Core Strategy Report"
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1 Core Strategy Report" What s in this report? The marketing operations function has become ingrained within high-performing b-to-b organizations, providing a foundation for sustainable growth. This foundation is defined by marketing operations range of responsibilities across two dimensions: core functional responsibilities (accountability, planning, infrastructure, data and marketing operations design) and organizational scope (activities within each area of responsibility, ranging from tactical to strategic see the Core Strategy Report The Marketing Operations Range of Responsibilities Model ). While marketing operations capabilities are a requirement for today s b-to-b marketing organizations, they can choose from a variety of approaches to execute those capabilities. The key to success is matching an organization s situation and requirements to the right execution model. In this Core Strategy Report, we define the organizational choices for executing marketing operations responsibilities and the advantages and risks associated with each choice, addressing the following specific topics: Defining factors. The elements that define organizational options for managing marketing operations responsibilities, including factors affecting model selection. Responsibility overview. The full scope of responsibilities that SiriusDecisions categorizes as b-to-b marketing operations duties. Typical manifestations. Organizational models that are commonly deployed, and their advantages and risks. Organizational assessment. An approach for assessing the current manifestation of marketing operations in a given organization. This is a starting point for making enhancements to an organization s current model. 1
2 What are the choices for executing marketing operations responsibilities?" Whether held by a single department or distributed across the company, marketing operations responsibilities must be accounted for. Each form that marketing operations functions take comes with advantages and risks. Two primary dimensions characterize the range of options for addressing marketing operations responsibilities: Scope. Beginning with a select and limited set of responsibilities and ranging through a developed and comprehensive set of responsibilities, scope refers to how many marketing operations responsibilities are being done in any capacity. An organization that executes all responsibilities is categorized on the right side of the graphic, and an organization that covers few responsibility areas (e.g. no skills development or analytics capabilities) is categorized on the left side. The selected category also represents responsibilities handled for only a portion of the marketing organization e.g. measurement done only for demand creation, or a budgeting process that only covers corporate reputation spend. Ownership. Considering where accountability for marketing operations responsibilities sits, the top range represents fully consolidated ownership for marketing operations functions, where all responsibilities fall under a single leader. Organizations with federated functions have responsibilities distributed across departments and geographies. Common federated scenarios include multiple marketing operations teams reporting into regional marketing heads, or standalone analytics, technology or planning functions reporting to marketing leaders spread throughout the organization. Some organizations operate hybrid models where roughly equivalent portions of marketing operations responsibilities are performed in consolidated and federated structures. The two axes of scope and ownership allow execution options for marketing operations to be classified into four types: central global operations, distributed operations, mission-focused operations and organic operations. Each of these types will be described in detail in this report. 2
3 What should be considered in the process of choosing the best-fitting execution model?" Three primary elements should be considered when choosing the most appropriate execution model for an organization. The combination of these elements influences scope of responsibility and optimal placement of ownership. Company size. An organization s size influences the level of available resources (people, program spend, technology) and the complexity of the operating structure. Resources play a key role in defining a reasonable and affordable scope of services. Size also indicates the complexity of the marketing and sales organization, which has a direct bearing on the level of interlock required to make the operations model work effectively. Strategic emphasis. The responsibilities of marketing operations expand and contract based on an organization s priorities and how it expects to grow. For example, businesses focused on growing by entering new markets have different requirements than those planning to grow through acquisition. Organizations that are sensitive to cash flow may need greater capabilities in budget management, while nimble, better-funded startups may see an opportunity to exploit gaps in the marketplace and challenge larger competitors through more effective use of technology and analytics. Operating structure. All marketing operations functions exist within a larger organizational construct and must be designed to align with how the company operates in order to achieve optimal balance between capability, efficiency and required coordination. Structural options for larger organizations include centralization, regional organization, business-unit-centric and market-segment-oriented. 3
4 What are marketing operations core responsibilities? Whether the responsibilities for marketing operations jobs are managed by a single functional leader or distributed across the organization, the scope of marketing operations crosses five pillars: Accountability. This component includes marketing measurement, reporting and advanced analytics. Consistent, credible marketing measurement and insights comprise a core operations deliverable for stakeholders in marketing, product, sales and executive management. Planning. This component includes campaign planning, budget allocation and annual marketing planning. Organizations should leverage the operations function to inform marketing strategy and drive transformational initiatives. Infrastructure. This component includes technology implementation, administration and roadmap development as well as marketing process management. Technology adoption is driving new marketing execution channels and increasingly marketing strategy. Data. This component includes data management and strategy. Data is the foundation of all marketing efforts. Marketing operations functional design. This component includes the design and development of the marketing operations function itself. Ensuring an effective, productive marketing operations function will enable the operations of the marketing department and marketing strategy execution. 4
