Long Run

By Larry Dignan  |  Posted 2004-03-05 Print this article Print

?"> Proponents say putting technology executives under sales and marketing has its benefits. For starters, it aligns technology with a department that drives sales—and therefore better quantifies the returns generated by information systems. In addition, sales and marketing folks can often do a better job trumpeting technology projects than technologists themselves. Mindbridge, for one, has had its technology run by sales and marketing since its inception in 1997, says chief operating officer Scott Testa. "We view ourselves as a sales-and-marketing company first and a technology company second," Testa says. One of the companys latest ventures—a hosted version of its collaboration software—was conceived by sales and marketing executives. Testa acknowledges, however, the set-up may work better for smaller companies such as Mindbridge, which has 90 employees. The real issue is whether sales and marketing can reign successfully over technology in the long run. Once Mattels integrated system project was completed, Held went back to reporting to the president of the company. "[The reporting structure] was a temporary situation to build the system," says Held. "The biggest danger is that the business wont be balanced and marketing will dominate all the projects."
Niraj Patel, chief information officer at GMAC Commercial Mortgage, where he reports to the CEO, says reporting to sales and marketing could focus technology on moneymaking efforts and the arrangement could work out if a company doesnt have substantial logistics needs. "By focusing technology on sales and marketing you could bring in more orders," Patel says. "But the question is whether you can fulfill the orders."
The risk that sales and marketing might dominate technology projects at the expense of other corporate needs is the primary concern about an organizational chart that doesnt link the CEO or chief financial officer with technology, experts say. For instance, a supply-chain-management system may not be implemented because logistics managers arent as adept at selling their projects. The other issue is budgeting. If the lead technology executive doesnt have the ears of the CEO and CFO, its bound to be more difficult to get budget approval for projects such as infrastructure upgrades or using data networks to transmit voice—neither of which would drive sales. No such problems have been reported, but the JetBlue and DuPont experiments have yet to show long-term results. According to Colin MacKinnon, another Tatum partner, the first questions to ask when technology reports to marketing are: Whats wrong? Is the company trying to shake up its culture? Is it trying to distribute technology expenses throughout the company? MacKinnon says JetBlues reporting structure makes sense due to its heavy focus on e-commerce and Web development. The case is harder for DuPont, which has to manage a more-complex supply chain. Ideally, a company would allocate some technology resources to sales and marketing for e-commerce and leave the bulk of the department devoted to companywide projects. Then theres the fallout from dropping technology executives lower on the corporate hierarchy. "I only see trouble on this front," says Deborah Sawyer, a partner at Morgan Howard Worldwide, a global executive-recruitment firm. "CIOs have fought for too long for their seat at the C table with direct reporting to the CEO or president." And she says that companies who relegate technology to sales and marketing may have trouble luring talent. "Were told all the time: Dont talk to me unless the next CIO job reports to the CEO."

Business Editor
Larry formerly served as the East Coast news editor and Finance Editor at CNET News.com. Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.

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