Growth and digital transformation are top business priorities for CEOs this year, according to Gartner. However, half of CEOs have no digital success metric. Here's what you need to know.
Digital transformation has become a reality for many CEOs in 2017, according to a new survey from Gartner. Some 47% of the 388 CEOs surveyed said they face pressure from their board of directors to make progress in digital business, Gartner found. But this approach is paying off: 56% of CEOs said that their digital improvements have already increased profits.
"CEO's understanding of the benefits of a digital business strategy is improving," said Mark Raskino, vice president and Gartner Fellow, in a press release. "They are able to describe it more specifically. Although a significant number of CEOs still mention e-commerce or digital marketing, more of them align it to advanced business ideas, such as digital product and service innovation, the internet of things or digital platforms and ecosystems."
Some 20% of CEOs are taking a "digital first" approach to transformation, which may include efforts such as creating a new business process, or a new mobile app, Raskino said in the release. And 22% of CEOs are taking a "digital to the core" stance—a more dramatic form of transformation where the product, service, and business model change with new digital capabilities, and the technology that supports those becomes a core competency, the release stated.
SEE: Digital transformation, a CXO's guide [download] (ZDNet/TechRepublic)
Growth remains the No. 1 business priority for 58% of CEOs in 2017, Gartner found—an increase of 16% from 2016. Meanwhile, product improvement and technology are the largest priorities for CEOs this year.
"IT-related priorities, cited by 31 percent of CEOs, have never been this high since the launch of the CEO survey," Raskino said in the release. Almost twice as many CEOs (57%) plan to build up in-house technology and digital capabilities, compared to the 29% who plan to outsource it, Raskino added.
"We refer to this trend as the reinternalization of IT—the bringing of information technology capability back toward the core of the enterprise because of its renewed importance to competitive advantage," Raskino said in the release. "This is the building up of new-era technology skills and capabilities."
Despite the focus on all things digital, nearly half of CEOs have no metric for what constitutes digital transformation success, Gartner found. For those who do quantify their progress, revenue is a top measuring scale: 33% of CEOs said they define and measure their digital revenue.
This is in line with the results of a recent TechRepublic CIO Jury poll, which found that more than half of CIOs said their business did not have a formal digital transformation plan.
The CIO can play a key role in aiding and scaling systematic digital transformation efforts, Raskino said in the release. "CIOs should help CEOs set the success criteria for digital business," added Mr. Raskino. "It starts by remembering that you cannot scale what you do not quantify and you cannot quantify what you do not define. You should also ask yourself: what is 'digital' for us? What kind of growth do we seek? What's the No.1 metric and which KPIs must change?"
Indeed, the role of the CIO is changing, and CIOs can best create value for their organization by delivering IT capabilities that match up with business priorities, according to a report from Deloitte.
SEE: Ebook—IT leader's guide to achieving digital transformation (Tech Pro Research)
To maximize success, CEOs must adapt traits of open-mindedness, adaptability, collaboration, and an entrepreneurial spirit, the report stated. This is the time for business leaders to scale up their digital business ambition, and let CIOs help them set and track success metrics, Raskino said in the release.
"CIOs should also help [CEOs] toward more abstract thinking about the nature of digital business change and how to lead it," Raskino said in the release. "The disruption it brings often cannot be dealt with wholly within existing frames of reference."
The 3 big takeaways for TechRepublic readers
1. Digital transformation efforts are now underway to different degrees at 42% of companies, according to a survey of CEOs from Gartner, released on Monday.
2. Growth is the No. 1 business priority for 58% of CEOs in 2017, and product improvement and technology are the largest rising priorities for CEOs this year.
3. To maximize business success, CEOs and CIOs should work together to scale up digital efforts.
- Why the CIO is essential to digital transformation (TechRepublic)
- 3 things you can learn from the NFL about digital transformation (ZDNet)
- CIO Jury: More than half of CIOs have no formal digital transformation plan (TechRepublic)
- Effects of the Digital Transformation on Businesses - Helpful Use Cases (ZDNet)
- Two-thirds of businesses see digital transformation looming, half say CIOs should lead it (TechRepublic)