While not a new concept, most companies are still grappling with what the digital transformation means for them. What is clear is that it offers an extraordinary opportunity for CIOs to step forward and take a leadership role in helping their organisations leverage technology to disrupt competition, break into new markets, and stay relevant for the long term. No wonder 45 percent of CIOs will shift their primary focus from physical to digital by 2018 to deliver scale, predictability, and speed, according to IDC.
In this report, we take a closer look at digital transformation through the lens of the CIO, defining not only what it really means, but also exploring some tangible steps toward achieving it. We have spoken to current and former CIOs, academics, industry experts, and others who have witnessed the emergence of digital transformation and understand what it takes to be successful.
It’s perhaps not surprising that when it comes to leading digital transformation, I believe a CIO with an innovative mind-set—and the right team—is ideally positioned to take the reins. For one, the CIO is inherently closest and most familiar with the new technologies that are driving this transformation, and in many cases, already has strong partnerships with the key technology providers.
But they are also uniquely positioned to work across the entire organisation and partner with various business leaders and teams to identify and help tie various digital initiative investments into a single, holistic digital strategy for the company. And it’s this focus on collaboration that also empowers CIOs to help other business leaders make faster, smarter decisions with data. I believe the companies that solve their data challenge will win…and those that don’t will be challenged to stay in the race.
While the battle for digital transformation is being fought on many fronts, we will highlight a few key areas in this report:
I hope you enjoy reading the report, and find some of the insights applicable to your business as you embark on your own journey toward digital transformation.
Diana McKenzie, CIO, Workday
— Diana McKenzie, CIO, Workday
Historically, the CIO’s primary job has been to manage a company’s operational systems and IT infrastructure. As a result, they have often been more focused on improving productivity and efficiency than on driving new sources of revenue and growth. The emergence of new technologies, including mobile, social, analytics, and particularly the cloud, has turned this notion on its head. Rather than obsessing about speeds and feeds, modern CIOs should focus on broader strategic projects and on aligning an organisation’s IT infrastructure with its business goals.
Liberated of some “lights on” concerns, today’s CIOs can directly influence product and service development by interacting with internal business partners and customers to better understand their needs.
The level of anticipated change in the role of the CIO was evident in the 2018 Gartner CIO Agenda Survey  where results showed “that 95 percent of CIOs expect their jobs to change or be remixed due to digitalisation.” Traditional technology management will take up less and less of the CIO’s time. In its place will be the need to be a change leader with broader responsibilities and capabilities in managing innovation cycles and developing talent.
David Liverseidge, CIO at Nuffield Health, pinpoints the continuous evolution of technology and the consumerisation of enterprise technology as two major change drivers within his function.
“The focus from worrying about data centres and networks to projects that can really change the business is huge,” says Liverseidge. “Not just making people’s lives easier, but around new channels to market, improving customer engagement and the experience, as well as the IT piece of the puzzle.”
For today’s CIO, culture is critical to enabling change and the ability for the organisation to capitalise on technology-sparked opportunities. One way of achieving a strong culture is building teams of various ages, interests, and specialisations.
For James Woudhuysen, visiting professor at London South Bank University and a writer on business, technological, and societal change, digital transformation is a cultural phenomenon that is immature as a practice. He argues that the IT leader is a strong candidate to lead digital transformation, but considering these change projects purely as technology challenges is wrong.
“There are so many examples of digital transformation projects gone wrong. The chances of success would be far greater were it not for the culture issues,” Woudhuysen says. “Digital transformation is more chaotic and more ad hoc than it should be. The responsibility is also fuzzy. The opportunity is there to be more formal and to put the CIO in charge of it.”
Technology industry commentator Martin Veitch, the former editor-in-chief of CIO magazine in the UK, has met thousands of IT leaders and heard an equal number of war stories about transformation. He agrees with Woudhuysen that the CIO is perfectly placed to drive digital transformation and he points to the need for strong leaders with an appetite for disruption and challenging the cultural equilibrium.
