Digitization: Driving change, changing the game

in Advisory, 08.07.2015

Two-thirds of CIOs expect digital disruption to fundamentally change their business, according to the latest global Harvey Nash CIO Survey in association with KPMG[1] . A good reason to take a closer look at this major game changer.

Changing business models

In recent years we have witnessed how better and increasingly powerful technologies have penetrated the markets. Innovations such as 3D printing, online advertising, mobile payment or the internet of things (IoT) have set the stage for new business models in today’s digital environment. These developments present a serious challenge to existing market players, who risk being overtaken unless they adjust their own business models to remain competitive. Two out of three CIOs surveyed recognize the need for action and as many as 90% expect digitization to have a medium to high impact on their own business in the next 10 years. Responding appropriately to these market shifts is essential, then, so it’s surprising that only 43% of those polled said they had a digital strategy. Companies need to ask themselves whether they’re prepared for the upcoming challenges – it seems that many are not.

Shifting priorities on CIO agendas

The findings above suggest that digital issues will increasingly dictate management focus. Leveraging business intelligence and analytics, understanding customers and actively managing social media are topics pushing their way to the top of CIOs’ agendas. The survey also reveals that while traditional IT issues such as operational efficiency, business process optimization and cost reduction remain key considerations, they’re losing significance compared to newer concerns. In fact, the trend away from pure cost awareness and towards more business value creation appears to be getting stronger as reflected by increasing IT budgets over recent years.

CIO survey 2015

(Source: CIO Survey 2015, click infographic to enlarge)

Evolving new roles

New roles have recently evolved in the digital landscape and are showing more traction. The Chief Digital Officer (CDO) is on the rise globally. Of the companies surveyed this year, 17% have already created such a role compared to just 8% last year. At organizations without a dedicated CDO, the marketing director is mainly responsible for digital issues. As digital becomes more relevant, IT and marketing are increasingly joining forces to meet new challenges. However, new skills are not only in demand at top management level: Technical skills in areas like big data analytics or expertise in organizational change management are just as important. With resources on the market in short supply, the war for talent in these areas is already in full swing. Where the required skills cannot be recruited, more and more CIOs are using outsourcing partners to access the skills they need. In fact, a lack of in-house abilities is an even stronger outsourcing driver than cost saving – an interesting development.

Leveraging the power of digital innovation

Tackling digital challenges is demanding. Start-ups and small, agile companies benefit from lean structures and have no legacy burdens as they face these challenges. This gives them a great advantage over more seasoned competitors. But it’s not game over for established players. Organizations that act proactively by setting up and implementing a clear digital governance and strategy are well placed to fully exploit the huge potential of digital innovation.

 

[1] The survey represents the views of around 4,000 technology leaders from more than 30 countries all over the world.

 

 

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