Digital Remix 2018: Digitalization Changes The Nature Of CIO Leadership

Michael Golz

Change may be the law of the natural world, but digitalization is taking it to a whole new level of Darwinism. In his book On the Origin of Species, Charles Darwin speculates that the survival of any species depends on its ability to adapt and adjust to environmental changes. Not intelligence, not physical strength – just adaptability and responsiveness.

Now that technology and society are evolving faster than businesses can keep up, this 19th-century observation has become a 21st-century strategy. The more digital transformation takes hold of entire industries and creates more disruption, the more the whole business needs to commit to change.

Although the 2017 Harvey Nash/KPMG survey of CIOs suggests that adoption of enterprise-wide digital strategies has risen sharply from 27% in 2015 to 52% in 2017, cultural resistance – not budget – has become the top impediment to digital success. In turn, CIOs are forced to adapt to a new era of leadership, business innovation, and mindset. Whether the change impacts a business model, business process, or the way people work, CIOs must focus more on how to leverage the underlying technology throughout the business and less on how the technology works.

The 2018 CIO makeover: From IT leader to business executive

According to Thomas Saueressig, chief information officer and global head of IT services at SAP, CIOs are encountering an immense sense of urgency when guiding digital transformation. In his Digitalist Magazine article “The Digital CIO: An Experience In The Digital Economy,” he said: “The digital reality has changed forever the way we live and do business. And no one better understands the opportunities and the challenges of digital enterprise transformation than the CIOs of today. Staying engaged on this topic is critical to ensure the success of the digital journey.”

Everything people need to know about an emerging technology is available in the palm of their hand – their smartphone. Outside of a browser search, people can become familiar with how the innovation works as they use the apps and functions that excite them as consumers. It’s highly likely that your fellow executives and employees are using them every day and applying them to fulfill their professional duties and simplify their personal lives.

CIOs who understand the digital habits of their audience have a front-seat view into the immediate future. Here are some examples of how they can help users engage with the latest crop of emerging technology on their mobile devices.

1. Humanized digital interfaces

 The use of artificial intelligence and natural language processing found in Siri, Alexa, and a range of chatbots are enabling a high level of productivity and engaging brand experiences. Even the Pokémon Go craze in 2016 taught us about the capabilities – and limitations – of augmented reality and virtual reality and how it can be applied to business operations.

A mobile app, for instance, can connect to smart glasses to provide a hands-free, informational experience. For employees, this approach can reduce the need for scanning shipments and simplify the overall process by eliminating the use of multiple handheld devices or pen and paper.

2. The Internet of Things

It’s a safe bet that the opportunity to capture data from location-based apps and embedded sensors can yield tremendous value. And when this information is sent to intelligent cloud services that give every line of business better visibility, the benefits will only grow.

Although consumer device sensors appear to be much more basic compared to sophisticated, industrial IoT scenarios, the underlying capabilities are quite similar. For example, dashboards that continuously track asset health can send an alert immediately when a machine or production process is beginning to show signs of a malfunction. This digital capability allows plant managers to avoid the risk of unintended downtimes by triggering an order for preventive maintenance with a single click.

3. Artificial intelligence and machine learning

As artificial intelligence and machine learning continue to enjoy escalating adoption rates, it’s highly likely that these technologies will eventually be embedded into every product or service we use at work and home. When a personal digital assistant or an app on your phone can anticipate your next question or need before you think of it, you know that a fundamental technology shift is taking place.

Sooner than later, this form of intelligence will make its way into every business process. For example, a machine learning application became a crucial enabler in streamlining invoice processing for our global finance team based in Singapore, which processes upwards of 85,000 invoices each year for the Asia-Pacific region. The application automates invoice matching by identifying more than 40 features – including differences in amounts and data as well as misspelled words – to reconcile bank statements with receivables. In addition, the Singapore team uses the application to predict the future financial needs of the business and pinpoint opportunities to optimize cash flow.

4. Blockchain

While the impact of blockchain may be less apparent in today’s consumer apps, a lot of change is happening behind the scenes. Whether we are making a digital payment or participating in crowdfunding, the technology can turn a middleman-driven process into a more direct way of handling everything from financials to contracts.

Although blockchain might be most known in the context of cryptocurrencies, it is uniquely suited to support interactions between business partners in a transparent and trusted way. One prime example is the automation of contract processing. Self-validated, self-monitored, and self-enforced contracts can help bridge the trust gap during negotiation and enforcement without the intervention of a third-party intermediary.

5. Cloud

Gartner defines cloud as “a style of computing in which scalable and elastic IT-enabled capabilities are delivered as a service using Internet technologies.” Whether we realize it or not, every piece of data we record and access on our mobile devices is enabled by cloud technology. From file syncing and sharing information to streaming content services and downloading app updates, none of these capabilities could exist without the cloud.

The running joke “there is no cloud, just someone else’s computer” doesn’t quite capture the value and built-in capabilities of today’s cloud services. Whether we’re talking about infrastructure, platform, or software as a service, the days when everything will reside in the cloud are not far away. In fact, cloud computing is reaching a high level of maturity on many fronts as businesses reveal its full value.

For example, a cloud platform managed by a third-party provider can help businesses achieve the speed, scalability, and flexibility required to evolve as quickly as their customers – or, in some cases, faster than their competitors. But perhaps more impressive is the reality that these capabilities can be achieved while keeping information, connected machines, and business systems more secure.

A new role for the CIO, a new opportunity for the business

The ability to understand the latest technologies and apply them in a way that furthers digital maturity will become a paramount asset in the coming year. This imperative requires a new kind of leadership where scaling digitalized practices and operations are prioritized over technology experimentations and pilots.

Whether they’re innovating business models, setting up new organizations, or maintaining IT operations, CIOs who choose to embrace this new mindset will be the ones guiding their business through a transformation that can lead to long-lasting competitive power.

Find out how your business can bring these new technologies together to power your digital strategy in 2018 and beyond. Explore the SAP Leonardo digital innovation system.

Learn more about how to use these technologies to turn your data into a strategic asset that can be quickly analyzed to discover previously hidden insights. Read the IDC Analyst Connection paper, The Value of Data and Analytics in Digital Transformation.

Michael Golz

About Michael Golz

Michael Golz is senior vice president and CIO Americas at SAP. He frequently speaks to customers about IT’s first-hand experiences with SAP solutions in the areas of digital transformation, digital core, cloud, business networks, and leading-edge technologies overall. Previously, Mr. Golz was senior vice president of Application Services with worldwide responsibility for SAP's internal business applications and external platforms, covering the entire spectrum of SAP solutions for SAP’s employees. Prior to joining SAP, he led the Information Management organization at OTTO Group in Cologne, Germany. Mr. Golz holds a bachelor’s degree in Business Administration and Information Technology from European Business School in Germany.