For a long time, restricting freedoms around data worked in technology companies’ favor. Whether by accident or by design, companies such as Oracle and Salesforce locked in customers by charging prohibitive sums of money (or outright refusing) to enable data flows into other marketing systems.

The tables have turned.

Retailers’ visibility and control of their customer data – from customer experience to supply chain to back office – is now a crucial component of their commercial success. It’s enabled the direct-to-consumer (DTC) trend, increased brands’ ability to operate independently of marketplaces, and well-organized data is the foundational element in marketing personalization.

What is less widely discussed is the organizational & management side of this trend.

As retailers’ ambitions became more complex over the last 10 years, many new vendors and agencies have sprung up in order to help brands navigate unchartered territory and take advantage of new solutions. The common currency between these various entities and platforms of course, is the data – which has spurred on growth in the practice of master data management (MDM), and in the relevant data solutions, in order to help brands unlock the potential of their composable stacks.

To understand this space, we spoke to Joshua Hudson, who heads up the MDM practice at Pivotree. With over 20 years in the ecommerce data space, with a mix of brand-side and agency experience, Josh is better placed than most to comment on this fast-evolving part of the martech and ecommerce industry.

You can listen to the full conversation with Josh in this podcast – or read an article based on it below.

This article…

  • explains retailers’ increasing dependency on third-party suppliers for MDM and relevant software, in order to pursue innovative new business models
  • describes the differing roles of the vendor and agency in this regard, and how vendors can help agencies do their best work
  • sets out the importance of openness – both of culture and of technical architecture – in enabling vendors and agencies to collaborate around data, and achieve the desired customer outcomes.

Amid such complexity, the customer is looking to different suppliers, with different specialisms, to supply specific solutions or answer different requirements.

With the budget thus broken up into different chunks, the only rational conclusion approach is for vendors and agencies to share insight, and help each other succeed.

Data consultancy & data solutions are opening up new ecommerce business models

Businesses increasingly recognize that they stand to gain a competitive advantage from greater control of their data.

This is reflected in the rate at which they’re acquiring new software. The Martech Replacement Survey (of 300 B2B and B2C brand marketers in the US, UK and Canada) showed that the greatest shift over the past 12 months had been replacement of data services. None of the respondents replaced a customer data platform (CDP) in 2021 – whereas 13% did in 2022.

Alongside technology adoption, brands’ processes and supplier relationships are changing in order to make use of their new systems. At every part of the retail operation – from customer touchpoints, through supply chain, to back office – businesses are discovering that they require sophisticated frameworks to make their data actionable, and to ensure that the technology delivers a commercial advantage.

Joshua Hudson helpfully maps out how enhancements in the data stack have evolved across the retail landscape, to the point where manufacturers and distributors now have increased market power as DTC brands.

“The early adopters to PIM [product information management] were retailers… They were pulling in all this information from the manufacturers, and the manufacturers were historically terrible at managing their data, because they just wanted to sell the product and ship it out. Maybe they’d help out with marketing jargon, logistics or dimensional data, but they saw selling as the retailer’s responsibility.

Then the distributors started to realize they needed to act how they retailers did.

And now we’re finally getting to the point where manufacturers want to get that data in front of the consumer themselves… Seeing what the retailers were able to do with their ‘not-so-great’ data made the manufacturer realize that if they owned that, they could cut out the middleman and reap the benefits.”

As a consequence of this trend, businesses are moving beyond viewing data solutions as tools for solving individual problems; more, as a foundation of their business strategy.

Josh gives the example of a bicycle manufacturer, whose ecommerce architecture Pivotree helped to overhaul (Josh chose not to name his client, but cited another brand, Trek, as an example of a company doing the same thing).

The manufacturer sought to buy out independent retail locations in order to go direct to consumer (DTC), but its product data was – in Josh’s words – “scattered all over the place”. Once this was resolved, it opened the door to a wider data replatforming exercise, which gave the brand the freedom and control needed to sell independently via a range of new retail channels.

“There were some things the client did and didn’t know about how they were organized, and how they managed data internally and the systems that were involved.

The more we dug in, we realized where we could streamline. We put some thought leadership behind that, and once we had everything implemented and aggregated and working seamlessly in the data supply chain, and the customer felt confident they could share all the complexities around a particular bicycle or a particular part, they were able to work out deals with retailers such as Competitive Cyclist (a large ecommerce marketplace) and launch their first-ever DTC model.

It’s a large player in the space which has taken that data management shift and turned it into a whole new strategic business model…

And we’ve done similar things with a few other manufacturers, but this is the one where, as soon as went live, a month later they announced big initiatives that were directly correlated to the work that we were doing.”

