Technology

Corralling Costs

Marketing's reputation as the free-spending cowboy department is being reined in by the growing use of an ambitious suite of sofware.
Jason KaraianNovember 1, 2003

A black hole. That’s how most finance chiefs like to describe their marketing departments. Taking up much of a company’s discretionary spend, marketing departments have come under fire for years for being free-wheeling spenders that shirk any attempts to instil the sort of financial rigour and analysis that CFOs demand of other functions.

That may be unfair on the creative types, but to stave off criticism marketing departments have turned to technology to help them adopt a more scientific approach to what they do. A relatively new suite of software, marketing resource management (MRM) serves several purposes to this end. (See “Marketing Accountability” later in this article). First, it automates a host of tedious administrative tasks, from pushing draft proposals through an approval process to monitoring spending, which divert creative resources. Second, and perhaps more important from a CFO’s perspective, MRM aims to bring greater visibility and discipline to marketing by moving a lot of their work into online databases, which can be accessed by other parts of the company. And software vendors say that some of the tools bring CFOs closer to what they’ve long been looking for: a measure of marketing ROI.

Consultants at Giga Information Group say a standard “best of breed” MRM suite costs between €450,000 and €600,000. Individual stand-alone modules—analytics, workflow and campaign management, to name a few—are about €100,000 each. After the roll-out, MRM users should see a return of between 10% and 20% in a year and can see returns of up to 85% if they integrate MRM successfully with other systems, according to Gartner, another IT consultant.

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Marketing departments certainly need the help. A survey earlier this year of 350 marketing professionals world-wide by consultancy BrandWizard Technologies found that 70% of respondents say most if not all of their work is done manually. The lack of automation has only made a tough situation tougher as the message being sent these days by corporate bosses to their marketing teams is to do more with less.

Tough times at Atlet, a SKr1.3 billion (€139m) Göteborg, Sweden-based maker of forklift trucks, made the introduction of MRM an imperative. In a difficult market, operating profit fell 25% and revenues 8% in the last financial year. That meant marketing’s budget was among the list of areas that needed to be pruned.

But, says Jerry Stridh, marketing support manager at the company, “despite the budget cut, we were able to do the same amount of marketing as always.” A lot of the credit, he says, goes to the MRM software that it had recently rolled out.

Before MRM, all of Atlet’s marketing materials—advertisements, specification sheets, technical documents and the like—were produced centrally in Sweden and shipped to the company’s retail network covering 30 countries. More often than not, by the time salesmen received marketing materials, they were out of date.

Just-in-Time

Since last year, Atlet’s marketing information is based online via an MRM tool called MarketStore from Citat, a Swedish software vendor and consultancy. Local retailers can call up specification sheets and sales materials tailored to customer queries and, if necessary, have customised marketing materials printed locally by downloading the requisite documentation from the web. This just-in-time approach to customer service has lifted a great burden from the central marketing team, who used to spend most of their time fielding requests from retailers. Stridh reckons the annual direct cost savings are around SKr1m.

MRM has also been a boon for the firm’s global sales. Stridh recalls how a Dutch retailer was able to close a deal in a matter of minutes with a customer looking for a very specific type of truck. “Before, there were only a few people in Sweden who knew what we were doing around the world,” says Stridh. “In this case, I think the new system certainly helped sales.”

Letting the Light In

Greater visibility is often cited as one of MRM’s biggest attractions. Rachel Fairley, head of international marketing communications at £1 billion (€1.5 billion) Colt Telecom, says an MRM suite from UK vendor Then is bringing transparency to a marketing department whose work was once “more than opaque.” Fairley recounts how before installing the software in August, each of the company’s 15 offices in Europe and the US used the phone and emails to keep abreast of marketing campaigns—not very efficient, particularly for offices in various time zones.

Because everything is stored in a central database that Colt’s marketing managers anywhere can access, “instead of reinventing the wheel each time, campaigns can be picked up from one country and run in another,” says Fairley. Now all the offices are working from standardised templates, which can be tailored for individual markets by, say, including translation or adding different photos.

Then there’s the “planning, collaboration and budgeting” module, which prompts users for financial information and centrally tracks each office’s spending against its budget—a feature Fairley says will make her life a lot easier when it’s time for quarterly meetings with the finance team.