“You’re going to want to have someone with the strength of personality, the appetite for work and detail, and the ability to steamroll naysayers,” says Veitch. “It can be a very tough job. You’re taking people out of comfort zones, challenging the status quo they’ve helped establish, and rightsizing, automating, and shaking up common perceptions and the ‘we’ve always done it this way’ mentality.
In order to enable such cultural change, IT leaders must embrace the notion of ‘failing fast’ and understand that there will be defeats along the way. A culture of trust must be instilled to help eradicate the fear of failure within the IT function, and encourage new ways of driving innovation.
In an interview with PwC, Christiaan De Backer, CIO of TomTom, commented: “The ability to make this transformation requires an appropriate innovative culture within a company. You have to allow innovation and accept that not every idea will be a success. You should also look at what is happening in other industries and learn from this.”
To be truly effective, the CIO should surround themselves with both business and technology partners who understand the broader business objectives and can operate honestly and transparently to achieve these goals.
— David Liverseidge, CIO, Nuffield Health
Digital transformation comes in many forms, but it provides an opportunity for business functions, such as finance and HR, to move away from manual, labour-intensive processes and automate key areas, including payroll and managing employee relationships. This frees up leaders in each area to see issues and opportunities early, enable employees, and guide the business with data-driven decision-making. Getting to this point, however, requires some form of digital transformation and strong partnerships between the CIO and their peers.
While data insights have always been important, technologies have evolved to the point that CIOs are now in a position to empower business leaders to dramatically improve the timeliness and quality of critical business decisions. The CIO today must play a central role in helping leaders unlock data and maximise insights across the organisation.
This sentiment is not lost on tech leaders, with an EY survey showing that nearly 72 percent of CIOs rated the need to build relationships and trust with key internal partners as highly important. For Nuffield Health’s Liverseidge, partnership is about ensuring IT actively leads the two-way conversation around enabling innovation across the business, rather than being viewed as a budget hog and slowcoach by internal partners.
“In some organisations the IT department still thinks it has to be the department of ‘no,’” says Liverseidge. “At Nuffield Health, we work closely with specific business partners whose role is to be the voice of the technology agenda out in the business.”
“You have to be willing to invest in people and put them out there in the business to listen; otherwise, there is an increasing risk that the CIO will become irrelevant over time,” Liverseidge continues. “You’ll be left nursing the decline of the legacy systems and being a passive observer as these new tools pop up, of which you have no control over.”
Building partnerships to support digital transformation projects for those who understand its power is one thing; however, but what does a CIO do in the face of resistance from partners and internal fear?
In the early 1990s, Richard Sykes led an early (and now famous) example of digital transformation at UK pharmaceuticals giant ICI (now part of AkzoNobel), leading the company’s IT department and aligning it with business needs. At ICI, he inherited an IT setup and a team that thought it was doing a great job—a view that wasn’t shared by the lines of business.
This may seem a world away from the challenge facing CIOs today in terms of digital transformation, but the barriers facing ICI are the same perennial pain points blocking IT change efforts. Sykes was unusual in that he was not from an IT background and was brought in as a change agent who could make IT and the lines of business talk to each other in a common language. For Sykes, a major IT change project has to include discussion with the board—but how do you get the board to listen?
Sykes did it through a coup de théâtre. He created a vision of a successful ICI of the future with doctored copies of the Financial Times lauding the company’s amazing end-of-year results. The idea: if Sykes could convince the chief executive officer that his IT plans would lead to positive business outcomes, then he would get sign-off.
“You break behaviors by telling stories,” he says, “and telling stories means you get the support of board-level players.”
Jerry Fishenden, who has held a wide variety of leadership and advisory roles in government as well as in the public and private sectors—and worked on major projects such as Modernising Government and Government Digital Services (GDS)—agrees with Sykes that storytelling is critical to building consensus with partners at all levels of the business.
“At a certain level of seniority you have to move away from talking about products, bits and bytes, and speeds and feeds,” Fishenden says. “It’s a consultative sell so you have to listen to people’s problems and then suggest solutions, and really get close to them and thrash out any issues that arise. You can’t always stick to the old cash cows. You have to change.”
