CIOs lead 37% of digital transformation efforts in the enterprise, while IT teams are pushed to the sidelines, according to an SAP survey. Here's how you can ensure your IT department stays relevant.
Most businesses are in the midst of a digital transformation—but only 21% have implemented a firm-wide strategy, according to a recent survey from SAP and the Economist Intelligence Unit.
The CIO is the most likely member of the C-suite to take ownership of digital transformation efforts (37%), followed by the CEO (25%). But, IT departments as a whole are falling short when it comes to digital transformation: Only 7% of executives said that IT leads their organization's attempts to identify ways to innovate, while 35% said they believe it should.
Only 3% of enterprises reported that their company was not involved in some digital initiatives, according to the SAP survey.
"There is a clear tie between digital transformation and the changing role of the CIO," said Rob Glickman, vice president of marketing at SAP. "The CIO must partner with the business along shared business outcomes." The survey collected responses from more than 800 senior executives across Europe, the US, Asia, and Latin America.
"With the emergence of digital technologies, a lot of business leaders can get things on demand, and sideline IT," said Gianni Giacomelli, chief innovation officer at Genpact, and head of its Genpact Research Institute, which has studied digital transformation. "Many CIOs are in a rut at this point in time."
In the past, enterprises needed IT departments for all tech purchasing, customizing, deploying, and training, Giacomelli said. Today, IT might be responsible for running a vendor management process and other functional tasks, but "they're very often asked to do the boring stuff, or the very complicated, heavy stuff," he said. "Many business executives feel that anything innovative, nimble, and agile can be done by somebody else."
It's increasingly important for CIOs leading digital transformation efforts to create company-wide strategies, Glickman said. For the 21% of companies that did have organization-wide digital strategies, those strategies tend to be more effective: 93% of respondents from companies with firm-wide digital transformation plans reported that their initiatives were highly effective, compared to 63% of those with no plans.
"Lines of business are increasingly owning technology—but they can't do it in a silo. Ultimately true digital transformation has to all connect," Glickman said. "A true end-to-end digital transformation is only possible if there's coordination across IT and lines of business."
SEE: Ebook—IT leader's guide to achieving digital transformation (Tech Pro Research)
Elevating the CIO
It's not surprising that the CIO is taking over digital transformation efforts in many enterprises, according to Marc Cecere, vice president and principal analyst on Forrester's CIO role team.
In Forrester's research on the subject, "when companies were considering a digital transformation, they were looking for somebody who knew technology, who had a lot of clout in the organization, and who touched the bulk of the organization," Cecere said. "It comes down to either the head of marketing, or the CIO."
The CIOs who have successfully led digital initiatives have separated those tasks from their other duties, and delegated operational tasks to others in their department to make time, Cecere said.
"A lot of CIOs don't have the skills to lead a transformation, which is very political, and involves running against people who are very senior in the organization," Cecere said. "The ones who don't have that skill shouldn't be taking this on."
SEE: How Sephora is leveraging AR and AI to transform retail and help customers buy cosmetics (free PDF) (TechRepublic cover story)
Factors hindering digital transformation at many companies include capacity and the time needed to execute new strategies. Often, employees lack data analytics skills and customer experience design skills, Cecere said, and seek out consultants such as Deloitte or KPMG for assistance.
"CIOs are in a unique position to elevate their role in the organization," Cecere said. "If they have the skills, take advantage of it—show your organization you know the mechanics of doing such a transformation."
IT departments are skilled at internal transformation, in terms of establishing a business case and assessing their needs. "Use those skills around digital transformation to show you can do it," Cecere said.
CIOs also need to ensure that they are not siloed, Glickman said. "The new role of the CIO is almost like a venture capitalist—they have to look across the range of software, platforms, and services available to enable their business to be digital ready and serve their customers," he said.
Large company challenges
In larger organizations, digital transformations tend to happen on the edges, as opposed to throughout the firm, Glickman said. Perhaps the marketing team adopts a new cloud platform, or the procurement team finds a digital solution.
While large enterprises often have the budget and technology capabilities for a digital transformation, they still struggle with the ability to experiment company-wide, Giacomelli said. "Everything you do at a large company has to have some critical mass, otherwise it's not considered important or easy to deliver," he said.
The other struggle is change management: "You might have identified the end state and have a strategy, but getting a company of thousands of people to get there is a job in itself," Giacomelli said.
Where the CIO can add real value is in cybersecurity, and connecting the front and back-end processes. "There's a gap in leadership in driving these programs," Giacomelli said. "You need a group that is able to assemble a cross-sectional set of people in the company and make them work together in designing solutions."
To ensure IT plays a bigger role in digital transformation, CIOs must approach the rest of the C-suite with an understanding of the business design and how to drive revenue. "It's not the technology gain—it's the business process transformation gain enabled by tools and technologies that are more powerful and easier to deploy than before," Giacomelli said.
"The CEO wants somebody to simplify and deliver the business transformation," he said. "If CIOs are able to reclaim ownership of that, they will be very relevant."
SEE: Free ebook: Digital transformation—A CXO's guide (TechRepublic)
The 3 big takeaways for TechRepublic readers
- While 97% of businesses are taking on some digital initiatives, only 21% have implemented a company-wide digital transformation strategy, according to a recent survey from SAP and the Economist Intelligence Unit.
- The CIO is leading 37% of digital transformation efforts, but the IT team is only involved in finding innovative strategies 7% of the time, the survey found.
- CIO's can demonstrate the relevance of their team in terms of cybersecurity skills and the ability to connect front and back-end processes.
- 5 things CIOs need to lead digital transformation (TechRepublic)
- Gartner's digital transformation, IT crystal ball for 2017: Reading between the lines (ZDNet)
- CMO, not CIO, leads digital transformation, says new report (TechRepublic)
- IT's new role: Build a digital society worthy of our descendents (ZDNet)
- Innovate like Amazon: Put values and tactics ahead of strategy (TechRepublic)