The buzz around “digital transformation” can make it difficult to cut through the noise. In the same search, you may discover wide-ranging recommendations from respected sources that point in opposite directions. Whose advice do you follow?
We wanted to hear directly from CIOs on how they are solving the most common problems arising from their digital journeys, so we sponsored an in-depth market study.
From the Front Line: CIOs’ Perspectives on Digital Transformations (Bennett-Frank Associates, 2018) was powered by interviews with over 50 CIOs from a broad range of industries and company sizes regarding the current state of their digital transformations.
Here are the insights that stood out the most to us:
1. It’s an evolution, not a revolution
Of the 50 CIOs interviewed in the study, none of them identified as industry disruptors. In addition, 78% reported that their organizations are less than halfway through their transformations. So, if you are just starting out, you are not alone.
Furthermore, findings show that most digital programs are not driving companies to reinvent their business model. They consist of projects that utilize data to allow organizations to do what they already do better, cheaper, faster.
The sky is not falling.
But that doesn’t mean there’s no urgency. The marketplace is changing. More and more people prefer to transact digitally whenever possible, eschewing traditional channels. The future of every organization is digital, and CIOs can’t afford to become complacent.
CIOs who haven’t started their digital journey are far and few between, and in our study the reasons boil down to lack of organizational maturity or lack of a business case. One firm is undergoing significant change due to recent M&A activity; therefore they prioritized an ERP centralization above their digital transformation. Another firm uses B2B distribution channels for approximately 90% of sales and currently does not see value in a digital transformation. While the circumstances are understandable, these firms may soon find themselves behind the eight ball.
2. The business is not the customer
Most (70%) of CIOs’ objectives included “increasing customer loyalty,” but only 10% reported shifting their focus from the service or product to the consumer. There is a big disconnect here.
To increase customer loyalty through digital strategies, CIOs first need to upgrade their line of sight from seeing the business as IT’s customer to seeing the consumer (or buyer) as the customer.
One CIO interviewed for the study reports his food services company has already adopted a customer-driven perspective, and the executive team is looking to technology to drive growth. Their digital transformation project—a mobile app for customers to order food and improve order accuracy—has increased revenue and customer loyalty. IT was brought in as a key implementation partner on the project, and delivered business growth.
To maintain a seat at the strategic table, IT leaders need to think beyond improving operations: how can processes be improved throughout the entire value chain to enrich the customer experience? Shifting to a customer-centric focus will result in initiatives that will improve the experience as a whole, and meaningfully impact customer loyalty.
3. Digital transformations bring organizations together
We know many CIOs struggle to get support from their peers, or feel frustrated when various departments go rogue with their own agendas. Departmental silos are a problem for most organizations.
But digital transformations are bridging the gap: 80% of CIOs surveyed reported their digital initiative is led by a cross-functional team. These initiatives touch too many pieces and require too many inputs to be contained in one area. Sales & marketing will understand what customers want, R&D will figure out how to deliver it, and IT will provide the data backbone. It logically follows that an initiative spanning so many functions will force people to work together.
The reality is that no one has more visibility into data availability, quality, and strategic possibilities than a CIO. IT executives are vital for digital strategy planning and execution. So this pervasiveness of cross-functional digital teams illustrates a trend that CIOs are sharing ownership—and credit—for the benefit of the project. This requires a high degree of self-assurance and leadership through influence.
A minority (10%) of the interviewees described an IT-led endeavor with limited business support. The other 10% reported a business-led transformation, with IT supporting. Both those situations could benefit from increased cross-functional collaboration.
4. Close the skills gap to increase funding
The two biggest obstacles CIOs cite are a lack of resources, and a lack of business expertise within IT. These challenges are very much related to each other.
Overcoming cost and resource barriers is often a matter of proper justification. Aligning other top executives around the digital vision and obtaining an ample budget is the CIO’s responsibility. CIOs need to be better equipped with business and financial literacy to contribute to these conversations.
Notably, less than 10% of CIOs spoke about organizational goals in terms of P&L. Most CIOs discussed reducing internal inefficiencies as a goal, while only a few discussed seeking new revenue streams. Once IT leaders incorporate organization-wide financial and business outcomes into their goals, digital transformations can be justified in the language of the business, and will garner more support.
Conversely, IT folks tend to be more tech savvy than non-IT focused colleagues, so it may be easy to attribute lack of technological knowledge in the business as a barrier to digital transformation. But that is only if you think in terms of technology. Digital transformation has more to do with customer focus, strategy, leadership, change management, and risk management than with the technology itself.
From the Front Line: CIOs’ Perspectives on Digital Transformations
Check out more findings in this comprehensive digital transformation market study analyzing the problems, solutions, and opportunities CIOs are dealing with right now. Participants generously shared their experiences and time with the research team so IT leaders across all industries can benchmark their progress and obtain ideas for solutions that will work for their situations.
Please feel free to share this report with your network and post a comment or question below.
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