As tech leads business models to shift, CIOs are best equipped to tackle digital transformation efforts, according to a new report from Deloitte. Here's how to get started.
What can CIOs do to help their companies? As the role of CIO changes, aligning to strategy and performance goals is now the IT capability that 78% of tech leaders say is most essential to success, according to a new CIO report from Deloitte. This marks a move away from innovation and disruption, which many CIOs said is lacking in their organizations.
CIOs create value by delivering IT capabilities that match up with business priorities, according to the report "Navigating legacy: Charting the course to business value," released Thursday. Deloitte surveyed 1,217 CIOs across 48 countries and 23 industries to determine how technology leaders help their organizations.
Tech leaders also reported a shift in business priorities: Some 57% of CIOs chose customers as their top priority, compared to 45% who did so last year, unseating "performance" as the top business priority.
"Business leaders recognize that tech is fundamentally shifting their business models, and that it needs to somehow drive growth or revenue for them," said Khalid Kark, managing director of Deloitte LLP, and director of research for Deloitte's CIO Program. "CIOs need to be contributing to driving business value, and this seems to be a tangible way. The customer becomes a proxy for data that can be directly and easily gathered and analyzed."
Just 35% of CIOs reported that innovation was a significant business priority—a major decrease from years past, Kark said. "Our assumption is that a lot of business leaders are moving less toward generic innovation projects that may not have tangible benefits, to a more focused efforts on what investments grab business value and create ROI," Kark said.
Many other members of the C-suite are focused on some aspect of the "digital iceberg," Kark said. For example, the CMO might be focused on customers, the COO on the supply chain, the CFO on analytics, and so on. However, these issues only reach the iceberg's tip.
"A lot of systems, including tech, legacy environments, and capabilities around cyber, need to be adjusted, and the back-ends need to support the front-ends," Kark said. If a business doesn't do that, it is setting up for failure, he said.
"CIOs are probably the most equipped to look at the whole iceberg—they need to be front-and-center for the digital transformation," Kark said. "If they're not, it becomes an issue for business leaders, because they are only looking at the front-end stuff, not the whole picture."
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Though many CEOs recognize this, CIOs are often relegated to just managing technology as the extent of their role, Kark said. "Some of it is that CIOs are not raising their hands to say, 'We are ready to do this,'" Kark said. "Maybe they don't have the credibility or influence, or haven't proactively said they can help."
"If CIOs don't step up, other business leaders will, who are only looking at the tip of the iceberg and aren't setting up for success," Kark said. "CIOs better understand the enormity of [digital transformation] efforts, and can articulate that to their business peers."
Deloitte's findings echo a recent Forrester report, in which improving customer experience was rated the largest key driver of digital transformation efforts. However, past Forrester studies show that about 70% of spending and resources in IT go to maintaining existing levels of service. "That leaves very little for new project spending," said Marc Cecere, vice president and principal analyst on Forrester's CIO role team. "Worse than that is that a lot of the new project effort is spent connecting to the old systems."
When asked, "Who will be/is/was responsible for leading your firm's most recent digital transformation?" in another Forrester study, nearly four in 10 respondents said it was the CIO.
"Ironically, though the IT organizations have significant gaps in digital skills, particularly around data, security and mobile applications, the CIOs are playing a strong role in digital transformations," Cecere said.
Essential IT capabilities
CIOs reported five essential IT capabilities for success in the position. They are as follows, the report stated:
- Strategic alignment: Three out of four CIOs surveyed said the capacity to align IT activities to business strategy and performance goals was a top priority for success. This includes the ability to be proactive in building solutions to address business challenges.
- Execution: CIOs are expected to execute on technology projects that deliver business solutions to drive performance and reduce costs. They are also more likely to establish credibility within the organization when they have a strong track record of delivering a reliable, consistent, scalable, and secure IT environment.
- Vision and strategy: Nearly half of CIOs said developing a vision and strategy was an essential capability for success. It is important for CIOs to set clear goals for delivering business value, and clearly state how to achieve those goals.
- Fostering innovation and disruption: Technology, and therefore the CIO, is at the heart of most business innovations and disruptions. Nearly half of CIOs said this was essential for their success in the workplace.
"The way to succeed as a CIO is to be adaptable," Kark said. "You have to adapt to changing business needs."
Kark also cautions CIOs not to veer too far from their business needs. "Determine that, and collaborate and influence other leaders to build alliances and drive changes for the business," he said. "Many times CIOs operate in silos, and forget that's the need."
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