PDF File: 

crm7_2_62_wp_sap_strauss.pdf

SAP AG

Focus on business strategies, high customer expectations and a rapidly evolving marketplace are definingthe growing role of the chief marketing officer worldwide.

In early 2006, SAP initiated a comprehensive program to transform its marketing planning processes, templates and tools. The goal was to have in place a revitalized marketing planning and execution program for calendar year 2007. Our organization has been extremely successful over the years in leveraging advanced marketing capabilities to maintain a dominant market position. However, there were a number of areas where improvements could enhance our planning process – helping us coordinate our work, support the business strategy more effectively, listen to customers more closely and then plan and execute campaigns more efficiently.

As part of this planning effort, we were determined to base our work on more than just our own thinking and innovations. We wanted to look to our marketing colleagues across other industries to discern current trends and best practices, and to lay the groundwork for continuous improvement. Accordingly, we conducted a small-scale research initiative involving surveys of 43 chief marketing officers at some of Germany’s leading companies, as well as in-depth interviews with approximately 12 of the CMOs surveyed. The study looked to determine trends along eight critical dimensions of the marketing function (see Figure 1) and focused on the following key questions:

• What different approaches are being used for the marketing planning process?
• What gaps currently exist between companies’ existing situations and best practices?
• What key concerns are on the minds of CMOs?
• What are the key drivers and challenges companies face?
• What kinds of solutions do companies successfully put into practice to face these challenges?
• What are the “hot topics” currently on a typical CMO’s agenda?

Although the survey sample does not support a detailed, scientific and statistical representative trend report, the results were nevertheless instructive to any company looking to transform its marketing function to support the more complex marketplace in which we operate today.

Pain Points

One of the initial questions asked of the CMOs participating in our survey was about the eight primary dimensions of the study: Which did they feel were most important to the success of their marketing organizations, and which of those areas were particular “pain points” – functions most in need of improvement?

We found it extremely significant that three of the most important marketing dimensions correlated with the CMOs’ most challenging areas:

• Fact-based planning and controlling;
• Planning process; and
• Standardization and automation.

The marketing capabilities ranked high in importance by CMOs are also the areas where they feel the most challenged, as shown in Figure 2:

That some of the biggest capability gaps are among dimensions deemed to be essential to CMOs’ success clearly means there are important challenges to be addressed in the future.

Looking at the more detailed results of our research, the most prevalent pain points among the CMOs surveyed can be understood as falling under one of those three major areas.

Fact-based Controlling and Positioning of Marketing

Insufficient C-level Involvement
The challenge of getting C-level executives involved in marketing strategy and execution was mentioned by many of the CMOs. Almost threefourths of the CMOs surveyed have marketing topics on the CEO’s agenda, yet only one-third of the marketing executives have representation at the C-level. Based on interviews conducted with the CMOs, many of these executives find that CEOs are involved to an extent in major campaigns, but less so or not at all for marketing activities at other levels.

Marketing Limited to a Services Role
More than half of the CMOs surveyed characterize the role of their marketing organization as either a shared services center providing marketing support, or as an industrialized marketing “factory” providing cost-efficient services; that is, marketing is more often than not primarily a “tactical” endeavor. Only about one in four executives felt that marketing was more central to the growth strategy of the company. Positioning the marketing organization as a proven value creator was seen as a critical challenge – growing out of its traditional role as executing communications or lower-level services, and becoming more integrated and aligned with overall business strategy.

Too Much Emphasis on Just Hitting the Budget Numbers
Most marketing organizations are driven by a top-down budgeting process, and performance is then tied to hitting those monetary goals. More than half of the CMOs surveyed have performance metrics based solely on those monetary goals. Fewer than a fourth are measured on quantifiable, nonbudgetary goals such as customer satisfaction. Budgeting is also primarily an annual process, which obviously limits a marketing organization from being as nimble as it might want to be to meet more immediate business needs.

Marketing Objectives in Conflict With Other Business Areas
Marketing objectives are often extremely diverse; accordingly, as CMOs indicated, they often come into conflict with other areas of the organization such as sales, top management, regional priorities and the finance organization. This finding highlights the need for leveraging the planning process to align objectives and key measures across functions and across the entire organization.

Planning Process

Our research confirmed the importance of the planning process to marketing executives. More than two-thirds of CMOs rated planning as above average in importance. However, the CMOs also pointed to several key challenges in this area:

Inadequate Focus on Customer Strategy
Asked to name their strongest capabilities in the planning process, most executives named planning of campaigns and activities as their best area, followed by “marketing mix and plan” and customer segmentation. Only a few CMOs named customer strategy as their strongest capability; however, an extremely high number of marketing executives named customer strategy as an area they expect to be involved in more closely in the future.

Low Application of Bottom-up Market Potential Analysis
Partly as a result of the lack of focus on customer strategies, we also find that CMOs have a limited use of bottom-up analyses of customers and markets, making it much more difficult to align spending with high-value targets and segments.

Limited Acceptance of Standardized Processes
The typical company, according to our survey, is in need of aligning global, regional and local marketing activities. Few companies operate using standardized processes across their geographical areas, making alignment of the planning processes difficult, if not impossible.

