Companies across the corporate spectrum are striving to implement digital strategies to drive up agility, responsiveness and improve the customer experience.
But it is proving a tough challenge, as the latest Harvey Nash/KPMG CIO survey has revealed. Over three-quarters of IT leaders admit their digital strategy is at best only moderately effective. On a broader level, over half of organisations rate the alignment of their IT and business functions as moderate or worse.
So why is this, and what can CIOs and IT leaders do to make better headway? I believe there are several key considerations that distinguish digital leaders from others.
The customer perspective is everything
Firstly, any digital transformation must be undertaken by framing everything from the perspective of the customer – organisations have become fluid, and technology has broken down the barriers between the organisation and the customer as well as within the organisation itself. This means that companies have to think and plan from the ‘outside in’, starting at the front end and working back to join systems up across the middle and back offices too; with every decision framed by the viewpoint of the customer. An ‘inside-out’ approach, starting with what suits the business in terms of its existing architecture, is simply unlikely to deliver the results needed.
The transformation can’t be closeted within the IT team: there has to be a pull from the business rather than a push from IT. All elements of a digital transformation (implementation, business change and benefits realisation etc) will struggle, if not fail, without business leadership, accountability and support.
An integrated approach across the business
As well as working closely with leadership and gaining their executive backing, the IT team also needs to be part of an integrated team with other key parts of the business, developing an innovative and experimental culture. Such a culture comes from the market and from customers, not from the technology in its own right.
This need to work with other parts of the business is simply part of the reality for today’s IT teams: two-thirds of respondents to this year’s survey say that more than 5% of their IT spend is managed outside their department. However, the most mature CIOs do not shun or try to shut down shadow IT – they find ways to embrace it and work closely across the business, breaking down barriers.
Once you get into the actual business of implementing digital change, you must have clarity on the standards and controls you will work towards, to help with the selection of the right digital tool or product for what you are trying to achieve. You need these clear standards because otherwise, the business will end up with a proliferation of different digital products that are not scaled, each having separate and inefficient TCOs (total cost of ownership) that will eat into the benefits you are trying to achieve and erode your business case.
Do you need a CDO?
Then there is an additional, wider point to think about: whether to appoint a Chief Digital Officer (CDO). CDOs have certainly seen explosive growth in recent years. All the signs are that having a CDO, either in a dedicated or acting role, bears fruit in terms of moving to digital – nearly half (44%) of organisations with a CDO believe they have a clear and pervasive digital strategy compared to just 21% of organisations without.
However, there is no one size fits all. Only around a third of CDOs are dedicated positions, with the majority being a combined CIO/CDO role. It really does depend on the organisation and its type of business. In a large media company, for example, that is developing and publishing digital products, a dedicated CDO makes good sense. But at the other end of the spectrum, for example, a utilities company with a B2B focus more on operational efficiency, a combined role may be more suitable.
I fully expect CDOs to continue to spread and become more common across businesses – including smaller ones. Indeed, in smaller companies with less legacy technical debt, there is the potential for a CDO to make a bigger impact – helping the business make transformational leaps more quickly.
There is undoubtedly progress being made – with a group of digital leaders emerging – and yet for many organisations ‘going digital’ is frustratingly hard. CIOs (and CDOs) need to keep bringing themselves back to basics and checking the digital strategy against the customer viewpoint: are they still aligned with this? Where there are clear successes, it is important to share them with the organisation so that there are exemplars others can learn from.
Ultimately, the businesses that retain customer viewpoint clarity all the way through the organisation will be the ones most likely to taste digital success.
By Peter Ironside, Director – Technology Advisory, KPMG in the UK. The Harvey Nash/KPMG CIO Survey was launched today.