The Digital Disconnect Facing CIOs

Industry convergence is one of the most significant trends transforming business in today’s digital economy. Companies in formerly distinct sectors are quickly merging, partnering, and collaborating, resulting in a gradual breakdown of industry barriers.

Chief information officers recognize that this is creating severe digital disruption that could easily target their industry. According to the IBM report, Redefining Connections: Insights from the Global C-suite Study – The CIO Perspective, 79% of leading CIOs expect industry convergence to have a huge impact on their business.

Business leaders also recognize that industry convergence can be a double-edged sword. On one side, it creates new growth possibilities by enabling innovative cross-sector opportunities. But at the same time, it opens the door for agile competitors and industry newcomers to swoop in and disrupt your core business.

CIOs must play a critical leadership role in the c-suite and collaborate to drive transformation and ensure organizational continuity in the midst of digital disruption.

The digital disconnect

While digital transformation sweeps through industries worldwide, it’s surprising how many companies remain ill-prepared for the disruption. According to The Economist Intelligence Unit (EIU) report, Digitising IT: IT Leadership for the Next Phase of Digital Transformation, only 21% of global companies have defined and implemented an organization-wide strategy for digital transformation.

This is despite the fact that most companies have implemented an array of digital initiatives. In fact, out of the 800 business and IT leaders who responded to the EIU survey, only 3% said their company had not introduced any digital initiatives.

There is obviously a disconnect between the execution of digital initiatives and the development of a corporate digital strategy. Some of this can be attributed to singular digital initiatives being undertaken in siloed corporate departments, and varying opinions in different units. According to the EIU report, for example, only 14% of marketing executives say their organization has a company-wide digital transformation strategy, whereas 26% of IT executives say one exists. At the same time, 30% of marketing respondents say individual departments have their own digital transformation strategies, compared with only 23% of IT executives who say the same thing.

The problem is that a siloed approach to digital transformation won’t work. Collaboration is key, and the IT department is often stuck in the middle, trying to make everything function properly. More often than not, IT plays a legacy role maintaining current systems and operating as a service provider to the company instead of focusing on digital innovation.

What’s interesting about the EIU survey is that 73% of respondents describe digital transformation as a “high” or “relatively high” priority for their company, yet only 14% of respondents say the IT department leads technology innovation within their business. Ironically, the report shows that both IT and non-IT respondents want more involvement from IT, and believe CIOs should take more of a leadership role when it comes to digital innovation. The desire is there, so CIOs must take charge and become the cross-functional connective tissue for digital integration and collaboration across the enterprise.

In order to do this, CIOs must ensure the following things are in place:

  • Strategic digital vision
  • Emphasis on innovation
  • Cross-organizational collaboration
  • Proper platform model

Have a clear digital direction

CIOs must have a clear digital direction in order to guide the organization through digital business innovation. This means striking a balance between strategy and execution, and communicating that plan to the rest of the company.

Strategy: A vision for what to do with digital business model transformation.

Execution: An understanding of how to do it with agile, collaborative, and portfolio-based processes focused on digital business innovation.

IT leaders must learn to balance efficiency and the customer experience with operational transformation and innovation by creating digital efficiencies and new digital revenue streams. They must do this by understanding their priorities for digital transformation.

Five CIO priorities for digital transformation

How are CIOs preparing to lead digital disruption in the face of industry convergence? According to the IBM and SAP reportDigital Transformation and the CIO, IT leaders must focus on the following five priorities:

  1. Delivering insight and intelligence: CIOs should understand that Big Data, analytics, and cognitive computing could help improve decision-making, planning, and strategic initiatives. (According to the infographic, CIOs emerge as transformation leaders, 85% of CIOs are focused on enhancing their company’s insight and intelligence.)
  1. Exploiting new delivery channels: Exploring new channels should be a top priority to engage with customers and partners in new ways to enhance or develop diverse initiatives. This could include the Internet of Things (IoT), mobile technology, cloud-based platforms, and other emerging initiatives. (77% of CIOs are exploring new delivery channels.)
  1. Renovating the core: IT leaders must rethink end-to-end business processes and provide a stable core IT environment to enable business transformation. (38% of CIOs say key investment areas are business process optimization and management.)
  1. Becoming an agile organization: CIOs should focus on building an agile culture that supports rapid innovation and new offerings in order to reach the market first. (90% of leading CIOs are focused on supporting agile innovation.)
  1. Securing the enterprise: IT leaders are focused on securing their core systems as they progressively collaborate with partners, suppliers, and customers. (76% of CIOs believe security is the biggest IT risk they face.)

The double-edged sword of industry convergence continues to force digital disruption in multiple industries by opening the door to new opportunities, innovations, and more agile competitors. It’s no longer a question of if your company should transform, but when and how. Your CIO should have those answers, and be prepared to turn that insight into action and lead your organization through digital transformation with the right strategy and execution. Is your CIO prepared to lead the way?

Find out more about Digital Transformation with IBM and SAP.

Read more details in the IBM and SAP report, “Digital Transformation and the CIO.”

See the infographic “CIOs emerge as transformation leaders.”

For an in-depth look at how the digital era is affecting business, download the SAP eBook“The Digital Economy: Reinventing the Business World.”

Learn more about the driving forces behind digital transformation in the SAP eBook, “Digital Disruption: How Digital Technology is Transforming Our World.”

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