Part 2 in the 3-part Digital Leadership Series
Leaders in digital transformation are in the minority today, according to a recent SAP Digital Transformation Executive Study conducted with Oxford Economics. As my last blog asked, are CIOs up to the challenge? What will it take to catch up? What’s required of you to successfully drive digital transformation?
IDC has developed a useful framework to guide the digital ambitions of CIOs and CDOs, complete with role-specific scorecards – one for CIOs and one for CDOs. These scorecards identify the following dimensions as critical to successful digital transformation:
- Vision. Leaders must cultivate an innovation-oriented culture focused on generating multitier digital revenue streams and identify new use cases linked to emerging technologies with clear risk-management approaches in place.
- Simplification and Integration. To prevent islands of innovation – which do not yield the significant business benefits of comprehensive approaches – it’s critical that companies put in place an enterprise digital platform architecture that aggressively modernizes their enterprise applications, infrastructure, and systems to support a digital organization. (SAP’s research confirms IDC’s prioritization of this dimension; for example, our findings indicate that leaders have established a strong base upon which to make the most of next-generation technologies and are currently far ahead of the laggards on Big Data and analytics (94% vs. 60%), IoT (76% vs. 52%), machine learning (50% vs. 7%), and robotics (15% vs. 8%).)
- Ecosystem-centricity. Leaders must build an external customer focus for the entire IT organization and develop consumer engagement expertise to support discussions with the CIO, CDO, and lines of business. This is critical to success, because the business models of the future are all about the end-to-end customer experience, which almost always crosses traditional customer boundaries. (SAP’s study validates the importance of this area of focus. After investing in greater interconnectivity across their business, nearly half – 46% – of the top 100 leaders reported that they are already seeing significant impact in terms of working more digitally with their partner ecosystems.)
- Data-driven business. Digital transformation requires that organizations look at data in an entirely different way so they can identify ways to monetize it and reinvent business models to create new revenue streams (referred to as “infonomics”). This requires leaders who will invest in and implement “new” data platforms of the future – platforms that can bring together data effectively as it’s needed, from wherever it’s stored, inside or outside the organization. It also requires a new understanding of the customer experience and how to use data about customers to deliver a personalized experience.
- Profitable digital capabilities. Leaders must put in place a digital platform architecture that aggressively modernizes enterprise applications (for example, by putting them on standard platforms) and core infrastructure to support digital organization. (IDC believes that this KPI is unique to the CDO, while the CIO and the IT department should deliver the right digital platform architecture to support these profitable digital capabilities.)
- Talent management. Leaders find ways to attract new types of top digital talent (for example, developers, data scientists, UX experts, and design thinking consultants) that will effectively turn digital use cases into a profitable digital capability, quickly and efficiently. SAP’s research confirms this – for example, leaders are much more likely to create new roles (such as “chief robotics officer”) to keep up with their digital transformation efforts (52% for leaders versus 32% for all others).
What are you waiting for?
Think you can wait to begin your organization’s digital transformation? Think again. Competitors who lead in digital transformation will realize consistently higher value – ranging from a factor of 2.5x to 4x more than laggards, according to SAP’s study. These results are staggering across the board and affect every part of the enterprise – from customers and partners to brand value, employee engagement, and revenue growth.
I encourage you to get more detail on the SAP Digital Transformation Executive Study, as well as to read IDC’s papers on CIO and one for CDO scorecards regarding digital transformation. In my next blog, we’ll explore a question on the minds of many CIOs today: can CIOs become the CDO for their organization?