CIOs lead only 19% of digital business transformation efforts, while 42% of executives believe the CIO should be leading.
As companies embrace a more customer-centric business model, a leadership gap has emerged. Digital innovation requires a leader with a healthy knowledge of technology, a hyper-focus on customer experience, and the financial management competency to allow budget agility. So who should lead digital innovation? CIOs, CDOs, CMOs… There’s a turf war waging over which one of these C-suite executives is the right person for the job.
While technology is key for digital transformation, leading digital business requires more than just technological innovation. Equally, it requires a mindset for delivering business and customer value. As Kasey Panetta notes in Gartner’s 5 Mindset Traits of Disruptive Digital Leaders, “a true digital leader is driven by the challenge and potential for creating net-new business value by harnessing breakthrough technology.”
Filling the C-suite skills gap
Finding an executive leader who fits the bill is a challenging and critical step in digital business transformation. A recent report from Altimeter shows 37% of companies jump to the CMO, while others create a new CDO role to fill the gap, and only 19% of respondents said the CIO is leading.
There's an argument to be made for each of these roles. The CMO is probably the closest to the customer, but the farthest from applying technology successfully. The CDO has a good grasp on digital vision coupled with experience guiding change across multiple departments. And the CIO is the clear winner when it comes to understanding and applying new and emerging technologies.
In each case, you have an expert with the potential to lead digital business. The challenge is deciding who is best suited, not just who is well-suited.
CIOs overlooked despite being the most logical choice
CIOs are the logical choice in terms of technology competency and insight into the business, but they’re being overlooked. According to a survey of 750 business and IT leaders, 42% believe CIOs should be leading digital business transformation. Only 18% of respondents felt the CEO should lead, while even fewer chose the CDO (9%). If CIOs are preferred two to four times more than their C-level counterparts to have a major leadership role in digital business, what’s holding them back?
Here's three big reasons behind the holdup:
- Run-the-business mindset- CIOs are bogged down in run-the-business firefighting and cost structures inherited from legacy technologies and methodologies. To become a successful and agile digital business, internal technology operations need to match that agility.
- Outdated project portfolio practices- If legacy long-tailed planning and build stages continue into digital transformation, the resulting products will be outdated by the time they get to market.
- IT as a cost center- Until now, IT has struggled to communicate the value of IT services to business leaders and to achieve transparency of complete technology costs.
The CIO is uniquely suited to overcome these challenges, but the role needs to evolve. Digital transformation calls for the CIO to move from legacy technology processes to an agile IT management structure. Where risk aversion used to be a key player in decision making, a new fail-fast culture emerges for rapid end-user digital asset development.
5 reasons CIOs are primed to lead digital business innovation
CIOs might be struggling to claim their seat at the table, but they are already well-suited to bring their companies into the digital business era. You don’t have to look far for evidence of this – you can place your favorite pizza order with Dominos from any computing device, thanks to CIO Kevin Vasconi leading the digital business innovation charge. Additionally, Target hired CIO Mike McNamara from Tesco to spearhead advances in supply chain applications to better align inventory with consumer demands, while also making strides to restore consumer trust and data security.
Here are five reasons why these CIO digital business leaders are succeeding:
- Technology expertise- They know how to integrate with all areas of the business, how to build technology, and how to maintain security for end-user data.
- Customer focus- Digital business transformation leads to a shift in focus from internal customer to external customer. The CIO digital business leader designs customer experiences and integrates into the customer’s personal value ecosystem through technology advancements.
- Agile IT management- The CIO is no longer bogged down in run-the-business IT processes. They’ve optimized their processes and cost planning, achieving full transparency into spending and the flexibility to strategically reduce IT run costs — freeing up dollars to reallocate to innovation.
- IT as a business- They speak about IT as technology that contributes to the company’s bottom line. They have the tools and language to discuss IT costs in the context of services that provide value to business leaders. With cooperation from these leaders, they shape service demand and use elastic cloud capacity to meet demand.
- Fail-fast culture- The CIO isn’t afraid of risk and neither are the teams they develop. Innovation is as agile as underlying IT processes. They minimize risk through the ability to rapidly iterate on technology deployments based on customer feedback.
What's next for CIOs in digital business?
With the CIO in the driver's seat of digital transformation, companies solidify their chances of becoming a digital predator. Companies that create a new role or pull in a leader who isn’t as embedded in technology have a greater chance of losing market share as they fall prey to digital predators.
Daniel Newman, digital transformation expert and Forbes columnist, described the future of CIOs in digital business well, when he said:
"The CIO should take a major leadership role in 2017, forging digital-based alliances across the entire enterprise. As technology moves forward, CIOs will be responsible for building bridges between business technology teams and the company’s IT department. It’s going to fall on the CIO to empower company-wide changes in thinking, culture, and practices. As the digital transformation continues to radically alter the way businesses operate, a CIO with a strategic mindset can be at the forefront of these changes."
Are you a CIO looking to take the reins of your company's digital business transformation? Download the datasheet 5 Reasons Every CIO Needs Apptio to find out how digital innovation can help you win, serve, and retain customers.