Ask any company executive a question about computers and they will
expound on how vital a role IT now plays in an organisation’s
Prod them a bit further and they will also reel off how marketing has
long been recognised as a vitally important weapon in a corporation’s
fight to gain a crucial competitive edge over rivals in the
It could be argued a company only has to give its marketers free access
to the latest IT to be way ahead of its rivals.
Not according to research by KPMG. Far from being happy with their cache
of IT, marketers claim it is not only failing to meet their needs, but
that it is actively hampering their efforts (see box).
So what has gone wrong and who is to blame? Marketers? Company
IT suppliers? All of them, according to industry observers who are not
at all surprised by KPMG’s findings.
Mike Juer, managing director of Matrix Workstations, supplier of sales
and marketing IT systems and now part of the Baan Group, considers that
only around 30% of marketing departments in UK companies are using IT
If that seems bad, the situation is even worse in Europe. Nick Hewson,
managing director of the Hewson Group, calculates that a mere 2% to 3%
of major corporations in Europe - the equivalent to the FT 5000 -
operate strategic customer management systems.
Both Juer and Hewson admit that, to be fair, IT specifically targeted at
marketing departments only really started appearing six to 12 months
ago. The fact that the marketplace is such a new one is a fundamental
part of the problem because many marketing directors, in their 40s and
50s, were not brought up with IT and simply do not understand it.
’They missed out on the IT revolution at school and are therefore
probably IT-illiterate, whereas marketing managers immediately below
them and in their 30s are more IT-literate,’ says Juer.
This lack of understanding and knowledge is exacerbated by boards of
directors of the same age group and suffering from the same problem, who
tend to view IT purely in money terms and how much it is costing the
When the IT fails to perform they are outraged that anything with so
large a price tag attached to it does not deliver exactly what is
This situation is not helped by the fact that the price of personal
computers is falling yet most companies still seem to be throwing more
and more money into a bottomless pit for their IT systems.
’The reason for this rising cost is that companies are becoming
ambitious in what they are trying to achieve with their IT. There has
been a tremendous surge in the past five years toward customer service
systems but a lot of companies are worried because the expected benefits
are not forthcoming,’ says Professor Robert Shaw, a consultant at the
Chartered Institute of Marketing.
The reason for this failure is a simple one but one which most companies
have yet to grasp: you can spend all the money you like on
state-of-the-art computer systems but unless you are installing the
right systems to be used in the right way, it is money down the
In order to be able to select the right systems, marketing personnel
have to be able to scale a huge culture gap that exists between the
business side of a company and IT personnel, whether from the company’s
own IT department or an outside IT supplier.
It is a gulf in understanding that is not easy to cross, admits Roger
Taylor, manager in marketing systems, operations and development at the
Automobile Association. ’There is always going to be friction between
the two sides because often the business side is asking for things that
are expensive to deliver.
’So there has to be a compromise in what is delivered and that seems to
be something that marketing people in particular are never keen to
accept,’ says Taylor.
Bridging the divide
Mark Godfrey, marketing manager at Direct Line insurance, agrees that
both sides of the divide must make an effort to see the other point of
view. But he adds: ’A lot of it comes down to the attitude of the IT
department and how integrated it is with the rest of the business.
’It is a case of making sure that the IT personnel are working closely
with the business side and understanding its needs rather than existing
in an ivory tower.’
IT suppliers themselves also come in for some of the blame, often
talking to marketing directors in deliberately unintelligible IT-speak
in a bid to sell them systems they neither understand nor want.
’There’s a lot of pressure from suppliers to buy their solution but it’s
often presented in a very technical way and not understood. For example,
data warehousing is just the name of a type of technology and that
doesn’t tell marketing directors how it can be used effectively in their
department,’ says Shaw.
But, in an ironic twist of events, if the gap between IT and the
business sides is causing harm, it is the lack of division between the
business departments themselves that is creating further confusion and
All too often, boards of directors are attempting to develop their
computer systems by committee, in order to install the same system to
cater for all of the departments, including marketing.
The result is a system that cannot possibly satisfy the disparate goals
of disciplines as diverse as marketing, finance and human resources, so
it ends up failing to deliver what any department wants.
Companies fail to get to grips with IT at their peril because it is
becoming a vitally important weapon, particularly in the hands of the
’IT is an absolutely integral part of our whole business,’ agrees Direct
Line’s Godfrey. ’We have just finished building a data warehouse so that
we can get very quick data feedback on our customers. But that is only
one part of our IT system, which we use to measure and to increase our
’We use IT to understand how different marketing activities are
delivering results and to understand our customers better by examining
data on who we are attracting, who we are failing to attract, who is
buying insurance and who is ringing up for quotes.’
Being able to store and analyse data is an invaluable tool for a
marketing department because it enables it to build up detailed profiles
of customers. This in turn enables it to devise strategies and campaigns
directly targeted at specific customers to retain their custom through
special offers, and details of new products tailored for their
’If a company understands its customers better it increases its
profitability,’ says David Stone, principal consultant with KPMG.
IT also enables a company to find out who it is failing to attract so
that it can devise ploys to bring new business on board. Computers allow
telesales and direct sales teams to assemble data at the touch of a
keyboard, a particularly helpful aid when trying to win new business or
when dealing with existing customers. Doing business with somebody who
can produce instant and accurate data is always impressive.
But even if the right IT system is installed, it has to be used
Industry observers agree that a fatal flaw among marketing directors is
a tendency to become obsessed with the operational side of IT, using it
for quick-fix tactical solutions to today’s problems, rather than
recognising it as a powerful tool for long-term strategic planning.
Juer says: ’The decision to buy IT should be nothing to do with just
wanting to automate a function such as telemarketing. It’s all to do
with strategy. Neither a department nor a company can now fulfil its
strategic plans without IT.’
While the evidence of KPMG’s research suggests that there is still a
long way to go, observers are optimistic that things are moving in the
right direction. Hewson says: ’There are many marketing people coming to
us because they want to learn more about IT and what it can do for
The good news is that their needs are likely to be met in a way that
would have been unheard of two years ago. New products are hitting a
marketplace that is consolidating into major global suppliers, and sales
of marketing and sales IT are expected to increase by 60% in 1998.
’In just two years’ time a lot more marketing directors will be using IT
effectively for the first time,’ predicts Juer.
However, Shaw has yet to be convinced: ’About 10% to 20% of companies
will be doing better in this area in five years’ time. But most will end
up merely copying what their competitors are doing, and making a lazy
job of it at that.’
The Windows 98 Show is being held at the Grand Hall, Olympia from March
10 to 13. It is organised by IT Events which can be contacted on 01256
KPMG: THE HIDDEN ADVANTAGE
’The Hidden Advantage’, a 1997 survey by KPMG of more than 200 UK
- 46% of respondents did not consider their IT to be effective.
- Fewer than one in ten rated IT as ’extremely effective’ in creating or
improving customer information systems.
- 11% of respondents blamed the ineffectiveness of their IT systems on a
lack of information.
- 53% cited ’maintaining customer loyalty’ as a key marketing
But only 15% planned to invest more than half their marketing budget in
customer retention, while 32% intended to spend more than half the
budget on attracting new customers.
- Almost one in three respondents were unaware of the term ’data