Big Four accounting firm and consultancy EY (known formerly as Ernst & Young) recently published the survey Born to be digital: How leading CIOs are preparing for a digital transformation (PDF).
Disruptive technologies (or digital technologies, in the lingo of the EY report) are creating new ways in which enterprises interact with customers, new definitions of the enterprise, and are changing how the IT organization has traditionally operated.
If CIOs manage the “risk” posed by the digital transformation underway, the “reward” for the proactive IT leader is to have a seat at the C-suite table. This is a strategic advisor who uses information, not data, to drive the business.
From the report:
Digital technologies — including social media, the cloud, data analytics and mobile — are rapidly emerging as disruptive forces for businesses across all industries, from retailers and banks through to carmakers and energy companies. They are fundamentally changing the ways in which consumers interact with these companies, while also opening up new business models at the heart of these firms.
EY Partner David Nichols, one of the subject matter experts for the Born to be digital report, said in a recent interview that CIOs need to take a multi-stage view of earning the innovative badge. CIOs are often hired for a specific role at a company and then are branded according to that role. His advice: start re-branding now in your present job so that you can be recognized as a driver of innovation in your next job.
One of my insights from our talk is that, as IT becomes more central to the enterprise, the role of the IT department becomes less inward-facing and more strategic. So to say, the chief tech guy looks less like an engineer in a support function and more like an upwardly-mobile executive.
Q&A with EY’s David Nichols
David Nichols: I think “digital” is going to do one of two things. It is either going to bifurcate the way companies view and integrate technology, or it is going to create the linkages to the business and the kind of the respect that IT has always wanted, along with a better look and feel for what you actually have in the business.
We started to see, on the tail of the dot-com explosion in the 90s, functions that were traditionally performed by the IT organization started to happen, with permission, outside of IT, such as updating websites. The IT organization does not have to set up corporate websites anymore, they are not responsible for the content. That is all being done by marketing now.
“Digital” has done the same thing, where you are starting to see revenue-generating business units, completely with permission, taking ownership of technical aspects of the business. And cloud-based technology has made that possible, and that is going to continue to happen, because all the trends in surveys and the analysis that we have done, this is not going to decline, this is going to continue at a pretty good velocity.
Do we split the notion of technology and IT? In the past those two always went together, and had to be housed and performed out of one area. But now we are wondering, is that going to potentially change forever? Have we entered a new dynamic, where infrastructure is considered IT, but technology is driven by other parts of the company?
Because you can now get so much of the functionality you need from elsewhere, you are starting to come up with these notions and these concepts of hardware-centric data centers and software-centric data centers. The software centric data center completely changes the function of the IT organization, because before your hardware was co-located near the majority of your employees, but now a lot of that has changed.
That really leads to more of the union of the business, because you don’t have to get so caught up in the operations of the infrastructure. It is more about how do you provide the infrastructure no matter where it operates from. And then using client-facing technology to really drive how you enter the market, and then how your employees interact among themselves and with your trading partners.
So that’s kind of the concept of we came up with, given the way in which this is happening, given the trends that we’ve seen in the comfort level of technology being performed outside of IT, you know this just might be what we have been talking about for a long time.
TechRepublic: How so? That’s interesting — perhaps you could sum up that point of view.
David Nichols: The only time technology has driven what is happening with the company is when that company has been on the cusp of a crisis. When you look at the late 90s and the retail industry, or what happened a few years ago with the media industry, it’s usually when things have been led by technology that the role of the CIO, and the role of the CTO has really been brought to the forefront.
There are many companies that look at themselves as technology companies, even though they may be perceived elsewhere as performing a business function, or supplying a good or product. That mentality has made its way into the DNA of most companies that are out there today. The difference is, to whom does the CIO go to provide technology back to the business? And that was handcuffed by what the IT organization had been able to provide. That’s not the case anymore.
Now they are naming people with other technology responsibilities, like the digital officer or the data officer, people who have large pieces of the technology within an enterprise. That itself to me is pretty much of a sea change. You go back 10 years, the hot thing was to have a CTO report the CIO. More and more that’s not the case anymore. They are reporting in a lot of cases directly to the CEO, and they own all aspects of the technology. So that creates the opportunity to bring the spaces much closer together.
TechRepublic: What does that mean for the role of a CIO in an enterprise?
