Many CIOs admit they lack an effective digital strategy to weather disruptive forces in the market.
As enterprises ramp up their spending on digital initiatives, CIOs are struggling to maintain the strategic vision needed to turn technology investments into real business change. Studies in 2018 have increasingly shown that IT and digital spending is skyrocketing. But at the same time, many CIOs confess they’re not using that money effectively to bring about the kinds of true digital makeovers that CEOs and boards demand.
One thing is certain: The cash faucets have been fully turned to the “on” position as organizations race to use technology to better engage with customers and invent new digital revenue streams. CIOs are reporting IT spending and staffing at their highest levels in a decade, according to data from a survey by KPMG and Harvey Nash. That corroborates Gartner estimates that global IT spending will reach $3.7 trillion in 2018, clocking in the highest annual growth rate since 2007.
The headlong rush toward digital transformation (DX) stands as one of the biggest drivers in this investment frenzy. According to the “2018 Digital Transformation Report” from PointSource, 94 percent of companies have increased their focus on digital growth in the past year, and 90 percent say digital plays a central role in their business goals. In total, IDC analysts believe that organizations will spend $1.1 trillion on transformation initiatives this year.
But with all that money thrown around, how much of it goes to waste? According to many CIOs, probably a lot. The KPMG/Harvey Nash study shows that three in four CIOs “admit their digital strategy is at best only moderately effective,” according to Peter Ironside, director of KPMG’s Technology Advisory service in the U.K. This tracks with data from an SAP-sponsored survey by Oxford Economics, which shows that while 84 percent of business executives say digital transformation is crucial to their survival in the coming five years, a miniscule 3 percent have completed any digital transformation projects across their entire organizations so far.
It’s why Gartner describes what’s developing as the “digital storm”—basically a period of disruptive turbulence for which business and tech leaders must prepare lest they sink under its surge. At the moment, enterprises are throwing a lot of cash at DX shotgun style, with many lacking any kind of coherent strategy or leadership drive.
84% of business executives say digital transformation is crucial to their survival
For some organizations, that chaos could potentially be harnessed with the unifying force of a chief digital officer (CDO) to help harmonize business strategy.
According to the KPMG/Harvey Nash study, organizations with a CDO are twice as likely to have a clear digital strategy than those without. However, take that with a grain of salt: The study also shows that only a third of those organizations have dedicated CDOs. For the most part, these organizations maintain a joint CIO/CDO position. It’s likely that the higher rate of strategy among CDO-friendly orgs is more correlational than causational.
The lesson for CIOs is that if they want to survive the digital storm, they’ll need to get out of their ruts and start thinking like a CDO—whether or not their organizations have one at the moment.
Part of that may require them to get out of what John Hagel, co-chairman of Deloitte’s Center for the Edge, calls the “efficiency mindset.” In a recent study by MIT Sloan Management Review and Deloitte Digital, Hagel explained that leaders need to focus more on effectiveness than efficiency.
“If you are truly going to accelerate performance improvement, you have to stop focusing on efficiency. If it’s just efficiency, that’s a diminishing-returns game,” he said. “But if you focus on effectiveness, on impact, on value delivered to whatever the arena is—the sky is the limit.”
Most important of all, CIOs and the rest of their organizations need to be moving through their transformation journey with a tangible roadmap.
“Successful digital transformation requires organizations to develop and stick to well-planned growth strategies,” explained PointSource experts in the company’s DX report. “These roadmaps help business leaders differentiate between when they’re making rational technology choices versus when they’re investing because there’s a perception that they should.”