Digitalisation is on the top of the CIO agenda in 2017. But what does it actually mean? CIOs today tend to take a very technical approach to digitalisation rather than focusing to matters that are essential for the survival of the company (leadership, governance and people) in the digital era. The result? A digital confusion where expectation and ambitions are not aligned in the company.
Every winter in Sweden, a report outlines the CIO agenda for the year to come. This year the report included 244 Swedish respondents. It stated digitalisation as the biggest focus and challenge for CIOs going forward. Even though it is a local report, I’m sure the scene is like many other geographical locations.
What does digitalisation actually mean? Are IT organisations driving the right agenda in 2017 to boost digital performance of the company or organisation?
How do you define digitalisation?
Digitalisation is truly a complex topic and its definition has changed frequently in the last couple of years. In fact, most IT professionals have their own interpretation of “digitalisation”, which complicates matter.
I remember my first encounter with “digitalisation” at a Gartner conference in 2011. “The NEXUS of Forces” (social, mobile, cloud and information) was going to revolutionize the IT and business organisations. At that time, digitalisation was mainly IT/technology driven but quite immature in the eyes of the CIO.
Since then, the meaning of the word has altered to focus on leadership, management, agility and organisation. Digitalisation has taken an external focus to focus on the customer, competition, and speed of change. Often we hear talk about management 3.0 and agile management to represent the necessary engine for digitalisation 2017. It is all driven by a rapidly changing business landscape and customer behavior.
Digital revolution is not a technical revolution – but rather a management revolution!
The future definition of digitalisation is impossible to predict but we can be sure that the speed of change will not decrease in any way. Digitalisation is today not primarily about technology and IT but rather a great force targeting the softer aspects of the organisation (leadership and culture). The company with the most dynamic organisation, motivated staff and focused leadership will survive the digital revolution. In other words, it is not a technical revolution – but rather a management revolution!
Who sets the digitalisation agenda?
The CIO study 2017 states that most IT organisations are in a transformation mode trying to cope with increasing demand for digitalisation (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 themselved define “digitalisation”. The top three focus areas for 2017 include Cloud, Mobile and modernising “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, digitalisation is defined by CIOs as improving IT/technical capabilities – somehow aligned with 2011 Nexus of Forces. This definition is quite far from how digitalisation is viewed today – with focus on leadership, organization and governance. The question I ask myself when studying the report is who sets the digitalisation agenda and who influences CIOs in 2017? The answer in not surprising – media and suppliers!
My point of view is that most IT organisations are forced into digitalisation by business or corporate leadership without complete knowledge of what digitalisation means for them. It is more important not to lose speed and position in the digital race than it is to understand what the race is all about and how to win.
In fact, only 31% of respondents in study reported that they had a digitalisation 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 digitalisations mean for you. The conclusion might be scary and tough but it is necessary to for digital survival. How many have done that?
IT Digitalisation vs. Digital Transformation
Maybe it is time to divide the word “digitalisation” into two different streams or concepts. To separate between “IT Digitalisation” and “Digital Transformation” as these two concepts address different aspects of the organisation and competitiveness. These are two concepts that are often mixed up and used as synonyms – which they are not.
IT Digitalisation: A concept of using IT technology to digitising business/customer processes with an internal perspective – increase internal capabilities and productivity. Digitalisation 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 organisation with an aim to optimise customer experience over time (unpredictable). Digitalisation 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!
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 digitalisation” and “digital transformation” is needed to build digital competitiveness. We need efficient IT services but also agile and innovation IT organisations (leadership and governance) to support business competitiveness. With IT only focusing on “IT digitalisation” will continue leave them as a bottle-neck for “digital transformation”.
Going back to the CIO study 2017, it shows CIOs focusing on “IT Digitalisation” of the company or organisation with a heavy IT focus. This is obviously quite natural as this is mainly the responsibility of the CIO in the organisation and should not be underestimated. It is an important part of the digitalisation 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 “digitalisation” (IT Digitalisation or Digital Transformation).
In any case, this miss-match in expectation and ambition create great confusion in the organisation where the digital initiative is lost or slowed down. A CIO needs to align his/her agenda to the business, CDO or Executive Team and not run his/her own race when it comes to “IT digitalisation”. 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 digitalisation or the digital transformation. Listen less to media and suppliers and more to yourself.
- Understand the expectations on IT – IT digitalisation 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!
The complexity of the CIO role is obviously to support both the IT Digitalisation 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 about IT digitalisation – 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 Digitalisation might be the role of the CIO 2017 but the role needs 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 organisation listing cloud or sales platforms as their focus 2018. Something to think about!
About the author
Hans Gillior is Senior Advisor at Sofigate, specialising in IT management with expertise in Performance Management (Business Controlling, Governance and IT Strategy) and Digital Strategy/Performance in various industry. He also has expertise in Agile IT Performance Management with purpose of optimising business value of IT organisations working in fast changing environment due to high level of disruptive digital trends.
Original source of this text: Hans Gillior’s blog post