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IT trends spotted and checked by experts

IT practice leader at information services firm CEB

Andrew has almost two decades of experience working with Chief Information Officers globally to help companies develop more streamlined business models and transition to new working practices...


Digitisation: Putting CIOs in the driving seat

9 Dec, 2016 11:40 am

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 wasted.

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 lagging behind. 

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 different places. 

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 same. 

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.  
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