Digitisation: Putting CIOs in the driving seat
Digitisation has the power to transform organisations, products, stock and sales channels and radically change how CIOs operate. Successful digitisation requires all company divisions to embrace the change, and CIOs have a key role in winning hearts and minds to embrace the transformation agenda and avoid common pitfalls that can endanger the entire project.
What are the leadership opportunities for CIOs in digitisation?There are four
opportunities. Two of them are within the IT arena, two at the
company level. First, at a company level, we are increasingly seeing
CIOs being deeply involved in business strategy. As digitisation
becomes a bigger driver of how companies grow and how they gain a
competitive advantage, CIOs are being asked to play a greater
role in formulating business strategies.
Second, most companies
overlook the fact that digitisation is far more than putting new
technology in place. There is a whole enterprise change agenda that
must happen for companies to successfully take advantage of these
technologies and data.
Third, there are all sorts
of compliance and risk issues to contend with. There is a
broad agenda of just helping the organisation understand
all the other things they must change for a company to go digital.
The fourth thing that must
change in IT is the talent. Most IT divisions are frankly woefully
underprepared and under-equipped to support their organisations. A
lot of that comes down to their current talent. So CIOs have to lead
a pretty fundamental change in the skills, competencies, behaviours
of the IT professionals in the team.
Is there a consistent definition of what digitalisation involves or does it change with every organisation?The framework we use first
covers products - things they sell; their channels - how they sell
them; and their internal operations.
Then it runs through a
spectrum of enhancements, essentially looking to apply new
technologies like the Internet of Things, big data and machine
learning, to enhance current company operations. Then over time, they
start to use those innovations to do new things, to transform.
Where it gets more
interesting still, is that as that transformation happens, the lines
between those three areas of product, channel and operations begin to
blur. So if you introduce a new digital product that changes how you
go to market, it changes your channel. Or say you generate new types
of data in your operations, you could sell it as a product.
How can an organisation embed digitisation into its corporate strategy?Some people see the need
for a separate digital strategy or a chief digital officer. We
strongly believe it needs to be part-and-parcel of corporate strategy
and it needs to be owned by the company leadership team and not
farmed off to one owner.
If you do that, you risk
isolating it. You give the impression that "Well, our digital
strategy is to have this digital leader" and fail to have it
embedded in the company strategy.
Having a CIO and others
who are knowledgeable about technology, are involved in the company
strategy-setting process and are tuned in to opportunities is
crucial, rather than the company creating a strategy that then
cascades down to an IT strategy, leaving technology teams scrambling
to catch up with it.
What are the common potential pitfalls? How can these be avoided?We think the biggest
problem is not comprehending the broader change implications of
digitisation. We track the questions CFOs, CEOs, HR heads etc ask us
about digitalisation and two-thirds of those questions are about the
technology. So a CEO has heard about the cloud and wants to know how
it works or the head of marketing wants to know what is next in the
Internet of Things.
That's useful but it
suggests that they are overlooking the much bigger question of how do
we change our company to be digital. I think that's the first step
for them, if you develop a great new digital product but you don't
change your sales teams' incentives, they will use the old
traditional incentives and not get anywhere.
If you invest a lot of
money in next-generation analytical tools and big data but you don't
train your employees to use data to make decisions, that's money
What can CIOs do to make digitisation a reality?The question to ask is: Is
digitisation in our corporate strategy? If it is not, then is that
because the company's leadership, doesn't get it? In which case, is
the CIO waiting to evangelise and help them understand?
If it is in their business
strategy, then it is likely to be those enterprise-level barriers
that are getting in the way. What can I do as a CIO to overcome those
or to help my company understand them?
If all of that is fine,
then the next thing would be, to ask whether the IT division itself
is able to support this strategy. In most cases this comes down to
service - what the CIO needs to put in place, new ways for IT to
operate, often some new underlying technologies - so you have more
of a platform approach, more APIs and integration; making IT more
flexible and agile.
It is a step-by-step
approach; a CIO needs to work out how far along the track the company
is and then figure out what is blocking it from going further.
How does digitisation create new career paths for CIOs?We have asked CIOs exactly
what their roles are and how that's going to change in the next few
years. Today, most CIOs are essentially systems providers. They have
additional corporate IT roles, oversee big enterprise systems like
ERP and manage most if not all technology in the company. Maybe they
spend a bit of time thinking about digital, but not too much.
But digitisation will
create new career paths, and the first step towards that is the idea
of being an evangelist, so CIOs are the ones pushing their company to
have more digital trends in their strategy and to educate the
C-suite. They are the ones saying, "Look, we have got to change
how the company operates, not just the technology".
What effect could digitisation have on IT budgets?The money a company spends
on IT and the IT budget are increasingly two very different things.
In the past, CIOs spent years fighting to get all technology spending
into their budgets, so it was centralised. And trying to clamp down
on anyone else across the company spending money on technology.
We are seeing that go into
reverse, because technology is so important and because now you can't
do marketing, you can't do sales, you can't do product development
without technology. Those groups in a company are also spending a lot
of money on IT -- we believe that for every pound in the IT budget,
50p is being spent on technology somewhere else in the company.
We believe that CIOs
should encourage this spending - or at least not try to stop it -
because it is a sign of how important technology is.
How big a problem is corporate inertia in driving digitisation transformation? How can it be overcome?It is mixed. Most
companies are making progress towards digital transformation. They
are doing it in patches. So, it is less about the inertia of the
company; some parts of the business are doing well and others are
The CIO's role in this is
interesting because you get different levels of maturity. The CIO
must be quite flexible and recognise that the conversation they have
with their chief marketing officer, who really gets digitisation, may
have to be very different from the conversation they have with their
vendor supply chain who is clueless about it.
The CIO also must teach
their team that they will have to work very differently with the
marketing group and the supply chain group because they are at
That is hard because
traditionally IT has generally had a "one-size-fits-all"
model for working across the business; they are treated all the
With inertia, you find the
areas of the business that are moving ahead fast and encourage them
and to be flexible. Whereas, with the areas that aren't, you spend
more time educating them and understanding why they are less
convinced about digitisation.