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CIOs Have a Lot to Worry About in the Digital Age

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Customer experience is driving digital transformation projects, but chief information officers (CIOs) have a lot of worries including cloud vendor lock-in, data quality, upskilling employees and business alignment, finds a new study.  The global study titled: 2020 CIO Priorities Report, by Flexera, is based on a survey of over 302 enterprise CIOs and examines how they are driving digital transformation efforts.

“We’re seeing CIOs and IT departments being tasked with leading the digital transformation—from migrating to the cloud or transforming the customer experience—and this demand is only going to increase,” said Jim Ryan, President and CEO of Flexera.

Here are some of the key highlights of the study:

1 – Digital transformation impacts CIO priorities

The study shows already-complex technology landscape is having a huge impact on CIO’s day-to-day decision-making activities. Ninety-one percent of respondents expect the pace of change in digital transformation to accelerate over the next year, with 52% saying it will increase significantly. However, the expected change varies by region. In the Americas, only 41% expect the pace of change to increase significantly, while in Europe and the emerging markets of Asia Pacific, 62% and 57% it will increase significantly.

 

CX is the top factor driving digitalization

The study shows, 69% of respondents cite customer experience as a vital factor in scaling their digital transformation efforts. The good sign is, a majority of firms are improving existing products/services, launching new products/services and growing new markets to improve customer experience. Using technology and re-skilling the workforce are critical to digital success, shows the study, citing that IT maturity can enable or impede digitalization efforts in the process.

Tech adoption supports digital efforts

The survey questioned CIOs on their priorities for adopting the technologies that underpin digital transformation and found that public cloud adoption is the top technology focus in 2020, with 79% of organizations planning to have heavy or moderate adoption.

Artificial intelligence (AI)/and machine learning (ML) rank second at 72% and can assist with filling many of the existing skills gaps and automate processes to improve efficiency and cut costs. Further down the list are containers, which help cut costs as the organization moves to the cloud, and robotic process automation (RPA), which increases efficiency and improves employees’ ability to respond quickly and effectively to customers. Adoption rates for edge computing and IoT with a key focus on customer experience follow.

Shift to cloud affects security priorities

As organizations ramp up their digital transformation efforts, they’re accelerating the move to the cloud. Protecting data, applications and services in a public cloud requires organizations to move beyond the traditional approaches of the controlled data center environment.

Organizations need to be vigilant to protect against continual threats because breaches can result in embarrassing media headlines, financial penalties, costly lawsuits and, most important, loss of customer confidence. Moreover, organizations must comply not only with the European Union’s General Data Protection Regulation (GDPR), but also prepare for legal mandates that are under consideration around the world. The findings indicate CIO priorities for investing in various aspects of cybersecurity, with the top five being cloud security, threat intelligence, data privacy, vulnerabilities and social engineering.

2 – IT strategic alignment becomes more critical

The study shows IT strategic alignment with the business becomes increasingly important. IT leaders who understand the organization’s strategic goals and align IT with those goals elevate IT from a role of technology implementer to one of equal partner in the business. The study suggests, CIOs must balance their allocation of investments between running the business with growth and innovation.

IT needs to partner with business

Digital transformation often encompasses a shift to faster delivery of enhancements to a company’s products and services. In order to enable this agility, IT must align itself closely with the business, participating in strategic technology decisions and activities early in the planning process, be it in the form of equal partners, stakeholders, Validators and implementers.

For the IT department to shift their role from that of a mere implementer of technology toward equal partnership, IT team must develop an understanding of the needs of the business and learn to speak in terms the business understands. They must proactively help business leaders understand how technology can be used to drive business goals and improve outcomes.

Business outcomes metrics justify investments

CIOs are under pressure to demonstrate to the business and enterprise that technology investments are paying off. Using metrics that resonate with the business is important to ensure IT is aligning with business priorities. The study shows that ROI remains the most enduring and popular value metric because it aligns financial goals with investments. Customer satisfaction, ranked second, is also a widely used metric as it helps build customer loyalty and long-term relationships, the study said.

3 – CIOs face challenges in the shift to digital

The increasing pace of change in digital transformation combined with a steady flow of new technologies place a tremendous burden on IT leaders as the business ratchets up demands for innovation. CIOs are facing challenges in the maturity of critical processes that support innovation as well as the speed of decision making and delivery.

