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CEOs embrace a digital future

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Kathy Gibson reports from Gartner Symposium in Cape Town – CEOs are beginning to change their attitudes to technology – and some of them are downright excited about it.

Gartner’s Mark Raskino says in the past CEOs would typically have been disinterested in IT.

The interest is being driven by the shift to digital business, where technology is embedded in the real world.

“It starts with mobile devices, which live in the world with us, and are full of sensors collecting data,” says Raskino. “Things like location and other information is being recorded by these devices.”

This is the start of the blurring of boundaries between the physical and virtual worlds, he points out.

“It is just beginning to happen. But think about how computing in the past has always been separate, and now the boundary is blurring, whch changes the conditions for everyone.”

And this starts to change the whole business. “CEOs are starting to make technology a key part of their business strategy.

“Today we see digital all over the place, and CEOs are talking about it all the time.”

For instance, Starbucks CEO Howard Schultz talks about digital technology helping to sell more coffee by creating spaces for customers.

Banking CEOs are looking to technology to drive new digital channels, and even technology companies are further blurring the lines between physical and digital business.

As a result of this CIOs should be requesting and expecting more involvement from their CEOs, Raskino says.

“A few years ago, the CIO couldn’t get the CEO to help sort out big ‘political’ technology management issues, it’s different now.

“Business leaders understand the future of their companies will be dependent on deep technology change in the future. They know there is going to be a lot of deep digital change over the next couple of years.”

A Gartner survey reveals that 25% of CEOs name a technology issue in their top three business priorities. “We have never seen a number like this,” Raskino says. “Technology comes in just about equal to workforce in terms of top 10 priorities.”

The main concern is growth, followed by technology, workforce and customers. “WE are seeing an imoressive level of interest in technology,” Raskino says. “This is a high watermark.”

Because growth is going to be in digitalisation of products and services, CIOs should determine what percentage of growth the CEO expects from digital products, he advises.

“In many industries, you might not find a very clear answer to that question. In which case, CIOs should work with the CEO to determine it. The CIO role is headed to be this kind of leadership role rather than an order-taker.”

Going one step further, CIOs could start to develop what they believe the future product could be, to start getting excitement building around the idea.

Why this is important is because CEOs expect to double their digital revenues over the next five years. Specifically, they believe the revenue attributable to digital channels was 22% in 2014; they want it to be at 31% in 2016 and 41% in 2019. This growth will put digitalisation at the tipping point next year – and CEOs need the CIO to help them achieve this.

An interesting finding is that outperforming companies tend to be those that have embraced digital – and these are the companies that are expected to perform even better in the future.

“People have been talking about digital for a while now,” Raskino says. “And we are seeing that some of the excitement of things like IoT are beginning to tire; robots, artificial intelligence and 3D printing are over-told; stories about bull markets are aging.

“But any trough of disillusionment is never the time to walk away; it’s the time to invest and the people who learn how to apply them well during the trough period are those that will win.

“We need to dig deep now to change the way our business, products and industries will work.

“The digital excitement is real – this is the future that is coming; it’s just the timing that is the question.

“CEOs must turn to long-range planning for digital change and scaling.”

The problem is that digital is often seen as being quite short range, Raskino explains. “But marketers are not generally involved in the long-range planning. But the business does plan for the long-term – and there is very long-range planning as well.

“Data shows that 95% of respondents do long-range planning, with 75% doing very long-range planning.”

The issue for CIOs is whether they are involved in that conversation. “That means working with people like the finance and strategy officer who work with the CEO to do long-range planning.”

To do this, CIOs should meet with the long-term planners within the organisation to keep them informed about what’s going on in the digital world, as the most senior person representing technology within the company.

“This will help to open their eyes to what is possible, what’s going on in the industry, and influence them long-term.”

Stories win, Raskino adds, and CIOs should be ready to tell at least three admired CEO stories – about companies that are out there that are doing great things with technology.

“Which firms are recognised as leaders by business leaders today?” Raskino asks. CEOs led with Amazon, followed by GE, Walmart, Burberry, Coca-Cola, Tata, Haier, Lufthansa and Volkswagen/Audi.

These companies all have digital technology at the heart of their business strategies.

TO get CEO buy-in, Raskino believes CIOs should drive technology education as a mission-critical project. “CEOs are beginning to learn how to change their businesses, and are hiring technology- and digital-savvy people into the board.”

Some companies are bringing in new chief digital officers, and sometimes the CIO is being promoted into this role.

“As we get to that, CIOs should be spending a lot more time with competitors – these companies could be your best friends when the challenge comes from outside the industry. We are seeing consourtiums, industry associations and standards within industries.”