Oracle's BigMachines Deal Shows How CMOs Take Control of IT Spending
Oracle’s Oct. 23 acquisition of BigMachines cloud-based sales-quoting software is further and maybe conclusive evidence of the demise of IT budgets totally under the control of the chief information officer.
The marketing department—once the home of a mysterious budget process built mostly around going to lunch and thinking creatively—has been the target of technology vendors for the past several years.
During that time, there had been some conviction in the industry that CIOs would naturally rein in chief marketing officers' IT spending, but the suites now being offered by the likes of Oracle, Hubspot and Salesforce.com means the IT budget shift from CIOs to CMOs will only accelerate.
While Oracle is not saying how much it paid (Business Insider claims about $400 million), the BigMachines sales quote machine will continue to fill out the Oracle sales and marketing suite. The purchase also illustrates the fervid competition between Oracle and Salesforce.com.
Salesforce was an investor in BigMachines, which offered its system as a service on the Salesforce cloud. Producing a sales quote remains a very human-intensive operation with the quote process bouncing around internally for department approvals and revisions before being committed to a document and then finally—even in this day and age—being faxed to the potential customer.
However, buying a group of companies and bundling them together does not an integrated sales and marketing suite make. Oracle, which detractors accuse of building "Frankenstacks," needs to prove it can meld companies as disparate as Eloqua (acquired for $870 million) and Compendium (acquired last week) into a seamless suite. In any case, the role of the CIO in deciding whether marketing uses the Oracle, Salesforce or Hubspot platforms is becoming ever more remote.
Even the use of big data in a corporation—which appeared to be securely in the CIO's purview—is slipping. I spoke earlier this week with Jeff Winsper, the founder of Black Ink, a marketing company based on a big data engine running on the RedPoint Global platform.
Jeff, whose background includes stints at advertising agencies Mullen and Leo Burnett, strongly advocates tracking marketing return on investment based on a standard set of measures—much like the measures used in financial reporting.
He has seen the role of marketing go through rapid change as traditional methods and measures have faltered in the face of social media and data sources widely distributed both internally and externally.
He sees the use of platforms such as Hadoop as crucial tools to pull in data from as wide a range of data sources as possible. He also sees the role of companies such as Black Ink as integral in providing the technology that collects the data and presents the analysis to the CMO and CFO. IT is playing a minor role, if any, in this technology purchase decision. Meanwhile, the traditional sales process is also breaking down.
"Seventy percent of all prospects are well down their buying journey before they communicate directly with anyone at the company," said Winsper.
The purpose behind the sales and marketing stacks being developed by the likes of Oracle and Salesforce is to increase the speed and efficiency of a sales process, which may be dissolving in the face of a sales process where the customer drives the sale rather than being led to a decision.
The sales funnel, a concept that many business books and seminars have championed, is based on the idea of a prospect being monitored, measured and coaxed along as he or she moves to a buying decision.
That process was justified in an era when customer opinion could be slowly shaped rather than determined instantly through a few opinions posted on Twitter. Today a potential customer can move from awareness, through opinion and to download and trial all in a matter of minutes and often outside the marketing and sales confines created by vendors.
Winsper is right. Marketing is in need of a new way to measure return on investment meshed with the need to act in a real time. Meanwhile, it appears that the likes of Oracle and Salesforce are building cloud suites based on a sales and marketing model that is quickly becoming obsolete.
Eric Lundquist is a technology analyst at Ziff Brothers Investments, a private investment firm. Lundquist, who was editor-in-chief at eWEEK (previously PC WEEK) from 1996-2008 authored this article for eWEEK to share his thoughts on technology, products and services. No investment advice is offered in this article. All duties are disclaimed. Lundquist works separately for a private investment firm which may at any time invest in companies whose products are discussed in this article and no disclosure of securities transactions will be made.