CEOs are generally from a finance/business track, rather than a technology one--why their traditional agenda and practices must change.
A new report from IDC predicts that within the next three years, 46% of the worldwide GDP will be driven by products and services from digitally transformed enterprises. This means that there has to be an adjustment to a businesses' administration, and that shift will invariably end up at the CEO, a company's highest ranking executive.
The new report outlines the new agenda for the CEO running the digital enterprise. This agenda is driven by new customer requirements, a need to build new capabilities, a new critical infrastructure, and a new industry ecosystem in which to compete. The implications set the tone for the C-suite.
"The change in the CEO's agenda will have great implications on technology suppliers that will need to sell to new buyers, communicate how their technology drives business outcomes, and build new ecosystem partners," said Meredith Whalen, IDC chief research officer.
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The path to become a CEO is fueled by a BS in business administration, a career start as a lower-level manager or supervisor, moving up within the company or one similar, so the trajectory is always upward. There's a lot of decision making, management, communicating, multi-tasking, liaising with the board of directors--in other words, it's a prescribed, challenging, and difficult career route to take.
An advanced degree in "Organizational Leadership" is actually offered at many universities, and the end goal for those matriculating is CEO. The focus for the undergraduate degree, on-the-job experience, and a highly recommended MBA will be on fundamental areas of business, such as operations, management, economics, and finance.
But in that tiny CEO profile, you won't often see a specific technology focus, learning a computer language, or anything mirroring the schooling and entry-level work of an engineer/developer.
A CEO may rely on HR to hire top-tier tech workers, but as artificial intelligence and technology take more and more space in industries, CEOs will have to step out of their comfort zone and adapt. That's where the IDC report "The CEO Agenda for Digital Enterprise" fits.
For the CEO of a traditional company, almost half of its revenue will be derived from digital products, services, and experiences, and changes the CEO's agenda significantly.
The number one priority for the modern CEO, said Bill Schmarzo, chief innovation officer of Hitachi Vantara, is "embrace how to think like a data scientist."
"The modern CEO needs to understand what a neural network and deep reinforcement learning and artificial intelligence can do and upon which business opportunities (use cases) to focus these advanced data and analytic technologies to derive and drive new sources of customer, product, and operational value," Schmarzo said. "The modern CEO needs to embrace the non-linear, highly-exploratory, fail-fast/learn-faster, highly-collaborative data science process to find those variables and metrics that might be better predictors of performance, and uncover the customer, product, and operational patterns, trends, and relationships buried in the data that enable an to engineer an organization's digital transformation."
IDC consulted with CEOs, and for each agenda item, they asked the CEOs to discuss the agenda item's future. At least 70% of all CEOs surveyed believe these agenda items will be more or significantly more important for them in the future. IDC predicts that market demand for tailored experiences will double every six months in more than two-thirds of all industries by 2022.
The IDC report also presents many predictors CEOs need to consider. The following are highlights:
Customers and consumers in the digital economy
By 2023, 30% of consumers will engage in AI-driven "continuous commerce" for a range of products and services, opting in to automated transactions enabled by data-driven predictive analytics and IoT devices.
Future of operations
If tailored experiences will double every six months, enterprises will need to find a way to alter internal operations to support this constant state of change. They will need to pivot their operations from throughput and efficiency to market-driven operations. For some organizations, particularly manufacturing, this is the opposite of their current operational mindset. By 2023, 40% of the data collected throughout the customer journey will be used to provide a contextually relevant, behaviorally targeted, and more empathetic continuous experience, and the notion of a static transaction goes away.
Future of trust operations in the digital economy
By 2023, 50% of operational organizations will have a "blended" organization that combines operational expertise and IT expertise with a mandate to drive and support digital innovation in the operation.
Trust in the digital economy
By 2023, 50% of the G2000 will name a chief trust officer, who orchestrates trust across functions including security, finance, HR, risk, sales, production, and legal by 2023.
Future of intelligence
Today, organizations learn and apply knowledge in silos (customers, operations, and finance) and one transaction/activity/data point at a time.
By 2024, AI-powered enterprises' hyperspeed reaction times to market and operational changes will enable them to execute their responses to customers, competitors, regulators, and partners in half the time of their peers--often by anticipating situations in advance.
Future of digital innovation
By 2022, organizations sourcing commercial applications solely from commercial vendors will drop from 95% today to 75% as they augment their digital strategy with internally developed applications. Corporate spending on software digital innovation will increase over 50% by 2023.
Future of work
By 2021, the contribution by "digital coworkers" will increase by 35% as more tasks are automated and augmented by technology. By 2024, enterprises with intelligent and collaborative work environments will see 30% lower turnover, 30% higher productivity, and 30% higher revenue/employee than peers.
Future of digital infrastructure
With digital products and pervasive experiences being so dependent on digital infrastructure, we see CEOs shifting to think of critical infrastructure extending beyond manufacturing plants and buildings to data centers, edge computing pods, and cloud-based services.
- By 2022, 46% of an enterprises products and services will be digital or digitally delivered, in turn increasing the business' reliance on IT infrastructure.
- By 2023, the number of applications running in enterprises' edge and datacenter locations increases by 300%.
Future of connectedness
By 2023, 70% of large enterprises will have adopted new metrics to measure connectedness success--shifting from traditional connectivity metrics like downtime and packet loss to business outcomes and more than 70% of large enterprises worldwide will have a technology roadmap that stitches together next-generation networks. Also by 2024, 70% of enterprises will have reskilled their developers or acquired new developer talent to include API-accessible network resources and environments in in-house development initiatives.
Future of industries
As more than 80% of organizations are undergoing a digital transformation, these traditional value chains are being disrupted. By 2025, 90% of new developments will use a platform approach to connect ecosystem players for better service, delivery, and higher occupancies.
The report's advice
As the CEO's agenda evolves to support a digital enterprise, it will shape the new agenda for CIOs, CTOs, and line-of-business leaders. The implications for technology suppliers are profound and include new buyers, new buying patterns, and a new basis for competition to name a few. It is imperative for technology suppliers to take actions to reposition their offerings, their go-to-market strategy, and their partners in order to position for success in the digital economy.
Future of customers and consumers: Clients need to have customer conversations at scale with a better understanding of the customer, tailored processes, and new interfaces.
Future of operations: Customers will pivot operations from efficiency to resiliency to support the increasing market demand for customization. In the next three years, 50% of operational organizations will have a blended organization that combines operational expertise and IT expertise. It is imperative to engage with the OT buyer.
Future of trust: Customers will develop trust programs to manage their reputation around digital activities. Begin developing a corporate trust program now before customers demand it.
Future of intelligence: Customers will be developing a capability around the ability to learn and to synthesize the information it needs in order to learn, which requires significant investment in technologies, such as AI, throughout the entire enterprise.
Future of digital innovation: Customers will develop a capability around becoming a software producer that creates and distributes digital services at scale. They will develop the longtail applications unique to their industry and ecosystem. Become a part of their new software supply chain.
Future of work: Customers will be developing a capability around a work model that fosters human-machine collaboration, enables new skills and worker experiences, and supports an intelligent and dynamic environment unbounded by time or space. The technology budget for workplace transformation sits in IT, HR, facilities, and other lines of business. Expand the customer base to their new buyers.
"And most importantly," Schmarzo added, "The CEO needs to mandate that the organization focuses their advanced data and analytics capabilities on the organization's key business and operational use cases, and that the resulting data and analytic learnings and insights are reapplied across the business to accelerate an organization's digital transformation."
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