“IT help wanted. CIOs need not apply.”
This job ad may very well be a cry for help from top management at a company near you. The business potential of digital transformation has placed technology firmly on the agenda of top managers in a way never seen before. A Harvard Business Review study of 537 businesses found that companies which focus on transforming their core business processes using digital technology boost their business outcomes and consistently outperform companies which are slow to adopt technology.
For decades, we commonly talked about a business strategy and the IT strategy as though these things were somehow separate, and in this way created an “us and them” divide in the organisation and often a mindset that IT is subservient to other business drivers. In the post-industrial world, that no longer holds. Today, it’s less about developing and implementing a digital strategy, and much more about formulating a business strategy for a digital economy.
Chief financial officers (CFOs) have traditionally had a determining influence over IT decision-making; even today, many CIOs report directly to the CFO. However, the CFO is an unlikely driver of digital transformation: it is tricky to prove ROI in a traditional sense when calculating the effect of digital transformation on the business. What often goes unnoticed is the potential cost of doing nothing; this may pave the way for CFOs rethinking their approach to digital infrastructure.
To understand why disruption is on the table at nearly every boardroom, it’s worth looking at the transcending potential of new business models emerging from digital transformation. In many organisations, the CIO and chief marketing officer (CMO) form alliances to drive the digital transformation agenda, which makes sense when you consider the potential for using cross-departmental data to transform customer-centric processes. This same theme is also seeing new roles join the C-suite.
The chief digital officer (CDO) or the chief customer officer (CCO) are also likely to play a key role in terms of data-driven digital disruption. These roles are all about understanding the next-gen customer or consumer, the experiences and services they are looking for, and the pivotal role that data and technologies play in creating those experiences and capturing the value. These are often the people driving new services and digital business models, while the traditional CIO wrestles with keeping the lights on. Companies need to utilise data intelligently in every customer touch point to deconstruct organisational barriers between sales, marketing, service and administration. The CDOs and the CCOs of this world are often closely connected to this agenda.
Globally, the power of digital transformation is unquestionable. Consider the list of the world’s greatest companies – among them Google, Facebook, Apple and AirBnB – as proof of this. Even technology companies that are 40 years old, like Microsoft and SAP, are in for fundamental transformation.
Locally, companies have been slower to champion digital transformation. A 2016 study by BMI-Techknowledge found that 53% of companies surveyed were investing in technology purely “to keep the lights on”, and not as part of some larger transformational process. This is exposing local companies to the risk of stagnation and decline, as more future-looking competitors claim invaluable competitive advantage by driving an innovation and transformation agenda. Often, companies underestimate the long-term effects of transformational technologies, instead opting for a wait-and-see approach.
In the case of digital transformation, the risk of not acting quickly and decisively is far greater than the risk posed by bold experimentation.
The transformation needed in the role of CIO is a shift away from a traditional focus on the complex stack of on-premises IT infrastructure and applications. It demands a change from a defensive and cost-cutting paradigm to an aggressive business-driven technology paradigm; here, simplicity is the key to freeing up valuable time and resources for innovation.
The digital transformation journey takes businesses and IT leaders from complexity to simplicity, and ultimately, to innovation and digitisation. It holds the promise of standardising IT, making it simple, making it end-to-end and making it highly scalable to support the digital transformation of the broader enterprise. My best guess is that a great many CIOs will place themselves in the driver’s seat of this journey. To be successful, though, they will need to establish trusted relationships with top management, with a clear objective of wanting to either defend or attack on the disruption stage.