Marketing is the next big money sector in technology

“By 2017, a CMO will spend more on IT than the CIO.” —Gartner Group

For the first time in history, businesses can leverage big data for the benefit of driving marketing insights. We are at the very beginning of this wave, but this fundamental shift will create several multi-billion dollar winners. And a set of technology companies will emerge as the marketing equivalents of Salesforce and SAP.

Based on this thesis, my partner Scott Friend (founder of Profitlogic) and I have been actively investing in this arena on behalf of our firm, Bain Capital Ventures. BloomReach, CQuotient, HookLogic and TellApart are among our recent early-stage investments in this new category of marketing innovation.

At the heart of each of these companies are CTOs and engineers who have experience with big data and modern techniques for data mining, analytics and machine learning. These companies typically charge on a performance basis as opposed to charging traditional enterprise software license fees. And they are having a significant impact on their customer’s revenues and profitability.

Why has it taken so long to get here? Enterprise software began in the back office

The world of enterprise application technology has gone through a number of iterations and evolutions over the past 30 years. In the late ’70s and ’80s, enterprise software consisted of mainframe and minicomputer solutions designed to handle various back-office functions: finance, HR and manufacturing. Over time, the winners in each of these functional applications areas — SAP (manufacturing), Oracle (financials), PeopleSoft (HR) — began expanding into the adjacent categories, spawning the ERP wave (enterprise resource planning). In the ’90s, these companies became behemoths, thanks to a concurrence of factors — the movement to client server infrastructure, the trendiness of corporate “reengineering,” the urgency around Y2K and the growth of the large system integrators.

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