IT decision making hampered by poor data

The pressure to make decisions, take action and swiftly deliver results continues to intensify as organizations undergo digital transformation and move to the cloud. But many factors are converging to hinder the decision-making process, leading to CIOs’ decision fatigue. They often cite not enough good quality data as the biggest challenge. Close behind is the fact that implementing decisions is slow, considering the accelerating pace of change digital transformation brings and the need to revisit the strategic roadmap monthly and, in some cases, weekly.

Lack of agile processes

Creating a compelling customer experience requires not only rapid releases of new features, but also a steady stream of innovations. Agile processes enable IT to meet this need for speed and to respond in a timely manner to frequent adjustments to the strategic roadmap. However, the study reveals, just one-quarter of survey respondents report having very mature agile processes in place, hampering the organization’s ability to deliver new innovations at a pace that meets the needs of the business.

Concerns about cloud vendor lock-in

The study shows vendor lock-in continues to limit CIO’s agility and saddled them with considerable technical debt and public cloud is the top area of concern with respect to lock-in. This is driving CIOs to incorporate a multi-cloud a requirement in their digital strategies. Moreover, as organizations leverage external partners to overcome staffing challenges, CIOs also want to guard against lock-in by the service providers, outsourcers and SIs they engage with.

Considering social responsibility

Data privacy and protection becomes more critical with the surge of digital business, and will garner significant increases in investments in 2020, finds the study. Additionally, failure to protect this information can result in costly lawsuits and harm the organization’s reputation. The study also saw CIOs working to minimize environmental impact and apply strong ethical standards throughout the supply chain.

Innovation processes on hold

Innovation processes are becoming more important to drive transformation and competitive advantage. However, organizations still have work to do, as only 35% of respondents are making good use of the customer feedback process. The study also recommends enterprises to set up innovation lab to assist in testing out ideas from internal resources for developing new solutions to problems is also need of the hour.

4- Staffing changes to support digital transformation

Technology shifts related to digital transformation are also affecting the makeup of the enterprise IT workforce. In the current IT setup, 54 %, full-time in-office employees represent just over half of the IT workforce. However, another 14 % are full-time remote employees, shows the study.

By accommodating remote workers, organizations can tap a larger talent pool, hiring people who can’t or don’t want to relocate. At the same time, they can offer salaries that are highly competitive for the remote geography but still lower than salaries for people living in large metropolitan areas.

The study also shows that investing in upskilling and re-skilling of existing employees and attempting to promote more women and minorities into higher management levels to achieve a more diverse workforce can contribute to increasing the level of innovation in the organization.

Organizations continue to leverage systems integrators, outsourcers, managed service providers and other external partners to fill gaps in the workforce and take advantage of special skills and expertise—for example, big data, AI or DevOps.

To sum up

The adage ‘customer is king’ certainly has relevance with CIOs. Customer experience is top driver of digital transformation efforts, and cloud technology is the primary vehicle for that transformation.

Nonetheless, rapid change is a major concern for CIOs. More than half of respondents expect the pace of IT change to accelerate compared with the previous year. To keep up, respondents are allocating more than a third of their budget to growth and innovation.

Also, when it comes to strategic alignment with the business, less than one-quarter of IT departments consider them equal partners with the business.

With respect to people, the vast majority of respondents say they’ll invest in their existing employees through training, upskilling and re-skilling, particularly in the cloud and security.

“Today, businesses are required to make fast but well-informed decisions on a daily basis to keep up with the ever-changing tech landscape. Consequently, it’s imperative that IT is involved early on in business-strategy planning, not simply as an implementer of technology, but as an equal partner in the business. The role of equal partner brings with it new challenges for IT and the CIO,” said Ryan.

Technology will keep growing and continue to change rapidly. So IT is bound to play an ever-expanding role in the modern organization. Those senior IT leaders able to participate in strategic technology decisions and activities early in the planning process will find themselves gaining prominence in the C-suite.

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Sohini Bagchi
Sohini Bagchi is Editor at Trivone Digital, a published author and a storyteller. She can be reached at sohini.bagchi@trivone.com