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Tips for honing your organization's digital strategy

Linda Tucci, Senior News Writer

In a world where business increasingly gets done on a digital conveyor belt, no one would argue that companies need a vision for maximizing the benefits of their digital investments. It's a tough job to come up with a digital strategy for everything -- from online collaboration and customer outreach via websites to mobile applications.

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That was the takeaway from a panel of Web content experts at the recent Gilbane Conference in Boston. And yes, using social computing for customer outreach, and as a force for unlocking employee passion does add complexity to a digital strategy.

As you and your business peers craft your digital strategies for 2011, Marie Williams, senior director for Web innovation at Hilton Worldwide Inc.'s Global Online Services; Keith Cook, global eBusiness officer at insurance company ACE Group Inc.; and Aaron Hill, senior director of the Online Strategy and Services group at SAS Institute Inc., offer their top two recommendations for getting up to speed.

1. Who's in charge? Strongly consider forming a separate organization to create and implement digital strategies.

All three panelists came from companies that have opted to set up a standalone unit for digital services. Some IT and marketing departments are able to work together to develop and implement their companies' digital strategies, but the question of who is in charge can get sticky, as a recent Chief Marketing Officer Council survey plainly shows.

Of the 320 global marketing executives and 300 global IT executives surveyed by the Palo Alto, Calif.-based CMO Council between June and September 2010, more than half (58%) of the IT respondents said that IT was shaping digital strategies at their company. Only 19% of the CMOs surveyed agreed with that assessment, however. Instead, 69% said marketing was driving the digital agenda.

Advisory firm Welchman Pierpoint has found that although any digital strategy relies heavily on IT support, IT departments often are unsuited to take charge of their company's digital strategy because of their traditional mission of service provider, said consultant Lisa Welchman, the Baltimore-based firm's founding partner. "IT is just not the right place for it. There is an inability to shift from that service mentality to [that of] a business contributor and collaborator."

Hilton Worldwide's Williams sees it a bit differently: "The tension is that IT has a much broader mandate and a multitude of things to focus on besides online," she said.

At the McLean, Va.-based hotel chain operator, the answer was to form a separate organization, Global Online Services, which "serves as bridge between IT and marketing," Williams said. An important factor in its success is that the CIO and the head of Global Online Services are peers and both report to the CEO.

Analytics software provider SAS recognized the power of the Internet early on, and formed a separate business unit about 12 years ago to take advantage of the evolving digital space, Hill said. His Online Strategy and Services group reports to the company's global CMO, but the organization has a "strong partnership" with IT, he said. "What we realized is that this big shift to digital services is not a project or an initiative. This is a transformation." "Digitizing the business," as SAS calls it, requires working hand in hand with IT as the company changes its processes, he added. Nevertheless, the appreciation of IT's critical role in the development and deployment of a digital strategy is probably more common at technology product companies than in other industry sectors, he said.

ACE Group, with a market cap of $25 billion, had not done much with digital services when Cook arrived about a year ago after a 13-year career at the now-infamous insurance giant American International Group (AIG). Presented with an "open slate," he is building an organization from the ground up to implement the company's global digital strategy, which includes a new information architecture that relies heavily on the cloud and Software-as-a-Service providers, he said. He offered a lesson from AIG, which struggled to understand how to use its IT and marketing skills to support a digital strategy until it formed a separate group staffed by talent from both departments. Even he was surprised at how quickly the two functions came together, once roles and responsibilities were clearly delineated.

2. Who pays? Consider levying a tax on business units that require digital services. Metrics will help.

Funding is the Achilles' heel of digital strategy efforts, whether they're run by a separate unit or by people working in IT and marketing. Again, the CMO survey is telling: A large majority of marketing executives (78%) and IT executives (68%) said that digital marketing is important to their organizations: Demand is up sharply for always-on access points, service options and interactive experiences. Nevertheless, only one-third of the marketers and one-fifth of the IT executives said their companies are "heavily committed and invested" in digital marketing. Organizations that don't levy a tax or don't have some dedicated funding stream risk being bossed around by the business unit with the biggest budget, consultant Welchman said.

At SAS, the challenge was getting people behind the idea that advertising dollars and resources had to shift to digital as this digital transformation happens, Hill said: "There are a lot of discussions about how to do that. It doesn't happen overnight." Executive support, of course, was critical, and numbers showing, for example, increases in sales related to digital marketing were crucial. "Having fact-based metrics helped build the momentum," he said.

What we realized is that this big shift to digital services is not a project or an initiative. This is a transformation.

Aaron Hill, senior director, Online Strategy and Services, SAS Institute Inc.

At Hilton Worldwide, Global Online Services is seen as just that -- a service organization -- and essentially is funded by a tax. "Each of the hotel brands puts money into a pot," Williams said, adding that large projects go to the board for approval. The ongoing challenge is how to ensure quality, she said.

Funding digital projects at AIG was done by locating expenditures for digital services in its some 1,600 business units, then calculating which services were local to a business unit and which could be shared across the business, ACE Group's Cook said. That calculation worked out to be about an 80% general/20% unique requirements split. His organization was able to deliver efficiencies without forcing business units to relinquish much autonomy.

At ACE Group, where no such economic analysis existed, finding funding "has been quite a challenge," Cook said. He has been methodically establishing enterprise-level agreements that provide economies of scale to the business units. "Once I get that benchmark, I can start building analysis to internalize those funds -- or not," he said. "But doing the business analysis up front to really understand what you're spending -- if you can do so -- will be a valuable asset."

One of the toughest jobs for digital strategies groups is to figure out which services should be centralized, and which content and services should be customized to maintain quality, consultant Welchman agreed.

Let us know what you think about the story; email Linda Tucci, Senior News Writer.

This was first published in January 2011

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