Kathy Gibson is at Gartner Symposium in Cape Town – It’s time for digital to show value. CEOs want to see a return on investment (ROI) on the significant investments they have made in technology so far.
Business leaders are under pressure from all sides and the economy is not as forgiving of new investments as it has been in the past.
“CEOs have been investing in these things for years – and they need it to show value,” says Mark Raskino, distinguished vice-president analyst at Gartner.
CIOs would like to be in the position where their CEOs can see the return in business growth and profitability.
“But many boards need to get more returns now- and they are not getting them.”
Only 7% of CEOs are extremely satisfied with the results of their digital investments, but the picture is not great, Raskino says. “We could do better.”
In fact, some people are getting frustrated – “pounding the desk” – about the money they’ve spent without getting stellar returns.
“Remember, digital starts with the promise that you would be Google one day,” Raskino points out.
A top CEO concern is reglobalisation. There is a possibility that we are heading towards deglobalisatoin, but that isn’t yet clear, So Raskino is taking about reglobalisation, where the centres of power are shifting.
The economic slowdown is quickly becoming a reality – it might be a self-fulfilling prophecy, but it is real nonetheless.
“And then we have the rampant problems of what we call digital dithering. We have been talking about these things for a while, but we need to commit to how we are setting out our strategic stall for the next few years.”
CIOs have to meet these concerns with solutions including geo-flexibility. “Use IT tools to help with the corporate flexing that needs to take place in terms of where markets, products and agility need to be.”
A productivity focus is well overdue, Raskino adds. “It’s not productivity at the expense of revenue making – it is productivity with revenue”
CIOs also need to be clear about the horizons for digital – what we are protecting now and were we are going. “We need short-, medium- and long-term to be clear so we know what we need to do now and what we can defer.”
Trade wars are only part of the reglobalisation challenge, Raskino says. There is a view that the pressure on globalisation is a result of technology that has brought benefits, but also created a sense of unease for people.
Raskino points out that technology like social media causes perceived inequality, even while technology is also guilty of creating real inequality. “So technology is part of the reason we have some of the problems we do today.
“So understand that CEOs probably think of technology as something of a double-edge sword.”
Trade shifts are nonetheless a reality for every boardroom – and not just a US-China thing.
The Gartner survey asked CEOs how trade issues impact their businesses and found that it is a significant concern across the globe, with many nuances in many different markets.
“This is an all-over thing,” Raskino says. “The problem doesn’t seem to be as direct and in people’s faces in Africa. At the same time, there is significant opportunity here.”
He points ot the African Continental Free Trade Area as a big positive, while the continent could also benefit from tensions in other markets.
A major challenge will be the need for companies to access high-end skills if they are to move their manufacturing or other businesses to Africa.
Only 3% of companies are positively impacted by the trade issue, with 19% having no concerns, 58% with general concerns, 20% anticipating negative concerns, and 3% expecting massive impact.
“Reglobalisation is the problem of the coming few years; what can CIOs do to help their CEOs?” Raskino asks.
The answer is to improve the geo-flexibility of the business.
They can do this by applying superior data science to outwit competitors by identifying the best geographic business locations and flows.
They can also deploy cloud-based capabilities to be geographically agile in their operations; and to exploit data sovereignty rules competitively.
By exploiting geographic moves as greenfield opportunities, CIOs can accelerate digital business transformations,
And they can build academic, venture capital and small technology service providers or start-ups relationship in locations with key specialty digital skills pools. “Identify the bright spots on the globe that can make a difference in your strategy and start reaching out to build relationships now.”
The economic slowdown has been among the top business priorities for many years, but this year the number of respondents mentioned profitability – in fact financial concerns have risen by 23% this year, while risk management has also come up in the ranks.
Multiple economic indicators have been causing increasing concern through 2019, Raskino says.
Although CEOs did not prioritise it as much as economic concerns, they do see technology as a major enabler for productivity and efficiency.
“So when they need more productivity and efficiency they are going to turn to you for answers,” Raskino warns. “This could be a challenge if you are not ready for it.”
Once the survey had raised the issue of productivity and efficiency, it asked CEOs if they wanted to reprioritise it – and they did, pushing it right up to the second most important priority.
Economic worries are still top of mind, though, and companies need to increase productivity and efficiency together with new products and services. “How can we create new levels of productivity by re-inventing our industries?” Raskino asks.
This involves CIOs challenging the tired and traditional measures of producitity that are delivering diminishing returns.
They need to work with the CEO to identify the new keys to productivity that will drive a digitally shifting business model.
The concept of sales productivity needs to be part of the considerations, Raskino adds. And CIOs are encouraged to identify the most important top measure and set a strident goal for it.
He says CIOs should exploit their data analytics capabilities to find substantive measures that connect inputs to outcomes. “And apply fiscal and IT innovations of all kinds to create productivity breakthroughs.”
Digital dithering is a real issue, Raskino points out. CEOs see the impact of the digital dragons changing the face of their industries – 64% believe they will start operating in their own industries.
Even when they don’t directly challenge an industry, the way users engage with technology has been changed by the dragons.
CEOs are using the word digital to describe their top five priorities more often every year. In fact, 82% of CEOs have a corporate digital strategy – although the success of these strategies is still seen as pedestrian.
Interestingly, although few CEOs think they are strong at harvesting digital results, at 23%, even fewer CIOs do (6%).
“It is beginning to be a tension point between boards and operational management,” Raskino says.
He recommends that CIOs think in terms of three horizons: being connected within the next three years; autonomous in the three years after that; and possibly deploying mobility services thereafter – defending the short-term while planning for the medium- and long-term.
“The challenge for the CIO is to be the thinking partner for your CEO: he has to navigate a smart path – and you can help him do that,” Raskino concludes.