CIOs will make the Chief Digital Officer obsolete, Forrester claims


CIOs will make the Chief Digital Officer obsolete in 2018, according to Forrester's 2018 CIO predictions.

Read next: Chief Digital Officer salary and job description - What's the role of the CDO and how much does a Chief Digital Officer get paid?

The claim was one of a number of predictions made by the technology analyst firm. It also expects many organisations to adopt subscription business models, access talent through short-term contracts and freelance employees, and act as venture capitalists to find value in emerging technologies.

If CIOs are able to orchestrate this combination of factors they can make the CDO superfluous.

CDOs are often hired to break down digital siloes in a business and are frequently confined to work on bolt-on digital units. These may deliver results in their individual modules, but they fail to drive scalable change throughout the organisation.

Change at scale

"2018 is an opportunity for CIOs to shine," says Pascal Matzke, Forrester vice-president and research director serving CIOs.

"Provided they can execute on this orchestration dimension, they will make the chief digital officer obsolete because it's through this orchestration that you can show you don't need to have this artificial role, which in most instances is just there to act as an internal change agent."

Matzke believes CIOs can do this by shifting from the traditional strategy focused on technical results, efficiencies and costs, to a more dynamic approach that continuously aligns technology with the changing business needs.

"It's really about shifting from linear delivery models that focus on transactional business processes to this new model that orchestrates emerging technology around the interaction rather than the transaction," he says.

The changes will entail a fundamental shift in skills structures. CIOs will need to invest in skills around user experience and concepts such as design thinking and ethnographic research. It will require fewer staff in traditional domains such as infrastructure management and engineering and more agile developers and creative designers.

Move to subscription models

Forrester predicts a major shift towards subscriptions will develop in digital business models as customers and businesses pay to use a product.

This is becoming common in consumer products such as cars, which can now be rented on demand through services including DriveNow, but will have the greatest impact in industrial sectors due to the high cost of their fixed capital assets.

Companies currently adopting this approach include Rolls-Royce, which charges airlines for its turbines based on the number of flying hours they provide, and Hitachi, which offers a "trains as a service" model whose cost is determined by the reliability of the trains.

"These kinds of business models help these companies to align themselves the changing customer requirements because the business cycles are shrinking," says Matzke.

"We have this contraction in terms of innovation and product life cycles, and at the same time, we have a high level of unpredictability and volatility in the market.

"For any producer of fixed capital goods or assets, the best service that they can deliver to clients is by aligning the value that they deliver to how the customer's business really operates or how the consumer changes as they move through their daily customer journeys."

These changing needs have made bi-modal development outdated. It is often used to protect legacy systems, but this leads to a siloed operating model that neglects the perspectives of customers and the back office and paints an incomplete picture.

Matzke believes that running a technology strategy in two streams that run at different speeds fails to keep pace with customer lifecycles: "You create a massive speed gap between what you do on the customer front and how you align the backend services, which is why I feel this orchestration component is so important.

"It's only through the orchestration, by committing to the cloud and by committing to devops and agile that you will be able to close the speed gap."

CIOs instead will need to think from the start about how to integrate the back office technologies with customer lifecycles and rapidly transform and replace a lot of legacy systems.

Which emerging technologies are set to break through in 2018?

Forrester predicts mixed fortunes for the most hyped emerging technologies of 2017. The firm expects AI and IoT to grow in practical value.

IoT has already evolved from an emerging technology to an enabling technology. It is having a major impact on the rise of IoT sensors in industry, where it is driving efficiencies in production and integrations between the supply chain, production, distribution and after-sales services.

In the past, these aspects would have been typically treated as individual projects, but companies are beginning to take a more holistic approach, supported by IoT platforms such as GE Predix. The growing integrations are creating new customer experiences when purchasing products such as cars.

The development shows the need to leverage technology to solve a specific problem. It's a requirement that AI is beginning to meet but that blockchain is only just starting to discover.

CIOs need to think like venture capitalists to gain this value from emerging technologies.

"CIOs have to apply more of a venture capital mindset, meaning that they have to manage the technology emerging and traditional really as a portfolio and look for opportunities to innovate," says Matzke. "By linking it to business problems that they can help solve with these technologies."

New hiring challenges

The skills shortage is a long-standing problem that shows no sign of being resolved. Forrester suggests that the best answer may be found through freelancers, the open source community and their network of external providers. They can identify this talent by hosting hackathons and other innovation competitions.

"That's a big change because it's really also catering to the needs of a digital employee who's not necessarily looking for 15 or 20 years of employment, but really wants to have two, three, or four cool projects to work on and ultimately move on," says Matzke. "I think that's where CIOs are looking for opportunities."

CIOs in the UK have some unique contexts that separate them from their international colleagues, but the key success factors are the same.

"What's interesting is that there is more of a convergence now between B2B and B2C markets," Matzke explains. "It's always the consumer at the end of any value chain, so it's really about thinking through how you're ultimately going to serve not only your customer but also the customer's customer.

"I think CIOs in the UK are facing the very same challenges. Maybe the context of what defines the customer journey is slightly different, but the key message is you've got to change from inside-out to an outside-in thinking.

"You've got to become this orchestrator around the core technologies, you've got to act as a venture capitalist, you've got to tap into your talent pools and automate where appropriate in order to be successful."

Copyright © 2018 IDG Communications, Inc.

Security vs. innovation: IT's trickiest balancing act