Managing change the biggest barrier to digital innovation, say business executives

Out-Law News | 17 Jul 2014 | 10:03 am | 3 min. read

Managing change has been identified as the largest obstacle businesses must overcome when introducing new digital projects in a survey of business executives conducted by a consultancy firm.

Accenture said that 42% of executives it surveyed said they "expect the biggest barrier to implementing digital business initiatives will be managing change".

The survey also revealed a spread of opinion on who executives believe is responsible within their business for digital innovation. More than a third (35%) said the chief executive has responsibility for digital innovation, compared to 23% and 22% respectively who identified chief technology officers and chief information officers as those responsible for such projects. Just 1% identified chief marketing officers (CMOs) as responsible for digital innovation within businesses.

Accenture said that the role of CMOs in leading on digital transformation is under threat.

"[CMOs] are so focused on leveraging digital channels that they are missing the full potential of the broader digital playing field," Accenture's report (20-page / 3.18MB PDF) said. "This has given rise to a variety of new roles, such as chief digital officers (CDOs), emerging to fill the gap and join the team. Given CMOs’ understanding of the brand and the customer, they are the natural leaders, able to envision a transformation that bridges the entire customer experience, including sales, service and product."

"As every business becomes a digital business, C-suite executives will need to collaborate to drive successful digital transformation. No CMO wants to be left on the sidelines. A new generation of digital natives is fast approaching – with emerging roles such as chief digital officer, chief customer officer and chief experience officer included in the digital lineup. Sidestepping the confines of traditional marketing to deliver a more relevant and integrated customer experience across the business, will help ensure the future of the CMO on the digital playing field."

An Accenture survey of 581 senior marketers operating across 10 different industries in 11 countries, including the UK, US, China, Singapore, France and Germany, found that 78% of marketers "believe that marketing will undergo fundamental change over the next five years".

That change is being primarily driven by advancements in data analytics and the move to digital and mobile channels, according to the results of the survey.

Of the respondents to the survey, 42% said they believe analytics skills will become a "core competence of marketing" during the next five years. More than a third of respondents (37%) said they believe digital budgets will account for over 75% of the marketing budget by 2019, with 35% of marketers anticipating that mobile will account for over 50% of the marketing budget by that time.

Approximately a third of those surveyed also said that they expect the marketing department with companies to be merged with existing sales and customer services teams by 2019 and also believe that marketing campaigns "will unfold in real time, depending on the individual needs and intents of each customer across every device and channel" instead of being outlined in advance.

However, just 21% of senior marketers believe their company will be "known as a digital business in five years", according to Accenture's report. Chief marketing operators working in emerging markets are "much more likely to initiate or complete a companywide transformation to become more digitally focused" than counterparts working in mature economies, it said.

Expert in IT contracts Clive Seddon of Pinsent Masons, the law firm behind Out-Law.com, said businesses must prepare for marketing teams to be more involved in procuring new technology and look to manage the risks that may bring.

"Accenture's report highlights the fact that digital transformation projects are still at an early stage for many businesses and that, whilst perhaps playing a marginal role in driving those projects currently, CMOs are expected to have an increasing voice in the boardroom on the deployment of new technology by their companies," Seddon said.

"Where CMOs are given a budget to procure new technology, such as software which helps them to better harness the potential of consumer data, this may present risks, together with opportunities, that businesses must be able to manage. Whilst CIOs are hugely aware of data security issues, CMOs are perhaps more focused on demonstrating connectivity with their businesses' brand and so will be naturally keen to extract data from consumers and analyse it to inform decision making. Business legal teams must ensure that there is sufficient oversight of the activities of these marketing teams, to ensure compliance with data privacy law, consumer regulation and good advertising practice," Seddon said.

"There are a myriad of other issues that businesses must be aware of could arise as a result of the increasing strategic role CMOs will play in procuring new technology. For example, there will need to be oversight to ensure the functionality of new technology is not already replicated in the companies' legacy IT portfolio and that the new technology is interoperable with existing systems," Seddon said.

"In addition, the contracts that CMOs are likely to oversee are likely to be less complicated than existing arrangements as suppliers of new technology often hold a stronger bargaining position on the terms and conditions that can be applied. As businesses are increasingly encouraged to experiment with new technology to keep pace with market developments, they will need to ensure that the underlying contracts with suppliers provide them with a 'fail fast' option, which enables them to terminate the arrangement 'fast' without adverse financial consequences," he said.