Digitalization is on the top of the CIO agenda in 2017. But what does it actually mean? It is quite evident from CIO studies that CIOs today take a very technical approach to digitalization rather than focusing to matters that are essential for the survival of the company (leadership, governance and people) in the digital era. The result is a digital confusion where expectation and ambitions are not aligned in the company. To be successful, we need to understand the different aspects of digitalization and do our homework – what does this mean for us.
Currently, I am reading one of many CIO reports outlining the CIO agenda for 2017. It is an important publication setting the scene for the Swedish IT industry for the year to come. Even though it is a local report, the scene is like many other geographical locations. It is a report that has been published many year and includes 244 Swedish respondents this year. It is a report stating “digitalization” as the biggest focus and challenge for CIOs going forward. But what does “digitalization” actually mean? Are IT organizations driving the right agenda in 2017 to boost digital performance of the company/organization?
Digitalization is truly a complex topic which definition has changed frequently in the last couple of years. In fact, most IT professionals have their own interpretation of “digitalization” and it complicates matter. I remember my first encounter with “digitalization” at a Gartner conference in 2011, and how “the NEXUS of Forces” (social, mobile, cloud and information) was going to revolutionize the IT and business organizations. At that time, “digitalization” was mainly IT/technology driven but quite immature in the eyes of the CIO. Since then, the meaning “digitalization” has altered to focus on leadership, management, agility and organization. “Digitalization” has taken an external focus to focus on the customer, competition, and speed of change. Not seldom we hear talk about management 3.0 and agile management to represent the necessary engine for digitalization 2017. It is all driven by a rapidly changing business landscape and customer behavior. How digitalization will be defined in the future is impossible to predict but we can be sure that the speed of change will not decrease in any way. Digitalization is today not primarily about technology and IT but rather a great force targeting the softer aspects of the organization (leadership and culture). The company with the most dynamic organization, motivated staff and focused leadership will survive the digital revolution. In other words, it is not a technical revolution – but rather a management revolution!
The CIO study 2017 states that most IT organizations are in a transformation mode trying to cope with increasing demand for digitalization (top challenge/interest 2017). The expectations do not only come from customers but also from business and executive leadership. The fear of losing market shares and revenues in a completely changing industry is driving a desperate and short-sighted behavior. But when studying where CIOs 2017 will focus their time and investments – we see how CIOs define “digitalization”. The top three focus areas for 2017 include Cloud, Mobile and modernizing “old” IT systems. The top three investment areas for 2017 include Cloud, Mobile and Security. Even though “IT governance” is considered a key question for 2017, investments and focus is on more technical topics. In other words, “digitalization” is defined by CIOs as improving IT/technical capabilities – somehow aligned with 2011 Nexus of Forces. This definition is quite far from how “digitalization” is viewed today – with focus on leadership, organization and governance. The question I ask myself when studying the report is who sets the “digitalization” agenda and who influences CIOs in 2017? The answer in not surprising – media and suppliers!
My point of view is that most IT organizations are forced into “digitalization” by business or corporate leadership without complete knowledge of what “digitalization” means for them. It is more important not to lose speed and position in the digital race than understanding what the race is all about and how to win. In fact, only 31% of respondents in study reported that they had a digitalization strategy. If you want to survive the “digital race” it is important that you go beyond media and suppliers and own your own ideas, analysis and conclusions about what digitalization mean for you. The conclusion might be scary and tough but it is necessary to for digital survival. How many have done that?
Maybe it is time to divide the word “digitalization” into two different streams or concepts. To separate between “IT Digitalization” and “Digital Transformation” as these two concepts address different aspects of the organization and competitiveness. These are two concepts that are often mixed up and used as synonyms – which they are not.
IT Digitalization: A concept of using IT technology to digitizing business/customer processes with an internal perspective – increase internal capabilities and productivity. Digitalization is all about implementing new IT services in Cloud, Business Intelligence/Big Data, Security, Business Systems (ERP), Internet of Things, Mobility and more. These are indirectly enablers to creating customer value. CIO responsibility. Easy to invest in and implement!
Digital Transformation: A concept to transform the leadership and governance of the company or organization with an aim to optimize customer experience over time (unpredictable). Digitalization is about change in leadership, culture, governance, agility to respond quicker to new trends and customer behavior. CDO responsibility. There are direct enablers of creating customer values. Difficult to invest in and implement!
“Moving Microsoft Office into the Cloud with Office 365 – what value does that bring to the customer? This is IT Digitalization!”
When studying companies and organizations, it is quite evident that these two concepts are often mixed. I don’t know how many companies I have studied that invest heavily in “digital transformation” but is in fact investing in IT tools and processes. It is like re-painting your car and hoping it will perform better. Not going to work – but at least you have done something! What complicates the situation even further is that both “IT digitalization” and “digital transformation” is needed to build digital competitiveness. We need efficient IT services but also agile and innovation IT organizations (leadership and governance) to support business competitiveness. With IT only focusing on “IT digitalization” will continue leave them as a bottle-neck for “digital transformation”.
Anyway, going back to the CIO study 2017, it shows CIO focusing on “IT Digitalization” of the company/organization with heavy IT focus. This is obviously quite natural as this is mainly the responsibility of the CIO in the organization and should not be under-estimated. It is an important part of the digitalization journey. No problem there! But it is important to notice that most CIOs are part of a “digital transformation” driven by Business, CDO or Executive Team which another purpose – where IT plays a different role. Topics to support “digital transformation” (governance, leadership, change management, agility) is far down in the priority list or not visual at all. Reasons might be many but probably they relate to management, business and IT have different definition of agenda and meaning of “digitalization” (IT Digitalization or Digital Transformation). In any case, this miss-match in expectation and ambition create great confusion in the organization where the digital initiative is lost or slowed down. CIO need to align his/her agenda to the business, CDO or Executive Team and not run his/her own race when it comes to “IT digitalization”. This is obviously quite complex and require different skills in terms of leadership, governance and strategic planning. It is these kinds of capabilities that determines whether IT is a bottle-neck or strategic enabler in the “digital transformation”.
- Own your own analysis of how to support digitalization or the digital transformation. Listen less to media and suppliers and more to yourself.
- Understand the expectations on IT – IT digitalization or digital transformation? These are not the same! Are you focusing on the right things?
- Free up time in your agenda to understand why, how and when to support digital transformation. Time is of essence!
- Contact Hans Gillior to support both IT Digitalization and Digital Transformation! There are endless number of consultants focusing on IT Digitalization but very few on Digital Transformation.
The complexity of the CIO role is obviously to support both the IT Digitalization and Digital Transformation whilst ensuring the day-to-day operations. How to free up time, resources and build awareness to drive these areas with right focus and competence? How to prioritize? Looking at the CIO report 2017, I see that 90-95% of respondents talk IT digitalization – with new e-commerce platforms, automating sales processes, implementing Office 365 and other cloud services. Digital Transformation is neglected and the price of neglecting might carry a heavy price in the next years to come. To drive IT Digitalization might be the role of the CIO 2017 but the role need to drastically change to support digital transformation – that’s where the survival of the company lies. It is going to be interesting to see the CIO report 2018 to understand how things has progressed. I would very much question the competitiveness of a company with an IT organization listing cloud or sales platforms as their focus 2018. Something to think about!
Hans Gillior – Senior Advisor and Digital Guru
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