5 What are the characteristics of the central global operations model?" With consolidated ownership and a comprehensive scope, the central global operations model consists of a single, global marketing operations leader with a direct reporting line into the CMO. In organizations where regional operations exist, those functions report through the centralized marketing operations leadership structure. Advantages. There is a high degree of coordination across strategically oriented functions, most notably budgeting, planning and measurement. This model supports the purest version of the marketing operations leader serving as the chief of staff to the CMO, providing operational oversight for the entire marketing strategy, including approaches to data, process and skills." Challenges. Marketing operations functions contain highly strategic and highly tactical responsibilities, resulting in a divergent set of responsibilities that sit within a single function. While not unmanageable, the position of marketing operations leader requires a skill set that balances traditional leadership skills and high levels of technical expertise. For many organizations, this has proven to be a difficult hire. Marketing operations remains a relatively new function, and few leaders have navigated their way into executive roles through operations functions." Best fit. This is the most flexible execution model and is well suited for organizations with annual revenue of $100 million or more. As companies grow beyond $1 billion in revenue, the need for functional specialization (e.g. analytics, skills development) accelerates, and stronger leaders are needed to manage the function, whose priorities fill a more expansive range." Making it work. The success of this model depends on identifying a strong leader with a clear charter and full sponsorship by the CMO. The model is compromised if the operations leader lacks the budgetary controls to encourage productive behaviors that align with the organization s priorities." 5
6 What are the characteristics of the distributed operations model?" In distributed marketing operations structures, a comprehensive range of responsibilities is covered and federated across organizational functions. Lightly distributed variations include regional operations functions reporting into regional field marketing. Highly distributed examples might have discrete analytics, measurement, planning and process leaders, each reporting through a different part of the marketing organization. Advantages. Distributed operations supports specialization of independently operating functional areas. Within these structures, high-performing analytics or marketing technology functions operate with relative autonomy, sometimes with high-profile executive-led support. The decentralized nature of regional operations allows responsiveness to distinct regional requirements, as sometimes seen within data functions or demand centers. " Challenges. Executing marketing operations responsibilities outside an integrated structure can result in unbalanced operational priorities, which can interfere with efficiency and scalability. Marketing technology functions that stand alone are less likely to appreciate the operational requirements that technology solutions address. Measurement functions isolated from planning objectives focus on more tactical measures, making the overall system less effective. " Best fit. In companies with more than $1 billion in annual revenue, federation becomes a viable option due to the management complexity of operations done on a large scale. The need for greater specialization of functions grows with the complexity of large installed client bases, especially in areas of planning, analytics and measurement. Organizations with regional structures need to federate to better support regionalized power dynamics." Making it work. Effective federation requires the establishment of a role that can pull together and organize operations across the organization. This responsibility cannot rest directly with the CMO and is too important to go without formal oversight. 6
7 What are the characteristics of the organic operations model?" It s not possible for a b-to-b marketing function to operate without addressing some marketing operations responsibility areas especially those with a tactical focus. Businesses with organic operations structures are reactive in responding to operational requirements as a component of execution. An example of organic operations is assigning full technology purchase responsibilities to the functional team most impacted by a specific technology. This work may be project oriented or done as a fractional, often unacknowledged portion of other job roles. Advantages. Organic operations models exist to create short-term point relief from operational pains. High initiative speed is generated by stripping out coordination and complexity but must be balanced against limited expectations." Challenges. Organic operations is not a sustainable approach, as it lacks a forward-looking mandate. That results in temporary solutions and inefficient uses of resources and may impede an organization s willingness to build the skills and capabilities required to achieve the next level of capability and success. With tactical solutions for specific problems, companies are unable to leverage their investments across business need areas and never achieve strategic advantage through marketing operations. For example, data may be enhanced for a specific trade-showrelated marketing push, or measurement may be done to prove a specific point, but such efforts stand outside a concerted marketing operations strategy. Best fit. High in speed and low in complexity, organic operations models appeal to early-stage companies with small marketing teams and a developing strategic focus. As organizations achieve functional differentiation within marketing, organic operations becomes unsustainable." Making it work. Organic operations is most effective when viewed as a transitional state that comes with a limited set of expectations. While relying on an unstructured approach to get the jobs at hand completed, a more formal vision must be established to achieve marketing effectiveness that is scalable. 7
8 What are the characteristics of the mission-focused operations model?" Some organizations may consciously develop operations models that are limited in scope but address the current requirements of the organization. In the most common scenario, organizations focus operations capabilities entirely on demand operations, and the function answers to a demand leader. Other variations include organizations in which strategic responsibilities involving skills development, planning or data management are not currently addressed for the marketing function. Advantages. Organizations with a narrowly defined growth strategy and a high degree of focus benefit from concentrating their operations efforts on the capabilities that most directly tie to success. Where demand creation is the overwhelming focus of marketing, supporting marketing services can be constructed with increased speed and reduced complexity." Challenges. Organizations often grow in complexity more quickly than structures can adapt. Mission-focused operations become myopic, losing sight of the bigger picture and ignoring interrelationships between functional areas. The result is poorly coordinated operations that struggle to provide a strategic advantage. Marketers plod away at tactical execution, despite the organization s need for a more strategic focus to enhance performance at scale. Best fit. Mission-focused operations serves as a transitional state for companies with up to $100 million in revenue. Beyond that size, more complete views of operations are desirable for leveraging operations efforts. Companies with tightly defined growth strategies are better able to focus the services offered. Companies with more centralized operating structures are better able to manage and coordinate efforts, even within contained functional areas." Making it work. A clear statement of marketing operations mission is required, including an assessment of where responsibilities will or won t be addressed. The model must remain flexible enough to address emerging needs or risks becoming increasingly federated and disorganized as other functional areas pick up the slack. 8
