketing tech solutions today, up from around 1,000 three years ago. Marketers often make quick buying decisions without a firm grasp of the technology, leading to the creation of a messy tech stack in desperate need of fixing, known in marketing circles as a “Frankenstack.”
So there’s real demand for help in getting everything working together and toward business outcomes. “I think we’re in the next phase of innovation – interoperability,” said Praveen Palepu, director for the Microsoft USA central marketing organization, speaking at the MarTech Conference.
Conversely, the fallout from LOBs making uniformed, disjointed buying decisions is lots of wasted tech investments. At Salesforce Incubator in San Francisco this week, a marketer suggested that marketing tech churn could be as high as 50 percent per year due to poor alignment between marketing and IT. Other marketers said this number seems high. Either way, churn is a telltale sign of companies struggling with digital transformation.
To be fair, marketers and other LOBs are doing a better job working with IT than in years past. In the CompTIA study, four out of 10 LOBs said their department works jointly with IT to determine which hardware, software, services and other tech solutions they will deploy. Many CFOs, CMOs and other LOBs have dedicated technology roles inside their departments, from data scientists to software developers.
“Business units and IT staff collaborate around tech choices, a dynamic that seems to suggest that the incidence of purely ‘rogue’ IT behavior by LOB managers may have diminished,” April said.
For the channel, there’s a silver lining in digital transformation and the rise of the LOB buyer. Channel companies that play in certain industries and geographies can help marketers and other LOBs make technology choices that solve their business challenges. They can build a short list of vendors. They can align digital transformation technologies with other parts of the business. They can consult on a digital transformation strategy. They can architect, integrate and fix marketing’s dreaded Frankenstack.
In other words, they can stop the train from derailing.
Based in Silicon Valley, Tom Kaneshige writes the Zero One blog covering digital transformation, AI, marketing tech and the Internet of Things for line-of-business executives. He is eager to hear how digital transformation is impacting your business. You can reach him at firstname.lastname@example.org.