IDG QuickPulse * The New CIO: Taking Charge of Innovative Digitization

The New CIO: Taking Charge of Innovative Digitization

With digital literacy now a corporate mandate, chief information officers have an unprecedented opportunity to lead a process that will fundamentally reshape their business. Success will require vision, execution and the ability to bridge organizational and cultural divides.

Digital innovation is about using emerging technologies to enhance the customer experience, create new products and markets and find operational efficiencies. But transitioning to digital business is no small task. A recent Capgemini/MIT survey reveals that only 7 percent of companies are able to rapidly organize around and exploit new digital opportunities.

One such organization is Phenix Energy Group, Inc., a manager of complex projects. It is using software-defined infrastructure to enable massive automation of its IT resources. The result: Its IT staff is 90 percent smaller than it would have been in a traditional data center, and the cost savings are passed along to customers. “Our goal is to automate systems to the greatest-possible extent,” says COO and acting CIO Bruce Perrin.

Approaches to innovationNew research by IDG Research Services and Capgemini indicates that companies taking a

proactive approach to digital innovation see bigger transformative opportunities than those responding reflexively. Proactive companies are also linking digital innovation to specific business outcomes and have a formal innovation process.

Not surprisingly, all companies surveyed intend to use digital innovation to improve the experience for newly information-empowered customers. Nearly six in ten said they expect to apply technology to new-product development. Among proactive companies, the ratio is eight in ten.

Proactive organizations are also setting their sights high. Six in ten said they are extremely or very likely to make a significant change to their current business model through digital innovation, compared to just 22 percent of the reactive respondents.

Internal efficiencies are also an important motivator. Five out of six respondents are highly likely to use digital innovation to enhance existing technologies or processes or to improve efficiency. Nearly all proactive respondents said this.

Technology investments The IDG research reveals both similarities and differences in how the two types of respondents set technology priorities.

Of the 17 technologies measured, only two—convergence and the Internet of Things—are targeted for investment by fewer than half of the respondents. Security tops the priority list, followed closely by mobility, business intelligence, big data/analytics, business continuity, automation of core business processes and compliance. Interest is especially pronounced among proactive organizations.

There are interesting distinctions between proactive and reactive groups in other technology domains. Proactive firms are investing more heavily in convergence and social

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Recent Capgemini/IDG research suggests that a proactive approach yields the most dramatic results.

networking tools. They’re putting budget toward the Internet of Things by a 65 percent to 25 percent margin over reactive firms.

This willingness to commit to early-stage technologies indicates that proactive companies are more likely to be the big winners in a digitally empowered business landscape.

Challenges to creating a culture of innovation Still, the transformation will not be easy. According to the Capgemini/IDG study, most companies are struggling to apply digital technology to redefine business processes. In fact, fewer than 10 percent of the respondents believe they are doing an excellent job of innovating.

Many also have difficulty building business use cases and getting alignment on strategy. Obstacles include company politics, difficulty implementing new processes, platform restrictions, security and cost.

Those firms that have a proactive innovation process in place, however, rate their progress as “excellent” or “very good” in achieving business outcomes, by about a 2-to-1 margin over reactive firms. For example, they’re nearly three times as likely to say they’re making strong progress when it comes to changing culture and mind-set. This underscores the value of executive sponsorship and planning.

It’s disappointing that few companies are looking at ways to fundamentally change their business model even though disruption is occurring across all industries from competitors

with drastically different business models. Technology is driving changes in customer behavior across nearly every industry segment. It’s essential that businesses be able to evolve their own models to adapt.

The role of the CIOThe CIO’s critical role in digital innovation is clearly underscored by the sharp distinctions between the practices of proactive and reactive organizations. Proactive companies report a much higher overall level of CIO engagement, particularly in the early stages.

For example, about twice as many proactive companies involve the CIO in idea generation as reactive ones. Many more proactive organizations also involve the CIO in strategy definition and managing the innovation process. Clearly, proactive digital innovators are putting their trust in IT to drive digital innovation. Smart IT leaders won’t let that chance slip away.

The CIO mandateNearly 20 years ago, the IT world became smitten by the concept of “business process reengineering.” Few companies actually achieved that goal then, but times have changed. Seat-of-the-pants decision-making has been supplanted by a rigorous focus on data-driven tactics. Cloud computing and software-defined infrastructure present unprecedented opportunities for organizations to optimize their IT resources and bring technology closer to the point of decision. The C-suite understands technology’s value, and it’s no longer a matter of aligning IT with the business but, rather, of getting the business aligned with the potential of technology.

Organizations whose CIOs define innovation strategy in the early stages and take a planned, proactive approach to transitioning to a digital business model will gain a significant competitive advantage over those that wait. Leadership in digital innovation is the CIO’s game to win— or lose. ■

IDG QuickPulse * The New CIO: Taking Charge of Innovative Digitization

For more information, visit www.capgemini.com

Willingness to commit to early-stage technologies is evidence that proactive companies regard digital innovation as an opportunity for sweeping change.

Source: IdG research, december 2015

Progress in Various Areas with Respect to Digital Innovation% Extremely/very good

Using technology to facilitate collaboration between employees

encouraging business use cases for digital innovation

Coming up with an overall vision

Getting business alignment and agreement on strategy

ensuring the right skill sets and expertise

48%

48%

43%

43%

43%Respondents at organizations that approach digital innovation proactively report higher levels of progress in

each area versus other respondents. There are not significant differences by title or organization size.