Rationalizing your marketing technology stack — an imperative for IT leaders

Businesses have spent around $19.5 billion per year on martech between 2020 and 2023, but many are still struggling to deliver the maximum return on those investments. Despite the significant spending, only 17% of business leaders reported that the different components of their marketing technology stack work extremely well together. This misalignment in the technology portfolio holds businesses back in providing compelling customer experiences across their digital channels and leads to inefficient use of time, budgets, and resources.

With investment in martech forecasted to reach $27 billion in 2024, IT departments are being called upon to rationalize the martech stack. This includes reducing technical debt, stemming maintenance of bespoke integrations, and eliminating systems with overlapping or duplicative capabilities.

Martech rationalization is an imperative for IT given that 20%–40% of IT budgets are being consumed by issues related to technical debt. A bloated martech stack only serves to compound these challenges, hindering data sharing and inflating costs.

What role does IT play in martech rationalization?

The role of IT is not only about keeping systems running smoothly, but also about helping their organization drive ROI with a technology infrastructure that enables teams to do their best work. Despite this dedication to improving tech systems, by 2026, an estimated 55% of enterprises are expected to continue struggling with siloed systems and limited data sharing.

The current martech landscape

Source: martechmap.com

The current martech landscape is crowded, with over 11,038 different vendors vying for IT’s attention. According to research by Adobe and PK, the average enterprise was using 130 different applications with overlapping functionality in 2020. And 44% of marketing SaaS licenses are underutilized or not used at all, indicating a significant misalignment between tool acquisition and actual need. This results in organizations investing in redundant tools with overlapping functionality — and presents a significant opportunity for organizations to reduce costs through strategic rationalization.

To address this, businesses are shifting to platform solutions to better manage spend and increase performance. In a recent analysis of 137 companies, Adobe identified a clear transition to platform technology. This is especially true for the six core building block technologies that most often comprise the martech stack:

1. Data management
2. Analytics
3. Core technologies (segmentation, targeting, and journeys)
4. Content management system
5. Personalization engine (or customer data platform)
6. Account-based marketing

Benefits of rationalization

Cost savings are perhaps the most immediate benefit of rationalization, with potential reduction in support costs, technical debt, and licensing fees.

Beyond cost, rationalization enhances security, reduces the use of unapproved software, and improves data interoperability, which are crucial for solving the prevalent customer data integration challenges at most organizations. Martech rationalization also reduces the time and effort required to integrate point solutions and simplifies operational complexity. This simplification extends to system scalability, minimizing the need for development and system management, and facilitating the automatic deployment of new functionalities.

In a recent study on martech stacks in the high-tech industry, Adobe found 63% of high-performing enterprise businesses have all six essential martech building blocks because of these benefits, with a notable 98% of these businesses consolidating at least three of these to a single vendor.

Evaluation and assessment in marketing stack rationalization

A methodical approach is essential for rationalizing the martech stack. This begins with:

1. Compiling a comprehensive inventory of all martech applications — including licensing costs and details, contract lengths, application purposes, key functions, and owners.
2. Assessing company utilization and business value — using metrics such as the number of active logins, usage time, and monthly active users (MAU).
3. Identifying the root causes of underperforming software — such as a sponsor leaving the company or underlying data issues.
4. Calculating a rough ROI for each application.
5. Creating a governance process for evaluating new purchases.

Gaining buy-in for the rationalization process early is crucial to achieving the five steps above and having successful implementation. Questions such as “How do you feel about your current utilization of this tool?” and “Would completing additional training for this tool increase the value derived from it?” can help determine the necessity of most applications on the rationalization list.

After evaluating each application, classify it in one of four categories: promote, consolidate, negotiate, or retire. This can be determined by assessing whether multiple applications fulfill the same function, if applications meet security and data privacy requirements, and whether they are widely used in the industry. The user-friendliness of the application, its relation to positive business outcomes, and the presence of potential alternatives within the existing stack or the market at large are also important considerations.

Martech rationalization use cases and examples

• National Instruments streamlined two dozen platforms into a single web platform, reducing IT management effort by 50% and cutting the development time for new experiences from four days to just one.
• IBM’s consolidation from over 40 marketing solutions to a mere five modernized capabilities resulted in a cost reduction of $120 million.
• Lenovo’s consolidation of three martech point solutions into one platform saved $11 million per year, increased content volume by 53%, and improved click-through rates by 12.5%.
• A large US financial institution consolidated multiple systems that facilitated 400 business processes, realizing a 36% reduction in its application portfolio, a 16% reduction in costs, and a 34% decrease in legacy application code.

Learn more about martech rationalization

Continuous rationalization is an imperative to maintaining the health of the technology stack. IT departments will need to play an increasingly proactive role in shaping the martech landscape to ensure that technology investments deliver their intended value, minimize maintenance costs, and allow time for strategic decision-making. By doing so, IT can lead the charge in streamlining operations, enhancing data utilization, and enabling business growth through a well-orchestrated martech stack.

For more information on martech rationalization, watch the webinar.

Raza Anees is a digital strategy associate at Adobe, where he plays a pivotal role in guiding major clients through their digital transformation journeys. With a keen eye for innovation and operational effectiveness, Raza combines his business and engineering expertise with his passion for empowering IT to drive competitive advantage and ROI in martech. With his MBA and engineering education, Raza has led digital transformation teams to assess and implement strategic technology optimization.