CEOs expect digital to have far-reaching, positive impacts on their enterprises – and more and more of them are choosing to head up digital change in their business, reports Gartner.
Gartner says its 2016 CEO and senior business executive survey finds chief executives now understand that digital business is substantial enough to warrant them leading it personally. If they delegate primary responsibility, then the next most likely leader is the CIO.
The rise in the number of CEOs heading up digital change is not surprising given that half of the CEOs surveyed expect to see substantial digital transformation in their industries, or for their industries to be almost unrecognisable within five years, says Gartner.
Examples of digital changes in industries include self-driving cars, the rise of blockchain in banking, the e-cigarette revolution in tobacco and the potential impact of Internet of Things (IoT)-fuelled data science in insurance.
Half of the CEOs surveyed expect to see substantial digital transformation in their industries, or for their industries to be almost unrecognisable within five years
Gartner says it had interviewed 400 senior business leaders (with 70 from the Asia Pacific) in user organisations worldwide in the last quarter of 2015, on their plans through to 2017. The survey results show that while business conditions are challenging, CEOs remain confident enough to sanction strategic investments, particularly on digital business transformation, it states.
The survey finds technology remains a higher priority for Asia Pacific CEOs (at number two) compared to the global average of number six. Asia Pacific CEOs are more aggressive about the external (customer, competition) impact of digital than their global counterparts.
Gartner says a third of Asia Pacific CEOs expect substantial transformation, and 9 per cent expect that they will operate in a new industry by 2020.
CEOs appear to see digitalisation as a positive force, not a destructive one, reports Gartner.
Overall, they are very bullish about the effects of digital change on the gross (pretax) profitability of their businesses, with 84 per cent saying that they expect digital change to bring higher profit margins.
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“One explanation for CEOs' optimistic attitude toward digital change may be because they can see how it helps with the product innovations that matter to customers,” says Mark Raskino, Gartner vice president.
“We asked CEOs what proportion of the customer perceived value of products and services they think is digital. Thinking about the product features that customers are choosing and believe they are buying, CEOs believe the value percentage is already 30 per cent on average and will rise to 46 per cent by 2019.”
The big rise of explicit mentions of the word ‘customer’ was very noticeable in the results of this year's survey.
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"The big rise of explicit mentions of the word ‘customer’ was very noticeable in the results of this year's survey," says Raskino. "CEOs seem to be concerned about improving customer service, relationship and satisfaction levels.
”At the same time, CEOs have become much more concerned about employee issues than a couple of years ago. The emphasis is as much on benefits, retention and training of mainstream staff. It is not constrained only to senior grade 'talent' issues."
Focusing on the Asia Pacific region, Gartner analyst Partha Iyengar says an aggressive approach to technology and innovation is required in the digital economy.
Iyengar says in some cases, enterprises should consider "techquisition" to get innovation into the organisation quickly. This involves going out and acquiring a startup focused on technology critical to the enterprise.
Iyengar notes the Asia Pacific region has already become a significant area for these technology driven acquisitions.
Iyengar also recommends adopting innovative approaches like Gartner’s bimodal methodology to leverage and drive the business value and outcomes out of the increased investments in IT.
“The increased investments are more likely focused on front-ofce IT, but traditional approaches to IT delivery may not yield the desired results.”
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