IT talent biggest roadblock to digital transformation

Digital transformation is on the mind of every business, but many are finding they don’t have the right skills in-house to make the transition.

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A global study from IDT, conducted in collaboration with SAP, surveyed 81 executives (65 percent of which identified themselves as CIOs) and found that 80 percent of businesses cite digital transformation as a priority. However, according to the report, only 35 percent of respondents said their business actually had a "clearly defined digital transformation strategy."

Although digital transformation is important to businesses, companies are still dragging their heels on developing a strategy. One thing that might be holding businesses back the most is hiring, according to a study from The Hackett Group. The study found that for midsized and large businesses, one of the biggest roadblocks with digital transformation has been actually finding and sourcing talent with the right skills.

"Without the right skills in IT and other business units, companies will not understand the possibilities of what can be accomplished through digital transformation and they won't define a digital transformation strategy," says Scott Holland, principal, Global Advisory Practice Leader at The Hackett Group.

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The skills gap

IDT found that only 17 percent of respondents had enough employees with the right skills to embark on a smooth digital transformation. While, at the same time, The Hackett Group study identified talent as the "most important determinant of IT's capability to successfully address its key issues," in relation to digital transformation.

"The central importance of talent reflects a broader issue in the IT field today: a structural mismatch between in-demand roles and the skills and experience of the talent available in the marketplace," says Holland.

Holland advices creating a "comprehensive strategic workforce plan" to win the talent war and executing on a strong hiring strategy to land the best talent. And it's not always about technical skills, he says. Oftentimes businesses are looking for skills like analytics and strategic thinking, an ability to manage others and business acumen.

But hiring for the hottest skills can get expensive. So when looking at hiring for new and in-demand skills, you might first want to look within your own workforce and see if there is an employee who could be trained in that area, says Holland. Another options, he says, to look to at third-party services "who are selling a full solution without the need to unpack what specific skills are necessary." While a third-party option may initially be more expensive, it can give more insight into what skills your business will really need for digital transformation, so you can then hire accordingly.

Mark Troester, vice president of Solutions Marketing at software provider Progress, hiring for digital transformation is about striking a balance between skills. "From a leadership perspective, look for individuals that live in the middle of business and technology -- individuals that are entrepreneurial in spirit and have the ability to apply technology in new and creative ways. If that skillset is lacking then you may need to go outside the organization," he says.

And not only is it expensive, there's also a lot of competition -- it's not just IT departments that are seeking out employees with these skills. All departments are clamoring for the right tech talent, as technology becomes a company-wide responsibility that's no longer isolated to IT. "Skills that were once considered purely IT skills in the past -- such as coding -- are now being hired into business units. The line between what is IT and what is business is blurring. IT will need to hire or develop better coordination and soft skills to maintain alignment with business partners," says Holland.

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Rethinking job titles

IDT reports that cross-functional knowledge is important for digital transformation. In the study, 88 percent of respondents said "extensive business-related knowledge on the IT side is crucial for developing a digital transformation strategy," but they're experiencing major gaps across departments. Fifty-eight percent say their IT executives have the right knowledge for digital transformation, while only 27 percent said their business executives had the same level of technical knowledge. "The business and IT leaders need to come together to create a single strategy driven by business goals that provides overall guidance which the entire organization can support," says Troester.

As a result, new job titles are emerging, targeted at blending the line between business and IT, according to Harry Osle, global HR solutions practice leader at The Hackett Group. He says he's seen a growing trend in new titles, including director of digital transformation, chief data officer and chief digital officer. "These positions will be key in helping organizations transform and provide insights on how important digital transformation is to any given company," he says.

For Troester, demonstrating your business's capability to encourage cross-functional knowledge and skills, can make your company more appealing to potential candidates. "Because what motivated individual would not want to work for an industry leader that is known for innovation?" he says.

A strong business strategy

In the business world, most new initiatives are driven by ROI, and digital transformation is no different. Businesses need to have a clear and well thought-out IT hiring strategy in place in order to convince the board of executives to allocate the right resources to find people with the necessary skills, according to Osle.

"Digital transformation strategies should be driven based on financial goals, and the investment should be measured over time," says Holland. He adds that it's not a race -- it takes time, and goals, and should be measured over time in a "grand multi-year strategy," accomplished through incremental steps that drive the success of the ultimate goal.

A good digital hiring strategy will ultimately change the way businesses view technology. "For the first time in the history of modern computing, we have seen a convergence of business and IT strategy, primarily fueled by the increasing power that new innovative and disruptive technologies have emerged," says Holland.

It takes time and energy to successfully transition your business to digital, says Holland. "It's impossible to do all at once." He says it's important to take it one step at a time -- even if that means deploying only one piece of technology, or hiring only one new employee at a time to see how it impacts or doesn't impact the business. According to Holland, it requires a "measured approach," that needs to include customer engagement, worker engagement, process optimization and digital value networks.

"It's critical that a company create a focused, incremental plan to achieve enterprise digital transformation by improving the parts that make up the whole based upon the apparent opportunity to drive ROI through increased efficiency and effectiveness almost function by function," says Holland.

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