Digital transformation is top of mind among CIOs as companies rush to reengineer their IT environments for the digital marketplace. According to the Flexera 2020 CIO Priorities Report, the pace of transformation is picking up speed.
What’s driving this headlong rush into digital transformation? Customer experience. Ninety-three percent of survey participants cite customer experience as the top priority in their digital transformation efforts. The next three priorities cited—improving existing products/services, new products/services and growing new markets—are also customer-centric.
Moving up to business-led IT
The focus on customer experience obliges CIOs to elevate their role and the role of the IT workforce. The traditional role of technology implementer simply doesn’t cut it in the digital enterprise. IT needs to become an equal partner in the business.
As an equal partner, IT works closely with all stakeholders to align the organization’s technology strategy with business strategy and corporate goals. IT also advises business units and departments as they evaluate technology solutions and decide how to allocate their respective technology budgets. Finally, IT participates in technology deployments, assisting stakeholders with implementation concerns and ensuring compliance with security policies and governance issues. This new model is called business-led IT.
CIOs are enthusiastically embracing business-led IT, with 65 percent reporting moderate to heavy adoption. However, they admit that they still need to advance to higher maturity levels with respect to aligning IT with the business. When asked to place their organizations into one of four levels of maturity, only 24 percent rated themselves as equal partners in the business—the highest level.
In responding to business-led IT, CIOs have to divide funding between two competing responsibilities: keeping day-to-day operations running smoothly and fostering innovation and business growth. The Flexera 2020 CIO Priorities Report indicates that central IT departments are currently allocating 36 percent of their budgets to innovation and growth and the remainder to keeping the lights on.
Spend allocation is only part of the business-led IT story. CIOs must also measure business outcomes to understand the business value that their investments are yielding. Here, 84 percent of CIOs say return on investment is the success metric they use most heavily, followed closely by customer satisfaction, cost savings and increased efficiency.
Taming new and disruptive technologies
In digitally transforming their companies, CIOs are adopting new technologies. Seventy-nine percent say their top-planned technology adoption for 2020 is public cloud, and most are taking a multi-cloud approach to maximize flexibility and avoid vendor lock-in. Artificial intelligence is in second place at 72 percent. Other technology priorities include containers, robotic process automation, serverless architectures and blockchain.
These are all disruptive technologies. Consequently, they present both challenges and opportunities. Public cloud, for example, offers unparalleled agility, scalability, economy and reach. However, it also complicates security and governance. CIOs consider cybersecurity to be an essential element of any digital transformation initiative and report that protecting apps and data in the cloud is their top cybersecurity concern. Eighty-four percent of organizations plan to invest more in cloud security in 2020, with 45 percent planning significant increases.
New and disruptive technologies combined with the need to support multi-cloud requires a combination of skills that is lacking in many IT organizations. CIOs are responding with a variety of approaches, with primary emphasis on upskilling and re-skilling current employees to provide them with the needed skills and, in some cases, to move them into entirely different jobs. In addition, they are turning increasingly to external sources.
2020 is proving to be an interesting year for CIOs and their IT teams as they digitally transform their businesses and move up to their new role as partner in the business. The challenges are many but the rewards are compelling. To meet the challenges, CIOs will continue to take action in a number of areas including technology adoption, skillset acquisition and budget allocation and prioritizing their efforts to ensure maximum impact.