Almost half of BoDs anticipate changing their organizations' business model due to the pandemic, according to a Gartner survey.
A large majority (69%) of boards of directors (BoDs) accelerated their digital business initiatives in the wake of COVID-19 disruption, according to a new survey from Gartner. Almost half anticipate changing their organizations' business model as a result of the pandemic.
The Gartner survey was conducted from May through June 2020 with 265 respondents in the US, EMEA and APAC in a director role or a member of the corporate board. The survey aimed to understand how boards view digital-business-driven business model evolution in their enterprises along with the role of the CIO and other executive leaders, specifically in the context of the COVID-19 crisis, per Gartner.
"BoDs play a strong role in helping the executive leadership team focus beyond the short-term risks associated with this extended pandemic," said Partha Iyengar, a Gartner fellow and the lead analyst on the survey. "Technology-driven digital transformation can, and should be, a strong enabler in addressing employee, customer, supply chain and broad-band impact to position the enterprise to come out of the crisis stronger."
COVID-19 prompts budget changes
The majority of BoDs (67%) expect budgetary increases in technology as a result of the pandemic, while functional areas such as marketing and HR are expected to experience cuts. Respondents said they expect a nearly 7% increase in their IT budgets for 2020.
"The long-term ask of BoDs during COVID-19 is to approve forward-looking investments even in the face of potentially plummeting revenue and profits," Iyengar said.
Analytics and artificial intelligence (AI) are expected to emerge stronger as game-changer technologies as a result of the pandemic, as enterprises lean on them to drive better decision making in the new remote-work-first environment.
Digital tech initiatives top priority list
Driven by the onset of COVID-19, digital technology initiatives will serve as the top strategic business priority for BoDs over the next two years, followed by customer engagement, and managing the remote workforce.
Two emerging themes came out of the survey: The first is leveraging digital initiatives from an inside-out business approach and streamlining processes, making the entire workplace more digital and improving profitability, Iyengar said.
The second is external: Organizations using digital processes to change the business model and go after new customer bases, while engaging existing customers in new ways by creating digital products and services, he said.
Most of respondents (86%) deem technology as having a transformational role in addressing strategic business priorities, which is why most organizations are expected to create a new chief digital officer role to respond to COVID-19 in the long term.
"BoDs must take innovative approaches to their governance models by leveraging technologies and IT expertise to accommodate the impacts that the pandemic is thrusting upon their digital transformation agendas," Iyengar said.
BoDs view the CIO as a partner
Almost all BoDs expect functional leaders to collaborate with one another during COVID-19. More than half believe that CIOs serve as partners with senior business leaders, while over a third look to the CIO to lead digital business issues alone.
"What's interesting is the number of CIOs partnering with boards of directors … went from 46% last year to 54% this year,'' Iyengar said. "So that's a fairly significant jump."
More significantly, he added, BoDs that deemed CIOs as being "at risk," meaning they are struggling to keep IT running, went from 29% in 2019 to 3% this year, he said. Those whose roles are transactional, and keep systems up and running, went from 20% last year to 13% this year.
The survey also looked at whether these will be permanent changes or will end when the crisis abates or disappears and whether there will be a rise in at-risk and transactional numbers, he said.
"That's where successful CIOs, we believe, will leverage this crisis to make the case that IT isn't just a back-office function and can drive business and can be in partnering and trusted roles, and IT as a department has to be seen as a trusted ally function," Iyengar said.
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