Most CIOs and business leaders recognize that innovation is what allows organizations to respond to new digital business opportunities. It enables companies to create enterprise value at higher, digitally driven multiples, outperform competition, and achieve faster and more profitable growth. However, unlocking this value requires organizations to change how they think about innovation, moving away from models based on business silos and three-year plans to more collaborative, agile, and lean approaches.
Given the importance of IT in helping lead enterprise-wide digital transformation, the CIO needs to take an innovation-leadership role, providing expertise and capabilities to support business-outcome-based growth and performance improvement.
In the recent study Digitising IT, SAP worked with the Economist Intelligence Unit, with input from Digital Bridge Partners, to survey more than 800 C-level business and IT leaders at major international organizations across Europe, North America, Latin America, and Asia-Pacific. The goal was to understand how enterprise-wide and IT-department contexts, attitudes, and intentions drive and/or hinder the transformation of digitally driven companies.
As cited in the study, David Rogers, a faculty member at Columbia Business School in New York and author of The Digital Transformation Playbook: Rethink Your Business for the Digital Age, emphasizes the need for IT-led strategic collaboration across enterprise lines of business (LOBs) and into the C-suite:
“Digital transformation puts a tremendous pressure on the role of the CIO to change, and I think many of them are still hashing this out, figuring out where this movement takes them,” he says. “But it’s clear that any separation between IT and the strategic goals of growth and revenue isn’t sustainable. Businesses need technology leaders who can help define how technology might be used to define the strategy for the business and uncover big opportunities.”
This places new demands on the CIO and the organization and requires the CIO to step into an “innovation solutioning” role. It requires IT to evolve from a focus on requirements delivery in response to LOB demands into one tuned to opportunity creation based on enterprise-wide strategic imperatives. It also requires an increase in the percentage of IT expenditures devoted to innovation.
In this new role, the CIO acts as a collaborative innovation catalyst, bringing together new technologies, insights, and art-of-the-possible thinking to help business owners deliver on digital business opportunities and drive the design and development process (from ideation through minimum viable product testing) across the organization.
CIOs are often deeply aware of the challenges of shadow IT and the disintermediation of internal IT by LOB heads who source IT solutions externally, often through SaaS or IaaS providers. CIOs assuming leadership around innovation solutioning not only help drive overall enterprise value, but help to ensure that the IT function provides value by becoming the internal service provider to address cross-enterprise technology and innovation requirements.