David Nichols: I think one of two things will to happen. I think that the CIO is going to be the person that provisions most of their services; they are going to be viewed as maintainers of infrastructure, or the broker of services.
And you’re going to get other C-suite designations that are going to drive technology, such as the CMO, the CTO, or the CDO (chief data officer). Those are the ones that are going to be the providers and the innovators of technology throughout the enterprise.
And the CIO’s role is going to evolve to either the provider of services or the broker of services that they get from other places, or the providers of infrastructure, the core infrastructure that companies need. But I think that the role as it stands today is slowly dissolving, and it’s going to go away.
TechRepublic: What’s the take-home message of the survey?
David Nichols: The big news is that most CIOs are going to have to reinvent themselves.
Usually when a CIO comes in, they’re coming in with a particular skill set or background. So for example, a company is in the midst of a large multiyear ERP transformation, and this individual has done this before, and we’re going to spend $400 million on this, and this person knows how to get it done. Or somebody who had a particular understanding of an industry, that kind of thing.
But once that purpose has been fulfilled, they are already branded as being able to do one thing, or they shy way from taking risks. Driving transformation is not really the kind of thing that’s going to help them keep their job long-term.
At that point the clock really starts ticking on that individual. It is rare that the CIO survives two or three major initiatives at a company. They are brought in for one, they make it through the second one, and then there is a review and a CIO change comes with it.
The opportunity here is for those CIOs who eventually want to wind up at other companies. To reinvent themselves they will have to start that at their current jobs, which means they won’t be able to finish that at their current jobs.
A “digital” CIO is going to be that individual who has made a name for themselves on the technology side, or they are going to be a reinvented CIO was never given the opportunity to be digital at their old job. But it’s rare that you’re going to find the CIO that is going to be able to invent themselves on their current job and survive that. I don’t see that happening, given the kind of trends that we’ve seen.
TechRepublic: The EY survey talks about best practices that “leading” CIOs do to promote their careers. What you are talking about doesn’t seem quite as optimistic about the future of CIOs — am I getting the right impression?
David Nichols: Actually, I think I’m saying just the opposite. The role the technology is going to play how CIOs will view themselves is as high now as it has ever been. And therefore these roles are going to be much more important going forward.
I guess it depends on how you look at it. The bad news is, and again this is David talking, we look at how the CIO role evolves and what companies typically look for. Businesses are often going to go outside of their organization to have that function provided back within their business. Because a CIO that is looked at as a major program, ERP-driven CIO — they are really not going to look at that person as someone to drive innovation in digital.
But that doesn’t mean the person is not oriented to do that, they’re just being perceived a certain way. It is hard to rebrand internally.
But the role of the CIO and what individuals can do who are currently CIOs — I don’t think it’s ever been more optimistic than it has been right now. Because before it was come in and try to deliver whatever they’re asking me to do to survive. Now, it is come in and try to innovate change and drive the business. And that’s something that they’ve never really been asked to do in the past.
TechRepublic: How does the upwardly mobile track for the information executive differ from other functions, such as HR or accounting?
David Nichols: Historically, in the IT organization, people had to take one of a couple tracks. Are you on the infrastructure side, are you on the software side, or are you on the hardware side? And then we kind of evolved to aligning people by major application functions. So, people would be part of the SAP team, the Oracle team, or the Microsoft team. They kind of did the same thing except it was based on software or hardware alignment.
Now, going forward, it will be more like what happens in the business. It’s going to be more based on the function that you play. Over the course of their careers, people are going to be able to play different functions, because you don’t have to be as hard-core specialized. That’s going to allow people to get a variety of experiences over time, and have careers that look more like other business people.
TechRepublic: What I’m hearing is that the information role is becoming less distinct, it’s going to be more like a business executive.
David Nichols: Absolutely, because you’re going to stop looking at it as data, and start looking at it as information that drives the business. Data sounds highly technical, but that’s not the issue anymore. The issue is how you use it to drive your business, and the person who has to understand both — data and information — is going to be in more of the business context. Because it’s really not about how do I hold the data, but what do I do with the data? That’s a skill that’s going to be needed, that’s all focused around business. And that’s the path that the IT executive will have going forward, which to me is extremely encouraging, because that puts you at the table. It’s not about how we hold the data, it’s what we do with it.
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