The divide between organizations that are executing a digital strategy and those that have not started is becoming more pronounced. A recent Deloitte survey on the global CIO shows that 42 percent of organizations either had no or limited digital strategy. Within those organizations, only 40 percent of CIOs are leading the digital strategy and only an additional 27 percent are leading its execution. That leaves a large number of organizations that are lagging in transformation, so it’s no surprise that only thirteen percent of IT organizations were perceived as market leaders according to this survey.
So while the future may be bright for digital CIOs, there is still a sizable gap between those that know how to develop digital strategy and execution plans, and those that are lagging. CIOs that have been charged with keeping infrastructure running, supporting business processes, or addressing regulatory and compliance requirements may have difficulty determining how to get started. Organizations that don’t fear disruption in their core businesses, have never leveraged technology to competitive advantage, or are comfortable making strategic decisions without data and analytics have little motivation to sponsor digital strategies and transformation.
Yet, by the time the writing is on the wall and digital business practices become mainstream it may be too late for laggards to catch up. CIOs have to snap out of complacency and help their organizations recognize what and where change is a necessity.
There are clear benefits to digital programs and surveys are showing that organizations investing in digital are experiencing tangible financial outcomes. One shows that digital leaders are outperforming laggards on key financial metrics like gross margin, operating margin, and profit margin. A survey of executives of financial service companies showed that over 60 percent of respondents reporting increased revenue, better customer experiences, and more innovation through their digital transformation programs.
If you find your organization, or yourself being a laggard in developing a digital strategy, defining a transformation program, or taking a leadership role in the execution plan then here are some recommendations on critical roles for the CIO and how to get started.
1. Facilitate executive alignment on digital strategy
Most CIOs do not have direct profit or loss responsibilities to a business or product line with short term financial targets. They should have no or fewer allegiances to how businesses operate today and are in great position to see both synergies and opportunities inside and across businesses. CIOs have to challenge the status quo especially with the executive team members who are more likely to pursue short term goals.
How should the CIOs go about exposing new ideas and thinking at the executive level since their colleagues are unlikely to respond positively to challenges? CIOs first have to do their homework and understand the fundamentals of the business, how and why customers buy the products and services, and what alternatives exist in the marketplace. CIOs also have to be versed on what technologies, and partnerships can drive improvements in customer experience, increase automation or deliver competitive data and analytics.
It’s at that point the CIOs can share knowledge and ask questions. What would be the impact if a direct competitor took advantage of a new technology? What if the technology organization could deliver a new capability to key customers? What if the sales organization was armed with some real time competitive data?
CIOs should then expect some objections, fear, and push back especially from leaders who are change averse. It takes several rounds of exploring, questioning and prodding to get people to think differently so CIOs should not give up prematurely. Find partners, especially the CMO who has their own goals in expanding the brand and market presence and with the CFO who is a key sponsor in driving automation. Digital strategies evolve as executives understand disruptive threats and new opportunities while better visualizing a path to delivering new results.
2. Driving change across the organization
With change comes aggression, paralysis and fear. There are drivers in every organization that look to do new things and experiment but need guidance on goals and best practices. There are others who are willing to get involved but don’t know where to participate and how to make contributions. Lastly, there are those that are fearful of change, some who back into their corners and horde information and others that unknowingly become detractors to the transformation program.
This is likely to happen across the business including IT. There are people who have been managing data center technologies that see cloud technology, migration of enterprise systems to SaaS platforms, and automation from devops programs as either a challenge or opportunity. DBAs that only had to keep database systems running and performing now have added demand to integrate more data and scale data lakes. Improving customer experiences likely requires developing mobile applications or API integrations putting more pressure on the development organization to modernize platforms and release features more frequently.
This is also happening outside of IT. Marketers have to be more data driven. Financial reporting is being streamlined with robotic process automation. Salespeople are being asked to capture more customer insights in the CRM.
CIOs should take a leadership role in driving organizational change. First job is to find the drivers and the ones that can take explicit roles in digital transformation programs. Find ways to slowly get them out of their day jobs and provide them defined roles and responsibilities in the program. Then, develop a communication and marketing program to help keep employees informed of successes, speed bumps and most importantly, ways that they can get involved.
3. Key practices in digital transformation programs
With leaders and employees slowly coming onboard with the digital strategy, the CIO should then look at the underlying execution practices. In my book Driving Digital, I focus on maturing agile management, portfolio management, data governance, and product management as fundamental to instrumenting digital transformation programs. Other practices include automation, devops, digital marketing, workforce collaboration and integration.
That sounds like a menu of too many practices to establish, set standards, and mature over time. That’s why the CIO has to work with their leadership team in and outside of IT to establish focus and priorities. What data governance practices are most needed? What devops best practices are going to make the most impact? What areas of integration drive the greatest customer value?
Most important is to make sure that practice leaders and participants understand why specific practices are needed and to drive consensus on what areas are aligned with the digital strategy. It’s hard to get across the board adoption if people don’t understand and buy into the rationale.
4. Selecting and modernizing platforms that drive agility
Selecting and modernizing technologies may be the bread and butter of the CIO and IT organizations but is a far from trivial exercise. There are too many platforms to research and it’s no easier today to evaluate viable long-term vendors, open platforms, scalable and secure technologies, and easy user interfaces. In fact, it’s harder because the speed organizations must execute demands the CIO make faster experiments and decisions around platforms. If the IT organization is going too slow, it’s likely to frustrate the organization that’s been sold a transformation program only to experience early speed bumps. If the CIO is too slow, then there’s risk of shadow IT popping up.
CIOs can combat this trend by having ongoing innovation programs that pilot new technologies. They also must proactively attend conferences and sponsor learning programs. Lastly, CIO have to communicate technology strategy, make the pilots and experiments being conducted transparent to the organization, and recruit an optimal team of business and technology participants.
5. Innovating with emerging technologies
So far, I’ve described four roles that are table stakes for the digital CIO. These are the types of activities and responsibilities being take on by CIOs to modernize their organizations and to remain competitive.
Companies and CIO that are leading their industries will also invest and experiment with one or more emerging technologies. Artificial intelligence, the Internet of Things and blockchains are the three largest areas of exploration.
Again, CIOs have a critical role to fill by getting the organizational support for innovation experiments, selecting the right areas of the business to focus on, prioritizing optimal problems to research, identifying a team of people and partners, and piloting appropriate technologies.
There is an art to selecting problems that deliver quicker wins while motivating people with some longer-term big bets. CIOs that master this level of leadership, deliver incremental results through their transformation programs, and drive organizational change have a great opportunity to lead their organizations to growth and recognized as industry innovators.