Businesses with high levels of "digital maturity" can reap significant financial rewards. According to Capgemini Consulting research with MIT, companies implementing digital initiatives such as engaging customers with technology and monitoring business processes in real time are seeing up to 26% higher profits than other companies.
In order to speed up that digital evolution, CIOs are increasingly turning to the utility computing model of the Cloud, effectively buying computing resources and solutions as a service, with the goal of freeing up more time to focus on more strategic activity, such as driving new revenue opportunities.
But some CIOs are starting to realise that although they chose the Cloud to leave them free to focus elsewhere, the management of this new IT landscape is taking up more time than they had anticipated. Creating a resilient Cloud infrastructure, managing Cloud security defence initiatives; SLAs, handling integration issues and heterogeneous Cloud applications, while dealing with tight IT project timelines, all takes time and a great deal of energy. The irony is that despite the potential of the technology, many CIOs find themselves too busy managing the Cloud to actually manage the business.
One of the effects of this extra time pressure is a reassessment of the CIO role. While IT management is increasingly seen as a more traditional CIO activity, the demand for digital transformation and the pressure of managing the cloud is creating a new type of IT leader. Some CIOs who are looking to digitally transform the business are recasting themselves as Chief Digital Officers - CDOs.
CDOs focus on how technology can transform the way their companies do business and boost growth through improved engagement with customers, clients and stakeholders - it's what we think of as an outside-in approach. Traditional CIOs, on the other hand, think first about how the technology must be managed within the business - an inside-out approach.
CDOs help drive business growth by using technology to transform the company. They're in charge of digital business strategy on rapidly changing areas such as mobile applications, big data, social media and web based information marketing. CEOs and other senior executives are now asking practical questions about what digital transformation actually means for their organisation and how they can successfully implement it. The way in which the CIO role is split is often at the heart of that decision.
Starbucks's CDO, Adam Brotman and CIO, Curt Garner work together as team but still have defined roles. The company's CDO has taken on the responsibility of digital initiatives such as mobile applications, eCommerce and consumer-facing programmes. This leaves the CIO with time to focus on managing the IT infrastructure and applications landscape, increasingly through the Cloud.
Bestbuy, the multinational consumer electronics company, sought to boost its sales by creating an omni-channel shopping experience for its customers. This required it to revamp its digital offering to ensure customers were receiving the same, consistent level of service whether they were online or in a physical store. The company eventually had to hire a CIO, CDO and online president to address all of its IT and digital needs.
The American office retailer, OfficeMax, also has a CIO and CDO. The pair works together in the approval process of a number of technology initiatives.
Gartner predicts that by 2015, 25% of companies will have a CDO. "The digital world is moving fast," says Dave Aron, vice president and research fellow at Gartner. "Each public and private sector enterprise has to think through whether and where digital front office and digital head office gaps exist, and if so how to fill them."
As digital transformation starts to become a top priority for businesses, the role of the CIO will continue to split as they are forced to choose between digital transformation on one hand and IT infrastructure, applications and Cloud management on the other. In the quickly evolving world of Cloud solutions, the CIO must decide what type of CIO they want to be. Some may feel trapped in an era of keeping the lights on. Some may be happy and effective in their role as a Cloud and platform orchestrator. Yet others want to be responsible for digital change, using the Cloud as a platform for business growth. They are the future CDOs.
* First published on IDG Connect. So a bit different in tone from what you would expect on the CTO blog. Hope you like it in any case!