Aside from the DTC trend, modern technical architecture has also enabled a wider range of businesses to adopt ecommerce, including B2Bs. Josh says that Pivotree is now working towards similar projects with medical device manufacturers.

But the technology does not tell the full story; the human and operational side to this trend is equally important.

In our previous episode of Martalks, Andrew Alia of Arishi, a customer experience agency, usefully commented that “a lot of companies end up sleepwalking into a monolith because it has everything in the box”.

Any brand forward-thinking enough to rethink its data architecture certainly isn’t sleepwalking. The question arises, therefore, of what replaces “the box”: i.e., provides harmony and structure to interconnecting software modules, and ensures the achievement of desired outcomes.

That ultimately falls on people, and on processes.

For vendors and agencies, therefore, a major selling point is now available in providing the services that enable that cohesion and collaboration around data – or in helping brands figure out how to do that themselves.

The need for consultative leadership around master data management

In recent years, digital agencies have been well-placed to capitalize on this growing customer need  by positioning as consultants.

The question for vendors – data and platform ISVs alike – is how to make themselves indispensable in a market where the software represents a relatively smaller component of the overall customer need.

Agency side: the requirement for consultative data leadership has fuelled growth in the practice of master data management (MDM). Pivotree’s data practice, Josh tells us, only launched around four years ago; the way he describes the early days of the practice is reminiscent of the frontier culture of tech startups.

“We were bootstrapping the data management practice. We had the partnerships and the people, and we were bringing some clients with us.

Pivotree acquired the practice by hiring a few of us individually. I was the MDM practice director, leading all these different platforms, working with all those clients, and trying to find the talent who understood the technology but also knew how to solve business problems.”

In setting up their MDM practice, Pivotree appears to have found a natural advantage in Josh, whose early experience, as a web developer in ERP and supply chain, revealed the limited utility of technology without the accompanying consultancy piece.

In his early days as developer, Josh says…

“The more we tried to develop technology the more we realized we weren’t really solving all the problems. We were trading one piece of technical debt for another.

I wasn’t interested in Band-Aid solutions, so that meant digging deeper… and ultimately that led to solving business problems. Between business problems and the technology, somewhere in the middle is the data.

Every time we kept running into a problem we couldn’t fix on the development side, we realized the data’s bad – so it’s not our problem.

But I kept thinking, what if we solved that problem? That led me into MDM (master data management).”

Today, Pivotree prioritizes relationships with vendors whose technology allows them to carry out the data consultancy piece most effectively.

“We try to get as far up the data supply chain and the decision-making process as possible because that’s where we can make real impacts.”

In particular, Josh draws attention to Informatica, a provider of enterprise data management & integration solutions.

“We’ve been working with Informatica full-time for over a year now. Seeing that they have the data governance and data catalog solutions has been really eye-opening and advantageous for us.”

What I found eye-opening – though not surprising – is that agencies such as Pivotree have been hoovering up vendor-side talent in order to better provide this consultancy piece to their customers.

Indeed, Josh openly states that this talent acquisition strategy has allowed them to achieve greater commercial independence for their customers, and for themselves.

“A lot of our people worked at places like Stibo STEP, Riversand, InterWorks – that’s where a lot of our people cut their teeth in the data space…

Solve the business problem first and the technology come second… and the technology you can learn. You can find people who are able to work with multiple platforms at the same time and are kind of Swiss army knives. If you take care of that problem first, then you are not beholden to your technology partner…

everything that [Informatica] is doing is heading in the right direction. But they’re technology experts, and they need partners like us.”

Such a bleed-across of talent, from vendors to agencies, inevitably means that customer relationships are also migrating in the same direction.

I would argue that vendors should view this not as a problem, but as a new reality of their business landscape. The natural complexity of composable architecture, and the scale and complexity of the modern retailer’s ambitions, will always play into the hands of an agency.

That’s not to say that vendors should not also strive to maintain direct customer engagement; brands, after all, also carry out their own data management, and so they stand to benefit greatly from the ISV’s product expertise.

It does, however, mean that a data solutions vendor is far more valuable to the customer, if they give the agency the freedom to do its best work on the consultancy side.

Open culture, open technology: the benchmark for vendor/agency collaboration

There is a clear dividing line between the different generations of technology vendor, in their cultures, and their willingness to collaborate with partners. Josh sums it up neatly:

“The monoliths want to control everything themselves. They’re good at working with consultants but they tend to dictate.”

This approach runs contrary to a market in which customers are breaking new ground, and crying out for technology that can continuously evolve with their needs.

