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​Are CIOs going back to the back office?: PwC

​Are CIOs going back to the back office?: PwC

Where enterprise technology used to be the sole domain of the CIO, there’s a shift happening in many organisations, according to the 2015 Digital IQ Survey.

Companies may be overlooking digital disruption of another kind—that inside their organistions, where enterprise operating models are under pressure, evidenced by shifting tech spending patterns and evolving digital roles.
Companies may be overlooking digital disruption of another kind—that inside their organistions, where enterprise operating models are under pressure, evidenced by shifting tech spending patterns and evolving digital roles.

While many CIOs predominantly lead all internal and external digital efforts today (40 per cent) this will drop off to 35 per cent in three years, according to PwC’s 2015 Digital IQ survey.

A majority (65 per cent) of respondents, meanwhile, indicate the CIO’s key responsibilities in three years’ time will be limited to all internal IT efforts or all internal IT efforts in combination with innovation.

Digital IQ, now on its seventh year, tracks best practices, evolving attitudes and priorities regarding digital technologies around the world.

PwC says this year, it interviewed nearly 2000 executives across 51 countries (including New Zealand) – split equally among business and IT executives.

The 2015 PwC Digital IQ survey finds new and evolving roles in the executive suite, and a rise in technology spending outside of the ICT department.

The traditional CIO role is fragmenting across new and existing leaders.

PwC Digital IQ Survey

The survey points out where enterprise technology used to be the sole domain of the CIO, there is a shift happening in many organisations, with the traditional CIO role fragmenting across new and existing leaders.

Some companies are appointing Chief Digital Officers (CDOs) to lead digital transformation efforts.

Read more: ​Study finds most insurers unprepared for disruptive tech and industry transformation

In some regions the marginalisation of the CIO role is even more pronounced: In North America, 44 per cent of CIOs have responsibility for digital across the business and this is expected to sharply drop to 31 per cent in three years.

Tech spending is also rapidly shifting. The majority of spending (68 per cent) is now coming from budgets outside of IT’s, a significant increase from 47 per cent the prior year.

In Central and Eastern Europe (73 per cent) and North America (71 percent), an even greater share of spending is happening outside of the CIO’s control, the study states.

Who is ultimately responsible for investments has also changed, with the CEO (34 per cent) at the forefront, followed by the CIO (27 per cent), the CDO (14 per cent), and the CFO (13 per cent). CIOs in North America and Western Europe are more likely to be responsible for digital investment, while in the Middle East it is CDOs.

“Everyone talks about digital, but few understand the specific leadership behaviours that drive performance,” says Chris Curran, PwC advisory principal and chief technologist.

Read more: Kiwi execs say digitalisation important, but need to ‘walk the talk’

“We are seeing signs this is changing, with leading digital practitioners looking to how today’s investments can improve tomorrow’s business results. This is a critical mindset, especially as digital technologies become more pervasive.”

The survey finds executives are seeking more strategic value from digital investments, with 45 per cent stating that their number-one expectation from these investments is revenue growth, followed by 25 per cent seeking better customer experiences and 12per cent aiming for improved profitability. Further solidifying the correlation companies are seeing between digital and business success, 31 per cent of global respondents stated they are investing more than 15 per cent of revenue into digital investments.

Overall, companies are prioritising their investments in order to drive revenue and profit growth, but only within the confines of their existing business models, reports PwC.

Only 1 per cent of executives says their number-one expectation for digital was to disrupt their own or other industries. Instead, executives are seeking immediate returns.

PwC’s 2015 Digital IQ survey links 10 key company actions directly to stronger financial performance:

  • The CEO is a champion for digital. 73 per cent of business and IT executives says that their CEO was a champion for digital, a significant increase over the 57 per cent who says they had a CEO champion in 2013.
  • The executives responsible for digital are involved in setting high-level business strategy. CEOs may set the tone and vision for digital, but those responsible for operationalising digital, often the CIO or CDO, are instrumental in setting high-level business strategy. This is especially true in companies where digital leaders have their own P&Ls and are responsible for a significant share of the business.
  • Business-aligned digital strategy is agreed upon and shared at the C-level. Organisations and leaders that are aligned are more likely to maximise investments and can better identify areas of overlap and resource gaps that could derail efforts.
  • Business and digital strategy are well communicated enterprise-wide. Strategy isn’t complete without engagement by everyone in the organisation. Currently, 69 per cent of companies say that business and digital strategy are shared enterprise-wide and last year that figure was 55 per cent and in 2013 it was 50 per cent.
  • Active engagement with external sources to gather new ideas for applying emerging technologies. Top-performing companies find digital inspiration everywhere, especially outside their organisation. Innovative companies are much more likely to evaluate many emerging technologies, characterising their approach to adoption as one that’s purely technology driven (69 per cent), in contrast to the rest of companies (54 per cent). They also look to a wide variety of sources to seed their idea pipeline, actively engaging with industry analysts (63 per cent), customers (46 per cent), and vendor ecosystems (44 per cent) the most.
  • Digital enterprise investments are made primarily for competitive advantage. An indicator of evolving roles, 68 per cent of digital spending comes from budgets outside of IT’s budget, a significant increase from 47 per cent the prior year. Also, the executive responsible for digital investment continues to shift, with the CIO (27 per cent) and the CDO (14 per cent) sharing that job with the CEO (34 per cent) and CFO (13 per cent).
  • Effective utilisation of all data captured to drive business value. Getting value out of data often means using it to guide strategic decisions like how to grow the business or whether to collaborate with competitors. This remains a challenge for executives, citing specifically behavioural and skills barriers, such as understanding which data to use and how it benefits their role, nearly as much as issues with data quality or accuracy.
  • Proactive evaluation and planning for security and privacy risks in digital enterprise projects. As companies add new technologies, customers, partners, devices, and data, there are ever more interdependencies and risks to address. That’s the baseline today. What’s different when it comes to Digital IQ is the level of proactivity required. Businesses need to consistently think about how their cybersecurity strategies can help build brand, competitive advantage, and shareholder value.
  • A single, multi-year digital enterprise roadmap that includes business capabilities and processes as well as digital and IT components. Progress has ebbed and flowed as digital has become more pervasive in the enterprise while at the same time also more fragmented. Today, 53 per cent of companies have a comprehensive roadmap that includes business capabilities and processes, as well as digital and IT components. Four years ago 63 per cent of companies did.
  • Consistent measurement of outcomes from digital technology investments. Consistency in measurement is also crucial. Businesses and their boards want to see the value they’re achieving from digital investments. Top-performing companies lead lower performing ones here again (79 per cent vs. 72 per cent). Demonstrating this requires a combination of traditional metrics (like ROI) to track against growth goals, as well as newer ones for measuring more disruptive investments.

Send news tips and comments to divina_paredes@idg.co.nz

Follow Divina Paredes on Twitter: @divinap

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