9 Can marketing operations merge with sales or business operations?" Some organizations choose to merge marketing operations responsibilities into a sales or business operations function. In theory, this approach promises efficiency and greater alignment between marketing, sales and finance. In reality, combining these functions almost always subjugates marketing s requirements to those other functions, especially at times of the year when resources become tight (e.g. end of quarter, end of year, planning season). Resources and focus invariably shift from the strategically important to the urgent, leaving marketing operations unable to support its mission. Even in the face of well-set expectations about responsibility scope, b-to-b organizations that take this route are unable to realize a consistently comprehensive scope. For this reason, we recommend this model only as a last resort. Challenges. Combined operations restricts functional scope. Although restriction of services may be intentional, the pieces that are most commonly sacrificed are elements that make marketing operations a strategic function. Under this model, the marketing operations leader is not positioned to serve as the chief of staff to the CMO. As an outsider to the marketing function, the marketing operations lead has difficulty merging marketing strategies with its required operational capabilities. The responsibility of driving intra-marketing interlock becomes increasingly complex. Making it work. Organizations committed to the shared operations model are advised to formally define the scope of marketing operations and communicate it effectively, then consistently measure how well that scope is adhered to. Measurement should include stakeholder surveys related to perceptions of quality and efficiency (see the brief The Measurement of Marketing Shared Services ). To evolve a truly strategic marketing operations function, the organization must change the combined operations structure. 9
10 How should the current organization be assessed?" Marketing operations capabilities must be matched to the current state of an organization. To understand the current state, conduct a SiriusDecisions Marketing Operations Responsibility Audit. Go through the list of marketing operations responsibilities, identifying which are being addressed and to what degree, then identify the owner for each responsibility. In larger organizations, completing this exercise requires reaching out to stakeholders situated in regions and supporting functions to develop a complete view of how responsibilities are being performed. Don t assume that responsibilities that are not performed centrally are not performed at all. Completion of this audit enables placement of the current state into one of the four execution model quadrants." Scope. Looking at the range of marketing operations responsibilities performed, identify each responsibility as comprehensive, fractional or not done. Comprehensive indicates that the responsibility is covered and spans the full breadth of the marketing organization. Fractional means that the responsibility is covered, but not for the entire marketing organization. For example, analytics supports demand creation but is not applied to communications, or perhaps data stewardship is a formal responsibility for EMEA, but it is not addressed in APAC. Not done represents a marketing responsibility that is not assumed anywhere (e.g. an organization that doesn t do marketing workforce planning)." Ownership. Identify where responsibilities are managed, selecting options among global, regional and federated. Global responsibility indicates a unifying marketing operations function that manages the responsibility company-wide (e.g. marketing operations owns global summarylevel measurement). Regional indicates that a geographic (or segment-led) approach is taken (e.g. toward campaign planning). Federated means that a function outside of marketing operations takes responsibility for the job (e.g. an analytics team reports directly to the CMO). Selecting multiple options for a responsibility indicates hybrid execution." 10
11 Core Strategy Report " What are some takeaways I can share with leadership and my team?" Selecting the right execution model for marketing operations is not a one-size-fits-all activity. While our research shows that marketing operations capabilities are fundamental for best-inclass performance, there is more than one way to fit marketing operations responsibilities into the overall marketing ecosystem. Success depends on understanding the needs of the business and matching them to a model that can deliver in the current operating environment. We offer the following recommendations for marketing leadership: Understand the current state. No operational gains can take place until an organization comes to grips with the jobs that are being done and those that are not being done. Complete an audit of marketing operations responsibilities to assess where the elements of marketing operations are being handled." Develop the vision. Assess the organization s size, structure and growth strategies to develop a view of the operational elements necessary for success. Avoid the tendency to become pennywise and pound-foolish by always investing in more execution, since this places greater interlock stress on the greater marketing ecosystem. Instead, balance the need to perform more marketing motions against the leverage that can be acquired through more accountable and efficient operations." Strive toward the strategic. While some organizations get bogged down in strategy, the larger problem is that organizations don t do enough to closely tie strategy to operational capabilities. This is the remit of marketing operations and offers the greatest opportunities for creating marketing efficiency and leverage. B-to-b leaders should resist the urge to envision marketing operations as a disconnected set of shared services to be tolerated as a necessary evil. Instead, consider the operational gains that can be achieved through a function charged with marrying marketing strategy and execution capability." 11
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