Standardization and Automation

The area of standardization is one with tremendous potential to enable a more effective marketing planning process. The gap between the real and the ideal, however, is quite high in most companies in several areas:

Lack of Coordination Among Business Areas
According to our survey, a common CMO struggle is to coordinate different business areas during the planning process. The decentralization of the organization means that different regions or countries feel empowered to make decisions based on what is good for their region or country. On the other hand, the lack of coordination makes it difficult to share best practices or to create plans where “the whole is greater than the sum of its parts.”

Absence of Automation and Integrated Marketing Software During the Planning Process
The absence of standardization is seen by the surveyed CMOs as an impediment to planning because it interferes with the ability to coordinate activities. Many marketing executives are familiar with the situation where regional heads will be asked to show their planning details; some will produce the plan using spreadsheet software, while others will use a presentation format such as PowerPoint, while still others will produce a written document. While each regional or functional head may have a valid plan or report, the absence of a standard or automated approach clearly makes it impossible to compare plans, or to roll up the different perspectives into a global plan.

CMOs today must move to a more precise, metrics-based approach to planning, harmonizing those metrics across different countries and regions so that everyone is really talking about the same plans and the same goals.

Initiatives and Innovations

Based on our research, and on conversations with marketing executives, CMOs are currently exploring a number of common areas to improve the marketing planning process at their companies. Some initiatives include the development and implementation of better marketing controls. Process automation and standardization, with the assistance of integrated software solutions, is another key area, supporting our survey findings that CMOs are looking to better coordinate planning across boundaries, overcoming issues caused by the absence of standards in the planning process and the lack of integrated software solutions that might ease this problem.

Executives are working to integrate global, regional and local processes as they work through marketing plans. They see the critical importance of closely aligning global and local marketing functions, as well as product management.

Finally, a number of marketing executives are working with their companies to launch new customer retention strategies and more innovative marketing methods. This set of initiatives is related to overcoming something noted earlier: the lack of metrics for the marketing organization targeted at strategic or business outcomes beyond simply hitting budget targets.

Best Practices in Marketing Planning

How, then, did this CMO research – performed in parallel with our ongoing initiative in marketing planning transformation – inform our work at SAP? Insights from the research confirmed several steps we have already taken, and also helped solidify our work toward the end of the initiative.

Our planning process proceeded in three phases – assessment, development and planning – supported by regional guidelines and an overall framework at four different process levels as illustrated in Figure 3.

For each level, process flows and relevant interfaces are defined, as well as milestones a nd activities.

Our CMO research highlighted the fact that adopting a customer-focused strategy is becoming increasingly important, although few of the marketing executives surveyed felt they currently excelled in that area. Accordingly, we ensured that we applied a specific customerfocused strategy during the planning process.

We used a strategic prioritization approach to summarize industry and customer insight, aligning marketing objectives to market scenarios according to the dimensions of market attractiveness and competitive intensity. By leveraging an insight-driven, end-to-end marketing planning process, we helped gain buy-in from, and alignment with, other business areas within the company, such as sales and business planning, as well as with our global and country marketing units. Within six months, we successfully achieved alignment across global marketing, regional and country marketing units regarding marketing strategy, programs and tactics.

For each topic, we defined marketing programs according to their pre-allocated marketing objectives. Then, for each marketing program, we created a detailed outline of the marketing objectives, priorities, KPIs and budgets. In addition, we recommended a best-practice architecture aligned to a target group.

Programs have been detailed into campaigns and waves in the context of integrated marketing communications (IMC) planning. All marketing and communication efforts have been aligned between regions and countries on a tactical level, facilitated by the IMC planner. Campaign targets and KPIs are defined and tracked to continuously measure campaign performance.

One of the keys to success in implementing the four-level process framework (see Figure 3), was a set of strategy, KPI and program templates and tools which facilitated the overall planning efforts. As noted earlier, few of the companies surveyed as part of our CMO research currently take advantage of standardized processes across their various geographic locations.

To avoid this kind of misstep, a key focus of the marketing planning effort was to standardize the planning processes across global marketing, regional and country marketing. This standardization enabled a faster turnaround of the planning inputs and outputs, meaning we achieved “plan readiness” according to the end-of-year goal we had established. This was an important milestone; one we had never before achieved in that level of detail.

Conclusion: Five Key Principles for Transforming the Marketing Planning Process

Summarizing the results from SAP’s chief marketing officer research, as well as our marketing planning transformation, we believe five key principles are necessary to create superior marketing planning processes:

1. Focus on process outcomes: Know what you need to achieve before starting the design or business requirements phase.
2. Focus on what’s important: Know the processes and activities that have the most impact on results.
3. Create the capacity for continuous improvement: Challenge your assumptions and those of your team; ask incisive questions (why, what, who, when, where, how and how often). Keeping track of best practices is important, but creating competitive advantage also means going beyond best practices to reach a point of continuous improvement.
4. Assign process owners: Create accountability and authority to achieve process outcomes across functions.
5. Measure what’s important: Ensure that your measures are linked to the desired outcomes you want to achieve.

We know, based on our research, that a significant amount of marketing organizations are still feeling tremendously challenged by new kinds of business strategies, by high customer expectations, as well as by a rapidly evolving marketplace. And they also are finding it difficult to coordinate planning activities across a global footprint, to align their work with the business and to use fact-based controls. However, there is also significant energy being produced by marketing professionals today, and that energy will inevitably lead to marketing planning processes that have a more direct impact on improving the performance of their companies.