CIO considerations for digital transformation in 2014

One of the most significant aspects of the disruptive trends is their ability to enable digital transformation across the business. As we enter the next evolution of IT, we’re at a point where industrial age business processes, and even Internet-era business processes, can be completely re-thought and re-designed in the new context of the consumerization of IT, ubiquitous low-cost computing, and a globally connected society.

While CIOs have aspired to spend an ever increasing percentage of their annual IT budget on innovation compared to “keeping the lights on” for many years now, equipped with the disruptive trends, such as social, mobile, analytics and cloud, they now have a far more powerful arsenal of tools to not only innovate within IT, but also across the business. Recent CIO surveys show a planned 4.5 percent increase in spending on IT products and services in 2014 with a “spending mindset shifting towards growth investment and away from cost-cutting”. 

As I mentioned in a prior article looking at the evolving role of the CIO, now is a golden age for pioneering CIOs to work in close collaboration with their C-suite counterparts to innovate corporate business models and processes using disruptive technologies to transform how work gets done.

As we move swiftly into 2014, what are the top considerations for CIOs in terms of embarking upon their digital transformation agendas? Does the mission just require the powerful elements of the disruptive trends, and a strategy for leveraging their combination, or will it require more? How does one begin the digital transformation process and where’s the best place to start? Here’s a list of what I believe are some of the top considerations:

Strategy

• Know how to recognize digital transformation opportunities – The first step is to determine the key characteristics that make a business process a strong candidate for digital transformation. Some obvious examples include processes that are still highly manual in nature or which leverage outdated technologies, but there’s also many less-obvious opportunities in processes that are already digitized. Approaches such as transformation scorecards can be used to uncover these opportunities by assessing how well the candidate business processes and applications score in terms of their suitability for transformation.
• Prioritize your high-value targets for transformation – Innovation workshops may be valuable ways to brainstorm and collaborate with business leaders to identify and prioritize opportunities for digital transformation. The workshops can be utilized to surface completely new ideas in addition to refining existing ideas. Voting can be based on “business impact” versus “ease of implementation” for a simple cost-benefit analysis, but can also be utilized to measure how well the candidate business process aligns with your transformation scorecard.
• Focus on the end-to-end user experience – Digital transformation only makes sense if it addresses an entire end-to-end process from the end user perspective. It’s important to think about how the combination of disruptive trends can best empower and support your end-users, either making existing interactions faster, better and cheaper or by offering up completely new experiences that leverage their preferred style of work.

Technology

• Leverage social, mobile, analytics and cloud as your core enabling technologies – Like any transformational change, digital transformation involves strategy, people, process and technology. The major difference today, however, is the powerful enabling technologies provided with social, mobile, analytics and cloud. These are essential ingredients in your ability to transform how business processes can be executed and how work gets done. You should think about not only transforming (i.e. re-thinking and re-designing) existing processes, but also about new processes that can enhance your value proposition and differentiation. A case in point that utilizes SMAC technologies are the telematics solutions currently utilized in the auto insurance industry to help drivers save on their premiums. The technology involved is typically a mobile device that captures analytics about driving habits from data uploaded to the cloud. This information can then be used to provide users with discounts for good driving habits. This solution doesn’t replace the traditional insurance process, but augments it with valuable real-time digital insights.
• Make CyberSecurity an embedded and pervasive part of your applications and infrastructure – CyberSecurity should be considered at the same time as you design your SMAC-enabled applications as opposed to an afterthought. In addition, an atomic-level approach to security, securing your data both in-transit and at-rest, will provide the best level of protection when compared to solely a traditional perimeter-based approach. With more and more news stories about tens of millions of consumer credit card records being stolen in a single incident, a new approach to security is required that helps protect the borderless enterprise. Sensitive data protection will continue to be critical in 2014 with basic techniques such as encryption as well as more advanced techniques such as data cloaking and data masking becoming increasingly adopted.
• Leverage different waves (maturities) of the disruptive trends to enhance your differentiation – While SMAC technologies will be at the core of your new master IT architecture, it’s important to recognize these trends are continually evolving and being influenced by other trends. For example, wearable devices and augmented reality applications are impacting the future of mobility, and the Internet of things is clearly impacting the direction of big data and analytics. These various waves of disruptive trends can be leveraged strategically to optimize your customer value proposition and differentiation since each wave provides unique value.

Process

• Business process redesign is key – Once digital transformation opportunities have been identified and prioritized, one of the key next steps as you undertake your projects is re-thinking and re-designing the existing business process for the new context (think a new style of work brought about social, mobile, analytics and cloud). Much has been discussed about big data scientists, but the role of “business process scientists” will be vital as well. Much like entrepreneurs, these business process scientists will combine deep skills in business process analysis and design with a unique understanding of how to leverage emerging technologies.

• Automation is a key outcome which can be enhanced with intelligent software algorithms – While increased automation isn’t the only goal of a transformation project, it’s a highly valuable outcome which can be realized in many areas across IT operations and across both digital and physical business processes. Some examples in the data center include application servers, networks, data storage systems, and even end-user devices where “sophisticated software algorithms can help automate many former, labor-intensive processes”.

People

• Assemble a multi-functional team working with your C-suite counterparts – Digital transformation is not just about leveraging disruptive trends in a vacuum. For optimal results, a multi-functional team is needed which encompasses industry expertise, business process expertise, and disruptive technology expertise. As a close collaborator with the C-suite, CIOs can work with their C-suite counterparts such as the CMO, to assemble suitable teams with all the requisite skills to truly innovate. The signs show that this is already happening. The 13th annual State of the CIO survey showed that 25 percent of the 722 CIOs surveyed reported that “the IT group is perceived by colleagues as a true business peer–or even a game-changer–that can create and launch new products and open new markets”.
• An entrepreneurial mindset is needed more than ever – Startups and entrepreneurs survive and make their fortunes by seeing new ways to conduct business. It is this kind of mindset that’s needed more than ever as teams embark upon their digital transformation efforts. Close collaboration is vital as well and the same SMAC technologies that are at the heart of the transformation efforts can also be utilized internally by project teams to boost efficiency and their ability to share their expertise and ideas among one another.

In summary, this new era of digital transformation brought about by the next evolution of IT is highly reminiscent of the e-business era. There’s many business opportunities to pursue, enabling technologies to be utilized, and customers to be influenced. The key difference today however is that IT is becoming a core and essential part of today’s products and services and is opening up even more possibilities for business innovation.