The CIO’s shift from infrastructure gatekeeper to strategic influencer is clear in a 2016 Harvey Nash survey, which shows that 57 percent of CIOs are now sitting in the executive boardroom, while CIO magazine’s 2016 CIO 100 placed the number of CIOs now reporting directly to their organisation's CEO at 56 percent.
Nuffield Health’s Liverseidge says, “As a CIO, you should always think about the pie chart of where you are spending your time. I believe I should be spending increased amounts of my time outside my organisation looking at where else we can take technology and innovation. We shouldn’t live in a bubble.”
— Richard Sykes, former CIO, ICI (now part of AkzoNobel)
So, what are the practical steps CIOs can take toward achieving digital transformation?
A good place to start is to think about how they can foster a data-driven culture. Executives and knowledge workers can make faster, more accurate decisions using current or real-time data. A University of Cambridge study found that data-driven businesses have output and productivity gains that are 5 to 6 percent higher than other companies.
Employees from CEOs to front-office staff can access analytics tools to drill down into data to uncover customer and business trends as they’re occurring. When business and operational data is made broadly available, decision-making is accelerated.
Gaining those insights is critical in a business environment where time is the new currency.
“How well a company leverages data to solve problems and find new opportunities is what will separate the most successful organisations from the rest,” says Workday CIO Diana McKenzie. “The power of data is unleashed when you can aggregate and analyse it across multiple functions within your organistion to better inform decisions.”
Shifting to data-led decision-making can have a powerful business impact. Data-driven organisations are 23 times more likely to acquire customers, six times more likely to retain those customers, and 19 times more likely to be profitable, according to the McKinsey Global Institute.
To help inspire key stakeholders on the merits of digital transformation, McKenzie finds that it’s most effective to demonstrate examples of how different technologies can help the stakeholders’ teams do their jobs more efficiently and effectively.
“It’s also useful to pull in advocates that you’ve had previous success with in other parts of the business who can help get other teams on board faster with a new digital agenda and assist with the company’s cultural mind-shift,” she says.
Achieving “quick wins” is another way to gain buy-in from functional and business leaders. McKenzie recommends starting with a business partner that a CIO already has a strong relationship with, and collaborating to address a specific business problem.
CIOs must also determine how they can optimally structure that balance between fresh, external skills and an evolving, learning internal team. In addition to seeding skill sets for cloud, artificial intelligence, and data science, CIOs also need digital strategists who can think creatively about new business models and are able to work with functional leaders to plot new organisational processes. The development of softer skills, such as the ability to build interdepartmental relationships and a broader understanding of the broader business objectives are also key for today’s CIO.
“The CIO needs to make sure that everyone understands what the end goal is and their role in making these changes,” says Mark Overton, CIO at HKS, Inc., a global architectural firm. “You have to break that fear down with continual communication.”
For former CIO editor Veitch, a cautionary notecomes in the form of a Gartner research in 2017 , which stated that “although more CEOs have digital ambitions, the survey revealed that nearly half of CEOs surveyed have no digital transformation success metric.”
“There are lots of CIOs who pride themselves on being change agents and tend to make a living by changing things cosmetically and then moving on, leaving the next person to deal with a lot of siloed services, tools, platforms, and versions,” Veitch says. “The KPIs are all green and the project goals are ticked off, but there’s no net business benefit.”
One of the most critical parts of digital transformation is getting the user experience right. That means not only the usability of applications CIOs make available to employees, partners, and external customers, but also the experience of working with the IT team and tools. Users have to be able to instantly find value in the work of IT, but in order to do that, CIOs must show how technology can drive business forward.
— Mark Overton, CIO at HKS, Inc.
We hope this report has provided some food for thought. Digital transformation never ends, but is an ongoing process where leaders adapt to flex new systems, ideas, and tools.
Learn more ideas about the opportunities and challenges of digital transformation with Workday.
1. IDC, IDC FutureScape: Worldwide CIO Agenda 2017 Predictions, #US41845916, November, 2016
2. Gartner Press Release, Gartner Survey of More Than 3,000 CIOs Confirms the Changing Role of the Chief Information Officer, October 2017
3. Gartner Press Release, Gartner Survey Shows 42 Percent of CEOs Have Begun Digital Business Transformation, April 2017