“Our role is to make IT more responsive to market requirements by blending product, marketing and IT teams together.”
Nigel Dalton, Chief Information Officer, REA Group.
This is the foundational principle for innovation and market performance at REA Group, a global online real estate advertising company headquartered in Melbourne, Australia.
REA's principle is a pioneering example of a new model for collaboration between IT and marketing. Such collaboration must be explored, especially as marketing departments continue to expand their use of technology. For instance, in 2013, the growth in technology spend controlled by Chief Marketing Officers (CMOs) was widely reported by Gartner (especially cloud services like CRM, eDM and social media management), suggesting an inevitable cross-over of responsibilities covering technology acquisition and channel management with Chief Information Officers (CIOs) and their departments.
3 Ways to encourage IT+Marketing
Massive growth of social media by consumers and business is driving the merge. A Nielsen report shows the time spent accessing mainstream social media increased more than 50% in 2013; while 47% of consumers are involved in different kinds of marketing services; and some 14% of the advertising views on social media lead to a purchase.
Marketing and IT are no longer like ‘art versus science’ in two parallel tracks. They are increasingly crossing each other’s boundaries and mixing up rapidly. However a differentiation still exists. In most companies, the IT department is told to treat marketing or product as the internal customer, receiving specifications from their business analysts and product managers.
Having everyone share the same concept of ‘customer’ – the consumer, the property owner or the real estate agent - was key to REA’s success (valued at 5 billion Australian dollars, and the market leader in digital real estate advertising with 20%+ profit growth, five years in a row). “All innovations should be firmly focused on the market,” says Nigel Dalton, CIO of REA Group, explaining further, “A company will be eventually eliminated if they only keep their eye on enhancing their products, without a consumer focus. Trying to nurture the DNA of innovation is the prime reason for REA Group blending our product, marketing and IT teams together.”
Product and marketing teams were pivotal to building a shared purpose for REA Group. They supported a collaborative work culture so that staff as diverse as software developers and salespeople could make the whole real estate buy/sell process simple, efficient and stress-free.
Based on our experience at REA, here are some ideas that will help organizations looking to merge IT and marketing to drive a significant performance improvement.
#1 Reform the Organization
Misunderstandings can easily grow between marketing and IT teams. According to an Accenture report from 2012 titled The CMO-CIO Disconnect, CMOs expect much quicker turnaround and higher quality from IT with a greater degree of flexibility in responding to market requirements. Nearly half of CIOs surveyed said that marketing teams make promises to customers without agreement from IT. Not surprisingly, the priorities for those two teams are different. A marketing team’s #1 driver (out of 15) for aligning and interacting with IT is access to customer insight and intelligence, but that driver ranks #10 for CIOs.
A mutual understanding of both of functions is the foundation to resolving key differences. To encourage this, REA Group reformed the organizational structure - by eliminating the boundary of each function by blending and by seating the teams together. The new business unit houses all functions and roles in one team. It includes people from marketing, finance, HR, IT, and product. Thus breaking the invisible wall as well as the visible wall at the same time.
The departments used to work on two different floors of the Head Office building, but now they sit at one table and are integrated into each other’s world with a shared focus on a common customer. To further communication, REA Group encourages the IT team to visit customers with sales on a regular basis.
“It was great to talk with clients in person,” Feng Zhichao, a developer for REA Group, said after he visited a customer. “It made me realize my way of thinking needed to be adjusted. ”
#2 The Market Drives Innovation
REA Group’s websites accounts for 77% of the total time people spent on Australian property portal sites in 2013 , which means it’s hard to gain more market share from its competitors. Where is the blue ocean for REA Group’s future growth?
The answer is to keep focusing on innovation, which is driven by the market, so as to continuously satisfy the consumer’s demand for better service.
“Hack Day” is one such great platform REA Group employs to release its creative ideas, by combining people from marketing, product, and sales teams with technologists.
Hack Day is held four times per year with working groups that are formed voluntarily. The groups work together to create initial ideas in two days, and then try to sell the ideas at a Hacker’s market to attract internal investment for production. Home Ideas and Investor, two star products with over a million page view, were born from Hack Day.
Having a diverse approach to innovation with different business and technical environments and contributors also helped REA. For instance, they established an R&D centre with Thoughtworks in Xi’an, China, which became the cradle of many creative ideas, including mobile, hardware, and GIS, to name a few. Ten of these ideas have turned into final products.
Nurturing innovative, creative teams will help them to deal with future challenges such as supporting similar strategies in markets like Italy, Luxembourg, and China and moving beyond property listings to other parts of the property process.
#3 Focus on Cloud IT infrastructure to shorten time to market
Traditional infrastructure has focused on data centres, servers, security, cost saving, and maximizing existing technical investment. It ignores infrastructure’s key demand, which is to support fast turnaround to market requirements and business innovation.
The REA Group were facing some problems with their traditional system, such as:
- The complicated product environments (with limited team members with hardware expertise) caused long lead times and bottlenecks with new product launches, and a higher ratio of failure. With big releases (say monthly), the risk is high – with multiple small releases every day, the risk associated with small changes is very low.
- Operations teams could not afford to manage a big number of automated tests, so it normally took longer to analyze every idea and component before the formal release. Their emphasis was on keeping systems consistent, to ensure stability.
- A team culture of ‘us vs. them’ between developers and operations emerged, as is common in traditional workplaces. Nobody took time to understand the other role’s jobs and responsibilities.
- Collaborating with distributed team members was difficult. Server environments would easily become outdated due to newer versions of software, making releases of new customer-facing features complicated and slow.
Under these conditions, new product launches could often take more than 20 weeks to deliver.
To resolve these problems, REA adopted cloud platforms to increase the supply of hardware at very short notice, and provide sufficient testing environments for the development teams in Australia, Italy and China. Currently, REA Group is running hundreds of nodes on Amazon to provide the environment for development, test and production.
Cloud and virtualization have built a solid foundation for automated deployment. Efficiency has hugely improved, and deployments have become less error-prone as they have been sufficiently tested. While previously deployment of new releases would take a long time, releases now can take just a day, thanks to automation. The IT teams can thus respond much faster to the market. This responsiveness was one of the first changes noticed by the REA sales, product and marketing teams. Where in the past the answer to fix a bug in a service or web page would be “wait for the release at the end of the month,” it became, “We can have that fix released later this afternoon”.
These positive benefits have led to REA migrating many existing systems including back-office ones such as CRM, code management, version control etc to the cloud. In particular, peripheral systems that received complaints from marketing and sales groups, have been migrated to SaaS platforms to increase the uptime and allow IT operations to focus on the core systems.
Nigel Dalton is optimistic for the future of REA Group. He says, “The winner in modern business is the company that learns fastest and adapts quickest. Survival of the fittest, the ideas of Charles Darwin, were not based on the biggest or strongest, but on the creature that could adapt the quickest. Our ways of working, tools and partners will ensure we stay ahead of the global game...”