What’s your priority this year?
If it’s digital initiatives or growth, you’re in good company, according to Gartner. Those are the top two priorities for CIOs in 2019, based on the firm’s survey of more than 3,000 CIOs from around the world and across a broad range of industries.
Gartner discussed these survey findings and more at their recent Symposium/IT Expo conference.1 A big focus of the conference was the evolution in enterprise business models – particularly as companies seek new growth – and how digital transformation plays into that, along with advice on how CIOs and other IT leaders need to address these top-level management objectives.
The new era of digitalization
Over the past two decades, the way IT has approached its mission has seen a transformation. Gartner highlighted that by noting we have moved from an area of IT craftsmanship (then) to digitalization (now), passing through the IT industrialization stage along the way.
These phases differ in that IT craftsmanship saw a focus on technology, with sporadic automation and an emphasis on programming and system management capabilities. The level of engagement could be described as isolated, with both internal and external disengagement.
As we moved into IT industrialization, the focus evolved to processes, addressing services and solutions and efficiency. The prime capabilities were IT and service management, and as far as engagement, the emphasis was internal. Colleagues were treated as customers, but companies tended to remain unengaged with external customers.
The current age of digitalization is characterized, Gartner indicated, by a focus on business-enabling technology that drives business and operating model transformation. The level of engagement has become highly customer-centric, with an emphasis on security.
For the CIO, this new era is all about prioritization, including recognizing the importance of digitalization and determining which initiatives can transform business models and further drive customer engagement.
Responding to changes
Gartner pointed out that just about half of CIOs indicated that their company’s business model had changed, and for most of those, the reason was the primacy of the customer and response to changing customer needs.
It is extremely important, Gartner noted, for CIOs to remember that their companies’ boards of directors are increasingly focused on three key areas: digital transformation, growth and cybersecurity.
A problem for CIOs, according to Gartner, is that too much of their people’s time is devoted to dealing with legacy technology. A better use of that time would be to investigate ways to leverage disruptive technologies and focus on creating new business opportunities.
And that is happening, particularly with artificial intelligence (AI). Gartner’s annual CIO study reported a 270 percent increase in adoption of AI over the past three years, although only a bit more than one-third of CIOs say they have deployed it already or intend to soon. The CIOs did point to AI as the technology that they see as the top “game changer,” followed by data analytics and the cloud.
Gartner’s advice: Rebalance your technology budget, moving away from the emphasis on legacy systems, infrastructure and operations, which typically account for about three-fourths of the spending. Leading companies are moving in that direction, increasingly devoting more of their budgets to business intelligence, data analytics, cybersecurity and cloud services.
It is ever more important now for CIOs to assist their companies’ CEOs and other top management in evaluating the use of new digital technologies to drive structural growth.
And when it comes to CEOs, a separate Gartner survey suggested that their top short-term priorities have changed. Unsurprisingly, growth is the top priority, followed by corporate changes such as new business models. IT was the third highest priority, which may be helpful when it comes to budgets. Also coming in as high priorities were workforce development and a focus on the customer.
Among the lower priorities were efficiency and productivity, which suggests that CIOs need to change the way they approach CEOs and other management leaders when it comes to technology initiatives. Today’s leaders are generally more concerned about generating revenues than they are about cost cutting.
And, with almost two-thirds of CEOs saying they expect to drive a change in their companies’ business models in the next two years, that will also affect the strategic role of the CIO.
If you missed the symposium, Gartner’s “Use Business Models to Guide Digital Business Transformation” is an ideal paper to help your business adapt to a new tech-based business model. This research note is available to you for a limited time.