More than ever, CIOs are expected to work with other parts of their business to help create value through the use of digital technologies \u2014 but the business world is volatile, making long-term planning a challenge.\n\nAs part of the IDC FutureScape program, IDC Group VP Tony Olvet and research director Craig Powers offer 10 predictions for what will make a digital business strategy successful, and what challenges CIOs and other business leaders worldwide will face in 2023 and beyond.\n\nAlthough they couch their predictions in business terms, they also apply to government, health care and other such endeavors, says Olvet. \u201cWe are inclusive here of commercial enterprise and public sector organizations.\u201d\n\n1. Spending on digital technology by organizations will grow at eight times the economy in 2023, establishing a foundation for operational excellence, competitive differentiation, and long-term growth\n\nAlthough IDC expresses this prediction in terms of a multiplier, that\u2019s perhaps the least reliable part of the forecast, and one over which IDC has little influence. IDC expects digital technology spending to grow at 16.9%, around eight times faster than current forecasts for growth in worldwide GDP in 2023. IDC doesn\u2019t measure that, but forecasts from other sources come in at around 2%.\n\nThat figure for worldwide GDP is no certainty, though. \u201cIt might drop below that,\u201d says Olvet. \u201cIt\u2019s much lower than originally expected at the beginning of this year, and is definitely lower than last year.\u201d\n\nThe core prediction here, he says, is that despite the economic challenges, \u201cWe\u2019re seeing enterprises still pouring money into key technologies that are going to help them be operationally efficient, ready to come out of an economic slowdown in much better shape competitively to differentiate themselves.\u201d\n\nThat spending should focus on cloud, advanced analytics, machine learning (ML) and other innovation accelerators, he says.\n\nCIOs can\u2019t be expected to solve problems by themselves, though. \u201cCIOs will need the full support of the CEO and C-suite peers to ensure their digital business goals are achieved from those tech investments, especially during this period of volatility,\u201d Olvet says.\n\nAt the same time, CIOs should also look for support from outside the enterprise. \u201cNow\u2019s the time to look closely at your tech suppliers to determine which of them can commit to supporting your digital goals and drive clear outcomes from IT investments,\u201d he says.\n\nOlvet also reminds CIOs that spending on cybersecurity should at least keep pace with, if not exceed, investment in digital initiatives as enterprises face more threats than ever.\n\nSpending on recruitment and retention of skilled talent will be key to the success of digital initiatives, too.\n\n2. By 2026, 40% of total revenue for G2000 organizations will be generated by digital products, services, and experiences\n\nCEOs of the world\u2019s largest companies tell IDC that they already make around 30% of their revenue from digital products, and they expect that proportion to grow in the years to come.\n\nIDC identifies three dimensions along which enterprises can achieve this growth. First, they can exploit new channels: e-commerce, mobile apps, or the creation of new distribution paths such as enabling the circular economy. Second, they can adopt additional revenue models: pay-per-use, subscriptions, dynamic pricing, transaction fees, or payment for outcomes. And third, they can seek to monetize new digital assets: data, intellectual property, or virtual objects.\n\nDeveloping such new revenue streams requires that CIOs keep pressing ahead with digital spending. \u201cIf you pause, you're already behind,\u201d he says.\n\nBuilding new products may involve skills that CIOs don\u2019t yet have on their roster. \u201cYou have to have the right mix of in-house and partners that can enable quicker development,\u201d says Powers.\n\nIn addition, he says, there are five must-have requirements for enterprise technology architectures to speed up delivery of these digital products: micro services and APIs, integration capabilities, industrial data models, modularity, and cloud native capabilities.\n\n3. The number of tech providers in the G500 will double by 2027, incorporating businesses that originated outside the tech industry\n\nThis is a consequence of the largest enterprises creating new business lines as they monetize their digital assets.\n\nThe sharing or sale of data will open up new revenue opportunities. \u201cAs agricultural data is shared more broadly between tech partners and farmers,\u201d says Powers, \u201cthere are new revenue opportunities around carbon offsets and clean climate-friendly products.\u201d\n\nAnother possibility that the petrochemical or metallurgical enterprises may be able to offer or profit from is carbon-capture-as-a-service, he says.\n\n4. By 2024, 50% of G2000 CEOs will establish strategic personal relationships with their cloud providers to achieve quantifiable outcomes from digital business platform investments\n\nWhen IDC asked CEOs who would be their most strategic technology partner in the future, over 30% pointed to their primary public cloud platform provider. \u201cThis is a shift from what we\u2019ve seen in the past,\u201d says Powers. \u201cFive to 10 years ago, it would have been a consultant or on-premises ERP provider, so we\u2019re seeing a changing of the guard.\u201d\n\nMore digitally mature organizations are now building these relationships with cloud providers at the CEO level. It\u2019s something suppliers have always wanted, and now CEOs want it too. \u201cThey want to be close to the outcomes of these big investments they're making. They want to see the ROI from that,\u201d he says.\n\nAnd this interest will support CIOs, not sideline them: \u201cCIOs can\u2019t be on their own in driving digital technology; they need the support of a digital champion CEO,\u201d says Powers.\n\n5. Organizations with highly developed industry value chains on an ecosystem control plane will innovate 25% faster than other businesses by 2027 \n\nProviding visibility into social responsibility, joint ventures and resilience all along the value chain will be key.\n\n6. By 2027, enterprises that collect, analyze, and contextualize customer data in a trustworthy way will successfully build creative business and pricing models that double customer lifetime value\n\nEnterprises that are moving to a central customer data platform will have a head-start in measuring and managing customer lifetime value.\n\n7. A quarter of organizations worldwide by 2024 will demonstrate responsible leadership through increasing their sustainability-related digital tech spend by more than 25% from 2022 levels\n\nSoftware plays a key role in monitoring an enterprise\u2019s sustainability \u2014 not just from an environmental point of view, but also a social one, such as ensuring employee health and wellbeing, IDC reported earlier this year.\n\n8. With the majority of technology budgets residing in lines of business, by 2027, 30% of the expertise in the C-suite will shift from encouraging to scaling innovation, and operating digital businesses\n\nA recent IDC survey of C-suite challenges found that organizational silos presented one of the biggest obstacles to scaling, says Olvet.\n\n\u201cThe shift to the digital business era is also going to require a shift in expertise,\u201d he says. \u201cAs a result, we're going to see a shift in the people who are at the top of the organization.\u201d\n\nIt\u2019s also going to mean a shift in role for CIOs and their IT teams as they spend more time assessing new offerings to be used across the enterprise, and more time building and maintaining their status as a trusted advisor.\n\nThere\u2019s a risk, as line of business leaders gain greater influence over technology, that enterprises see duplication and needless redundancy in IT spending.\n\nTo counter that, Olvet recommends that CIOs \u201cbe contagiously confident\u201d in their team\u2019s technology knowledge, bolstering their role as experts to be consulted, and to be \u201ctenacious with talent,\u201d making a persistent effort to find, support and retain staff with the necessary skills to scale technology across the enterprise.\n\n9. By 2026, 80% of organizations will accurately quantify the value of their digital capabilities and assets (data, algorithms, and software code), and significantly improve their market valuation\n\nBefore organizations can quantify the value of their digital assets, they need to recognize they have value, and that it can be exploited or increased along the three dimensions explored in prediction 2.\n\n10. By 2026, enterprises that did not effectively address the talent and digital skills gap in their organization will constrain revenue growth opportunities by 20% This will be one of the hardest challenges for CIOs to overcome in the next three or four years, and one they need to begin working on today.