In fairness to the monoliths, there are valid reasons why they’ve sometimes struggled to adapt to requirements; making changes in legacy architecture is notoriously risky.

“The monoliths are scarred from past experience of making tiny changes that break something downstream. Nobody wants to be that guy that gets called up in front of the firing squad.”

But in the data space, the core customer problems are less related to the freedom to develop software, and more related to the ability to make use of the insights that it can yield.

“When it comes to clients using composable solutions without massive technical debt, those clients are looking for a little more thought leadership.

They’re realize their data keeps hitting roadblocks, funnels, data through-put isn’t where it needs to be; they’re looking at it from a supply chain perspective if you will.”

With challenges such as these – and with databases in general – the precise characteristics of the technology are to some degree less critical to performance than they are for other martech components. Whilst some data solutions providers have replatformed – Riversand being a leading example –  Informatica has not yet developed a cloud-native solution. As a database, the ‘SaaSificaiton of their on-prem solution’ has proven sufficient to integrate with customers’ wider technical architectures.

A second major differentiator between the vendors, alongside technical debt, is ‘human debt’, manifesting as a reluctance to view collaboration and adaptation as core to your value proposition.

The customers of composable vendors, says Josh, are looking for people to share insight into how other companies have organized around problems related to their own. This requires Pivotree to undertake what Josh describes as a “traditional, strategic data governance initiative”, in which they take a wholesale view of how data is stored, processed and actioned.

The vendors who serve these customers…

“…tend to be a little more accepting of our help. They’re a little bit more honest with themselves. They know their core capabilities and their strengths – they know this isn’t one of them and they ask us for help.”

This stands in contrast to the culture of the monolithic providers, whose willingness to be guided has often been limited to established business practices and partnerships.

“They’ll still look for outside help, but they tend to think the only people that can help are million-dollar consulting firms – the likes of McKinsey, Deloitte and Accenture. They’ll give you a great presentation, but how much of it is executable? How much are you actually getting for your money?”

We often encounter a lot of reports that the monoliths have spent millions of dollars on… We’ll take those bulletpoints and we’ll tally them with how we’ve got to know you intimately as an organization, and show you how we can help you execute on that.”

This phenomenon is not restricted to data, or even to martech. Cultural differences have been stymying business collaboration since the dawn of time.

What’s changed recently is that the costs of not collaborating – around brands’ data and customer technical development – are spiralling. The only winning formula is one whereby suppliers play to each others’ strengths, in order to help themselves and the customer succeed.

Technology companies: overcome ‘human debt’ to succeed

For retailers who want to unlock the full potential of their data, combining the vendor’s product knowledge and development capability, with the agency’s consultative expertise, is now critical.

What’s incredibly exciting is that brands’ escalating ambitions, and the new revenue opportunities they’re tapping up, are putting huge amounts of budget on the table.

The rational move for technology companies in such an environment is to collaborate in order to win and retain customer business. This collaboration could take a number of forms.

The movement of technology and salespeople from vendors to agencies is fantastic for the customer, as it increases the consultants’ abilities to advise them from an informed position. This should go both ways; vendors can benefit immensely from the consultancy’s customer knowledge.

Thought leadership, which Josh referred to a couple of times, is another fertile opportunity for collaboration. Businesses like to be helped, but they also like to self-educate before they spend money. There should be ample opportunity for vendors’ and agencies’ marketing teams to co-create helpful information, and share access to each others’ audiences during the marketing rollout.

On the technology side: collaborating agencies and vendors should continue to share best practices around technical architecture and seek to incorporate that insight into product design, and systems design.

Josh told an anecdote of the time when Riversand began replatforming to the cloud.

“They took a massive gamble [in replatforming]. And we were working really closely – I live about 20 minutes away from Riversand’s office – so when were doing projects with Riversand I’d just show up, and we got to speak with their CEO, Upen [Varanasi].

We also got to see the growing pains that went along with that, and we were at the forefront of that as much as we could be, because we knew it going to be hard, but we knew it was the right thing.”

The lesson here is that people, and collaboration, are central element of overcoming technical challenges. That implies combining open technical architectures with open cultures, in order to mould your product and proposition to evolving customer needs.

As Josh puts it,

“Ultimately our goal in the data space is about alleviating technical debt. We’re not just here to implement systems and trade one piece of technical debt for another. If we can resolve problems at the people and process level, ultimately the technology is going to take care of itself.”

About Rosenstein Group

Rosenstein Group has been recruiting the leaders in martech sales for over 20 years. As the #1 executive search firm in martech, supply chain, ecommerce and SaaS, we  specialise in recruiting heads of sales, channel sales leaders, and other members of the commercial team.

Learn more about Rosenstein Group here.

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