There has been a big spike in companies around the world upgrading their approach to digital from tactical responses to strategic planning, according to the recent global Harvey Nash/KPMG CIO survey.
The survey is an annual event and highly regarded around the world. This year, it sought views from almost 4500 CIOs and IT leaders across the globe.
The results are especially interesting for the digital world, where CIOs have been largely excluded until recent years. Digital technologies enabled business leaders to circumvent IT departments, which — fairly or otherwise — were seen as impediments to change.
Now, as those digital systems mature and become more core to the way companies operate, IT is being called back in to make sure the machine keeps humming despite all the extra complexity and sophistication.
According to the study’s authors, “Many more organisations are addressing digital at a strategic level. In the past 24 months, there has been a 52 per cent increase in the proportion of organisations with an enterprise-wide digital strategy in place. Four in ten respondents take a leading role in this activity and many present digital strategies to the main organisational board.
“A further one in five respondents have digital plans for individual business units. IT leaders at smaller organisations are less likely to have implemented an enterprise-wide digital strategy — 39 per cent have done so — compared with peers at mid-sized (42 per cent) and large (53 per cent) organisations.
Not surprisingly, the industries whose products and services are digital in nature are more likely than their peers to take an enterprise approach. In four sectors — Technology, Broadcast & Media, Telecommunications, and Advertising — a majority of respondents confirmed they pursued an enterprise-wide strategy.
By comparison, the more hardcore real-world sectors of Energy, Construction, Utilities, and Manufacturing are the least likely to think strategically. But even in these sectors the trend is running one way. (And the advent of the Internet of Things is likely to drive further change.)
The authors also suggest there are some interesting anomalies in the data.
“Enterprise-wide digital strategies in the education sector have nearly doubled since last year. Such marked increases are very rare in our experience. We followed up with some CIOs in the higher education sector. They tell us that their leaders are pushing hard to improve the student experience and are demanding innovation in this area.”
While digital is moving up the management food chain, there is still a major problem. Most companies don’t think they are doing a very good job. (Actually that might explain why there is more executive engagement!)
The study notes that “The proportion of respondents (18 per cent) who believe their organisation is ‘very effective’ in using digital technologies to advance their business strategies is modest, both in absolute terms and compared with the other capabilities on which we measured digital effectiveness. This suggests that digital incorporation is relatively immature for most organisations, with lots of opportunity ahead to learn and improve.”
About a quarter of the respondents have gone down the route of applying a structural solution to what is usually a deeply cultural problem — they have appointed a Digital Tsar.
Bridget Gray, managing director Harvey Nash Australia told Which-50, “Over the last year the proportion of Australian organisations having a CDO rose from 20 percent to 28percent; in other words almost one in ten organisations appointed one. That’s a phenomenal growth. ”
“Our observations have been that the typical background of CDO’s in Australia tend to be multi-disciplinary, but heavily biased towards marketing, data, loyalty and commercial experience. That being said, these executives need to be technically articulate but not specifically engineers. Overwhelmingly the key trait of a CDO is that they can work with, and influence, a wide range of people.”
Gray also said that evidence from CIO Survey suggests that the presence of a CDO actually correlates with a heightened influence of the CIO. “Where a CIO is working with a CDO they are 25 percent more likely to be ‘very fulfilled’ in their role. It suggests that the CDO role is key to unlocking potential in lots of places, and it’s not all about a ‘power grab’ for the CDO.”
She said “Australian businesses are hyper-aware of the need to be quicker, faster and create more relevant digital products in a globally competitive marketplace, they therefore need to be an intrinsically involved in the overarching digital and commercial strategy.”
The report meanwhile notes that globally, “One in four respondents now report that their organisation has hired a Chief Digital Officer (CDO) or someone serving in that capacity. Given the extent of enterprise-wide digital planning, it is likely that, in addition to increased hiring of the CDO, a range of technology leaders may now also be responsible for digital. This also reflects the large proportion of the almost 70 percent of organisations who report not yet having a CDO currently in place, with no immediate plans to hire into the role.”
According to the report, the last 12 months have seen a big jump in the engagement of Chief Digital Officers. The authors write that the proportion of organisations with a CDO in place has more than tripled in three years. This, they suggest, indicates a positive correlation between CDOs, the adoption of enterprise-wide digital strategy, and very effective digital capabilities reported in 2017.
Maybe. Or maybe leadership teams grew tired of waiting for the marketers and CIOs to step into the leadership breach, as had been expected.
“After exploding onto the scene in 2014/15, the pace of CDO appointments levelled out somewhat in 2016. But the speed of CDO hiring has picked up again, with 39 per cent growth compared with last year. More than half of large companies have a CDO in post. This is more than twice the global average and is growing at the fastest pace compared with organisations of other sizes. We think that large organisations recognise the need to co-ordinate digital activities across the enterprise to avoid duplication, leverage skills and experience, and exploit synergies. Smaller companies, on the other hand, are much less formalised in their approach. Barely one in five have appointed a CDO. We suspect that they rely on their inherent nimbleness to address their digital challenges.”
Crikey, what do we do now?
The researchers write that “For more than half of our respondents, the top two most popular methods to help foster digital innovation are to dedicate more time for innovation (54 per cent) and to partner with innovative organisations such as academic institutions (52 per cent). Ring-fencing innovation budgets is a distant third option used by three in ten (31 per cent), while hiring a Chief Innovation Officer is a strategy adopted by only one in ten organisations (12 per cent).”
Finally, and as ever, culture is the big impediment to success.
The report reads, “Overcoming resistance to change (43 per cent) is almost twice as likely to prevent respondents achieving innovation success compared with securing financial resources (25 per cent). While there is a ‘burning platform’ of sorts where business leaders want to innovate quickly, workforces generally do not like change and certainly do not like it when it affects them adversely.”