Kathy Gibson at Gartner Symposium, Cape Town – Digital business means that we have entered the third era of enterprise IT – and CIOs are excited about the new directions they can take the business.
Tomas Nielsen, research director at Gartner, explains that the first era focused on IT craftmanship, the second on IT industrialisation, and the era we are in now is about digitalisation.
The latest moves build on previous trends that spoke to taming the digital dragon and flipping to digital leadership. Today, it’s about building the digital platform in order to seize the digital ecosystem opportunity.
“Now there is a new job: the role of the CIO is changing,” Nielsen says. “CIOs have to ask, if their enterprise was looking to fill your job today would they hire you?”
As the CIO role changes from delivery executive to business executive, the CIO has to change as well.
In terms of performance, only about 6% of CIOs stand out as performance leaders, with about 7% trailing the majority.
Good news for CIOs is that they are being given the resources to spend on digitalisation. African CIOs are slightly ahead of the global trends with 3,1% budget increases in 2017, against a world average of 3%.
“So it’s no longer a cost-cutting game; it is a digital business game,” Nielsen says. “And the CIO needs to grasp this opportunity.”
Spending on the technologies that underpin digital business is growing: artificial intelligence has seen 150% growth in 2017, with Internet of Things (IoT) growing 80%, and 3D printing growing 70%.
The CIO is well placed to lead the charge to digital business, Nielsen says. “Our advice to CIOs is to anticipate this change, and communicate that. As a business executive, the CIO needs to engage the rest of the enterprise.
“There is a real opportunity for the CIO to take on the digital leadership role. Are you ready for that?”
The CIO’s mindset is right: 77% of African CIOs have made the mindset switch; 50% of them are responsible for the digital transformation strategy of their organisation, and 43% are in charge of innovation.
“CIOs in Africa are fully embracing and capitalising on digital business,” says Nielsen. “Among respondents from Africa, on average, 29% of organisations’ processes have been optimised through digital means. As a result, their role is moving to non-IT responsibilities, forcing them to reimagine their role within the organisation.”
CIO respondents in Africa have made significant inroads in their digital journey. The survey showed that 45% of CIOs in Africa are either designing or delivering their digital initiative, while 13% moved beyond delivery into scaling and harvesting on their digital initiatives.
However, the majority of CIO respondents in Africa remain in the initial stages of their digital journey – and for these CIOs, the biggest barrier is the organisation’s culture.
“Nearly half of all CIOs said that culture is the biggest barrier that prevents them from scaling their digital business transformation,” says Nielsen. “Their second highest challenge is shortage of resources.”
This means that CIOs in Africa need to embrace a broader role beyond technology, and hone their change management and transformational leadership skills to succeed in their digital transformation journey.
“Digital business is clearly taking centre stage in the IT department,” Nielsen adds. “It is also eroding the barriers to change and increasing the adoption of new technologies and trends in Africa.”
As such, digital business is not only driving the need for new roles in IT, such as API product managers, chief analytics officers, user experience designers and cloud architects, but for CIOs in Africa another critical investment area is cybersecurity.
Cybersecurity has become one of those unavoidable factors that CIOs have to have an answer for. “It’s not about if you will have a security breach, but when,” Nielsen says. “The CIO’s role is to figure out how to pre-empt that, and manage it when it happens.”
The CIO survey found that 36% of CIOs in Africa have already invested and deployed a digital security solution and an additional 30% are already actively experimenting with digital security. Twenty-nine percent of CIO respondents in Africa who are in short-term planning or already invested in digital security said it will necessitate the most new skills to be added to the IT department by the time the solution is operational.
“Following the recent cyberattacks, it is not surprising that cybersecurity investments take centre stage in Africa,” says Nielsen. Ninety-six percent of respondents believe that cybersecurity threats will increase in the next three years. Increased focus and need for cybersecurity has essentially become the unavoidable consequence of the recent years of growth in cyberattacks.
“CIOs should pay increased attention to this space, as it has direct attention from both corporate executives and external board members.”
The Internet of Things (IoT) was ranked as the second highest investment in digital technologies by CIO respondents in Africa. The survey found that 11% of CIOs in Africa have already invested and deployed IoT, 17% are actively experimenting with it, and 25% have medium or long-term planning for IoT.
“Interest in artificial intelligence (AI) is also growing with most respondents indicating AI is either on their radar or a medium to long-term plan for 38% and 27% of CIOs in Africa, respectively, with only 2% having deployed AI,” says Nielsen.
Digital change is causing the role of the CIO to evolve. Respondents reported that they were spending 38% of their time with the executive leadership team – up 8 percentage points from three years ago. CIOs are increasingly involved in traditional business tasks such as cost optimisation, building business agility, and developing business strategy and planning.
In addition, CIOs are increasingly being assessed on business-focused metrics as well as IT-performance metrics.
“The key is to increase investment in technologies that help organisations reach their business objectives. CIOs should align their priorities with the priorities of their C-level partners. This requires that they know what those priorities are,” Nielsen says.
There is no magic formula for elevating the CIO role to directly reporting to the CEO, Nielsen says. “But the higher you get in the digital journey, the more the CIO reports to the CEO.”
The key is in bringing the digital initiative to the scaling and harvesting phase of the business, he adds. “Technology is not the biggest barrier here: it is the CIO’s ability to drive the change.”
But digital business is a team effort, Nielsen says. “The CIO needs to build on the energy and commitment for the business.”
This doesn’t necessarily mean that digital transformation teams are necessary. “But we see that 71% of the top performers have digital teams. And 75% of these teams have an enterprisewide transformation responsibility.
“If you really believe in digital, it can’t be a separate silo. Having a digital team speaks to the need to have a digital reality in the business. Digital transformation is a business transformation, not a technology transformation.”
It could be counter-productive if digital teams are completely separate from the rest of the organisation, so companies need to keep their digital ambitions top of mind.
The principles of digital business are rooted in ambition, design, delivery and scale in order to be able to harvest results, according to Nielsen.
“You need to start with the why, not the how. Be very clear about why you are doing this.
“The digital principles are important: have a vision; have a timeline; and have a strategic focus – what are we driving this business towards.
“Yes, you need to look at the leadership structures and the KPIs, but a lot of the success comes down to what the ambition is.”
Nielsen says there are four levels of ambition:
*Digitisation – getting ready for digital transformation, where the platforms are tied together and the basics got right.
* Business function optimisation – where the technology is used to optimise the business functions.
* Operating model transformation – this would include things like predictive maintenance, change how you do things.
* Business model re-invention – where the company would either change the business model or create a new startup.
“CIOs are under a lot of pressure, and the opportunities for IT are changing and there is a growing awareness that IT can have a business impact,” Nielsen says.
“The advice I give CIOs is to make digital become relevant. If there is one thing they should do, it is to help the business leaders get their bonus in 2018.
“Even if the CEO is not interested in digital business, if you talk about delivering better results then they open their eyes and ears.”