Thursday, April 2, 2009

Marketing Shared Services - An Alternative to Centralization

While the notion of shared services is prevalent across many management functions including IT, HR, and finance, it is for many marketing organizations a business technique that is in its infancy. A marketing shared services (MSS) model offers the opportunity for improved service delivery, greater economies of scale, greater concentration and leverage of expertise, and more rapid and effective program/campaign execution. IDC defines marketing shared services as:

  • Organizing two or more areas of repetitive and redundant marketing activities into a fewer number of activity areas that are offered to internal customers at a cost, quality and/or timeliness that is competitive with internal or external alternatives. Marketing shared services result in cost reductions and an overall increase in efficiency and effectiveness of operations.

Given the difficult economic environment that we are all navigating through in 2009, tech marketers' who are developing shared services strategy should be prepared to respond to the following challenges:

  • Company-wide mandates to reduce marketing costs: IDC is forecasting a 10% decrease in marketing investment for FY09 (with a 15% decrease for the first half of the calendar year). Tech marketers are and will be forced to permanently eliminate entrenches silos of program costs as well as target duplicative marketing costs.
  • Rigid marketing budgets in the product/lines and field: Given the current nature of marketing investment, comprised of tight marketing budgets and slimmed-down marketing staff levels, the overall flexibility of spend across corporate, BU (business unit), and field marketing is quite limited. With stringent cuts in BUs and field likely, it will be challenging to solicit these groups' buy-in for a MSS strategy. Moreover, asking the regions and product lines to "give up" some control of their marketing spend will be challenging, and a very thorough business case will need to be developed to even begin the process of obtaining buy-in.
  • Developing an effective worldwide structure for the MSS organization: "Where to start ?" becomes quite relevant here as marketers will be challenged to not only identify the prime functions for MSS but also how to structure their MSS strategy. Which countries and regions will most benefit from a MSS strategy? Where can you best leverage low cost countries? What functions can these countries provide? How can you best leverage your current marketing staff? What will be the impact of language/cultural barriers?

Based on a recent study conducted by IDC's CMO Advisory Practice as well as findings from IDC's recent Marketing Operations Board meeting, I'd like to provide some brief guidance and insight around shared services:

  1. Successful MSS strategies start with a “pilot test". Marketing shared services still remains an emerging area across tech marketing, particularly for vendors <$10B in revenue, so the importance of "testing the waters" before moving forward is a critical successful factor. Marketers must first gain executive buy-in, lock down the process, demonstrate overall success and usability, and then roll-out to other areas.
  2. MSS organizations should target marketing's most repetitive operations and also better leverage marketing automation and related infrastructure.
  3. MSS organizations must be run like a business (not an overhead corporate function) to be successful. A company's MSS center should outperform the competition (internal and external vendors in areas such as pricing and customer service), build internal success stories, so that the "brand equity" of MSS starts to carry weight and impact within the organization.

The IDC CMO Advisory team is currently in the process of publishing a detailed study that analyzes best practices in marketing shared services with case studies from Microsoft, SAS, and IDG. Look for it in the coming weeks. However, please do feel free to comment below or email us directly.

Seth Fishbein, Senior Analyst, CMO Advisory Practice, sfishbein@idc.com

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