The Buy-In

MRM software can involve other parts of a company as well. At the National Geographic Society (NGS), a $476m (€439m) Washington, DC-based publisher and educational organisation, purchasing relies heavily on MRM- generated information.

There are about 20 users of the MRM system—from North Carolina-based vendor SmartPath—who “absolutely live in the thing,” explains Shawn Bleam, director of infrastructure systems at NGS and head of the MRM roll-out that wrapped up in September last year. Once marketing materials have gone through the internal approval process, bids from printers and distributors for the job are solicited and collected online via the MRM system. This file is accessed by NGS’s purchasing team, who now have an easier time identifying cost savings and reducing billing errors. “Without a doubt, MRM has brought a lot of communication, standardisation and centralisation to a process that was about as fragmented as it could be,” notes Bleam.

Bleam is now working on integrating the MRM data hub with other systems, “pulling price data from the ERP, ingesting media asset management material or bringing some logistics from the database side.” He has already built line items into the MRM system that mimic entries in NGS’s ERP system.

But that’s when an MRM project can hit a raw nerve. “The good thing about these systems is that it makes things very visible,” says Gerrit van Bruggen, a professor of marketing at the Rotterdam School of Management. “But that’s also why it’s seen as a threat by certain marketing managers.” Though most major functions are becoming increasingly automated and transparent—think ERP for finance, business intelligence for operations and CRM for sales—marketing has has largely resisted automation.

And it’s not just marketing managers who are sometimes among the detractors. Jean-Pierre Jeannet, a professor of strategy and marketing at Swiss business school IMD says he’s deeply sceptical of MRM. “As a discipline, marketing doesn’t do well if the straitjacket is too tight,” he says. “It’s about bold ideas and quality of thought—what’s needed is more brainpower, not software.” For marketing managers, however, the hope is that there doesn’t have to be a trade-off.

Marketing Accountability

Marketing resource management (MRM) software addresses five main areas, says Claudio Marcus, research vice president at IT consulting firm Gartner:

Planning and budgeting. MRM stores project timetables and budgets online, allowing various parts of a company to view and, more importantly, update this information. Given this greater visibility, other departments can co-ordinate their work with marketing—for example, purchasing can prepare in advance for upcoming media buying requirements.

Creation and development. MRM automates marketing workflow, making tasks like approval of materials faster and easier. Instead of a draft advertisement being shuttled around a company so that comments, feedback and signatures can be collected, everyone involved is sent to a single online version.

Collection and management. Centralisation of marketing’s intellectual capital ensures that if staff from marketing leave a company, they don’t take their know-how—documents, processes, research, preferred partners, best practice guidelines—with them.

Distribution and fulfilment. Instead of each campaign starting from scratch, a central marketing team can create templates and guidelines, stored online, so local projects can get to market quickly and remain, in marketing parlance, “on brand.”

Measuring and reporting. MRM stores all data related to marketing, including campaign cycles and spending patterns compared against budgets. This data hub can be integrated with other systems, such as ERP or CRM, giving companies a clearer view of marketing’s contribution to overall performance.

It’s No Joke

“I know half the money I spend on advertising is wasted. The trouble is I don’t know which half.” That old joke may finally be due for burial, according to analysts at AMR Research.

They say that the advent of new governance rules means lax marketing management is no longer a laughing matter. Specifically, AMR cites Sarbanes-Oxley’s Section 404 as a case in point. It requires all companies subject to the act to report on, and certify, their internal financial controls. The external auditor must also attest to and report on management’s controls assessments in the company’s annual report. These rules are to take effect for non-US companies with fiscal years ending on or after April 15th 2005 (June 15th 2004 for American corporates).

For marketing, this means it “needs to find that 50%,” says AMR. The profusion of spreadsheets, memos and emails that many marketing departments rely on for financial control will no longer pass muster.

Enter marketing resource management (MRM) software. Vendors claim that by giving marketers a centralised, enterprise-wide system to work from, marketing’s finances become more auditable. “Often for the first time, the rest of the business can figure out what’s going on in the marketing department,” says Dan Sehlberg, vice president of Citat, a Swedish MRM vendor.