Getting reorganized

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Seeking tighter integration of operations and improved efficiency across the enterprise, many b-to-b companies are restructuring their marketing organizations and putting new executives in charge.

Last month software giant Microsoft Corp. restructured its marketing organization, creating a global integrated marketing communications group that will manage more than $1 billion in marketing expenditures this year. Other b-to-b companies, including transportation and logistics provider Schneider National and software company UGS, have recently named new senior marketing executives.

While there has always been attention paid to the money marketing organizations spend, companies nowadays want to prove the return they are getting on marketing investments, said Mary Donato, associate director at the Institute for the Study of Business Markets, a b-to-b think tank affiliated with Penn State University.

"Companies are trying to get a handle around all the things they are doing around marketing in the organization, and they are making their operations much more integrated," Donato said.

Microsoft's new global marcom group brings advertising, events and relationship marketing under one umbrella. Previously, advertising and events were part of Microsoft's corporate marketing group; relationship marketing was in Microsoft's server tools division.

"This reorganization reflects a shift in priorities," said Steve Petitpas, general manager-worldwide advertising at Microsoft. "By building an integrated marketing communications capability, our customers will see better message management and more consistent, cohesive marketing communications."

The new global marcom group, which is inside Microsoft's corporate marketing group, is headed by Mike Delman, general manager-global integrated marketing communications.

A key charter of the group is to develop highly integrated marketing communications campaigns and customer experiences that will improve the effectiveness of Microsoft's marketing programs.

"You can't deliver integrated messages with lots of moving parts," said John Kahan, general manager-worldwide global relationship marketing at Microsoft, referring to Microsoft's previous structure.

A year ago, Microsoft consolidated all its global relationship marketing activities with two agencies, McCann Erickson's MRM Partners and Y&R Advertising. Prior to the consolidation, Microsoft had dozens of agencies handling its relationship marketing activities around the globe.

"[The new structure] should make it easier for our agency partners," Petitpas said. The company's advertising agency of record, McCann Erickson, San Francisco, will continue to handle global advertising.

Another goal of Microsoft's new organization is to create standard metrics across the company to measure the effectiveness of its marketing investments. "We were already on the path of creating standards for metrics," Kahan said, pointing to awareness and preference consideration as above-the-line metrics, and response and conversions as below-the-line metrics. "By connecting the response side with the behavioral side, you get a complete picture of the customer worldwide," he added.

Other reorganizations

In November, Schneider National named Steve Matheys to the newly created role of CMO, from CIO.

"The overall goal was to bring an integrated, enterprisewide sales and marketing face to the customer," said Tom Nightingale, VP-corporate marketing at Schneider.

Previously, sales and marketing at the trucking and intermodal services company operated as separate divisions, with the two groups reporting to operations and human resources, respectively. Matheys will lead an integrated sales and marketing organization and report directly to President-CEO Chris Lofgren.

To further its goal of providing integrated, enterprisewide communications, Schneider in December consolidated all marketing communications with a single agency-Perry Banks Kemp, Portland, Maine. The agency will provide creative, Web, collateral and a go-to-market strategy. Previously, Schneider used multiple agencies.

UGS, a product life cycle management software company that was spun off from software giant EDS last year, named Dave Shirk to the position of exec VP-global marketing last week. One of the key goals of his hiring is to move UGS's marketing organization from a decentralized operation to an integrated global marketing organization, Shirk said.

"The structure will change from a geography-based model to much more of a global organization with strategic, integrated marketing communications," Shirk said.

Also last week, the company announced operating income of $200.7 million for 2004, up 37% from the previous year, and revenue of $1.0 billion, up 14% from the previous year.

"The maturation of our company reflects the maturation of the PLM [product life cycle management] industry," said John Clendening, senior VP-marketing communications at UGS.

As it scales up its marketing to CMOs, UGS is also restructuring its marketing organization to provide cohesive, consistent messaging across the enterprise, Shirk said.

"The challenge is to bring the framework together to provide a level of consistency on a global basis across all marketing activities," he said.

One of the ways Shirk plans to accomplish this is to put processes and disciplines in place that will help UGS define customer segments, map solution sets and drive partnerships for its go-to-market strategy.

"Integration means discipline," Shirk said. "If you don't have an integrated message from the CEO's office to the front-line salesperson, you have lost the power of 5,500 employees that helps us further evangelize our cause." M

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