Business

The Digital World: CIO Dates the CDO or the Other Way Around?

CIO CDO

About 200 years ago, it took six months for a letter from Australia to reach family in England and around 50 years ago, air mail revolutionised international postage by cutting delivery times to mere days.

Today, every day we create more than 2.5 quintillion bytes of data. To give that some context, in the US a quintillion is represented by a one followed by 18 zeros. In the UK, it’s a one followed by 30 zeros.

This explosion of data and the emergence of disruptive technologies such as Social, Mobile, Cloud & Analytics have brought about the 4th industrial revolution – the Digital Revolution.

As the lead of this digital transformation is the Chief Information Officer (CIO) – the role responsible for leading the organization in its effective use of Information Technology (IT). The CIO is expected to lead this digital transformation. But as IT spending has increased, so too have failures regarding its returns. Many third-party researches reveal the failures:

  • The CHAOS research shows a staggering 31.1% of IT projects being cancelled before completion
  • Gartner estimates that 55 % to 75% of all IT projects fail to meet their objectives
  • 74.1% IT deployments exceeded the budgets
  • 61.1% IT deployments took longer than expected

And generally, the CIO is blamed for these gloomy outcomes. This could possibly be one of the key reasons for the involuntary turnover rate of CIOs being higher than that of other executives across all the CXOs.

Disappointed by the perceived inability of their CIOs to drive the digital transformation, some organizations are now either replacing them with Chief Digital Officers (CDO) or hiring a CDO specifically to drive their digital transformation initiatives. This only demonstrates the inexperience within the management teams, which believe that the digital realm is different than mainstream IT.

Just read the job specifications for a CDO, and trust me, it is not very different than the roles & responsibilities of a CIO. In most scenarios, many CXOs don’t acknowledge their role in the digital transformation journey and anything to do with IT is delegated to the CIO. While the digital technology may be new, the business and change management challenges are the same.

The role of the CIO is complex but a CIO can be a successful CDO and can increase their potential for success through these pillars of success, which are beyond the broad skills such as interpersonal skills, leadership, building high performance teams and ability to unlearn & learn.

Understanding the Changeover

The CIOs should be able to understand the type of transition situation they are entering and the associated expectations of both the CEO & the board. When hired, the CIO needs to understand why he or she has been hired. A newly appointed CIO experiences one of four types of transitions:

  • Core Transition: The CIO being responsible for gathering the IT capabilities – team, processes, budgets, and technology to get a new IT organization off the ground.
  • Turnaround Transition: The newly appointed CIO takes on an IT organization that is in trouble and works to get it back on track. In this transition context, the perception of the top leadership team is that IT is not delivering expected business value and the previous CIO is seen as having failed.
  • Rejuvenation Transition: The new CIO is hired to rejuvenate an IT organization that is drifting into trouble. Prior to the CIO’s appointment, tensions were beginning to emerge, often due to a new reporting line for the CIO, changes in the makeup of the IT leadership team, or a new mandate for IT. Given the new expectations, the existing IT organization is often characterized as unfit for the new purpose. Such transitions are a result of the CEO articulating a more strategic direction for IT. This new vision stemmed from different drivers, such as a merger, geographic expansion, new digital ambitions, or other changes in the competitive environment.
  • Strategic Transition: The new CIO takes responsibility to preserve the vitality of a successful IT organization and expand it to the next level. The previous CIO was perceived as being successful and having performed well in the role and has either moved into a new role, moved to a new organization, or retired. This type of transition is characterized by a chief executive who wants to build on the stability and success of the current IT organization and resources.
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The CIOs who come in and have been successful have figured out very quickly the CEO’s vision around the digital transformation. Building this shared vision needs to be part of the new CIO’s 30-60-90 day plan.

The focus should be the Business

The CIO has to understand that digital transformation is all about business and innovation. In fact, technology is just an enabler of the innovation. As part of the leadership team, the CIO has to be close to reality with focus on innovations around customer experience, supply chain and other strategic innovations. Mobile banking did not emerge due to mobile technology, a strategic intent to let the customer do banking from anywhere & anytime was enabled by mobile technology.

Get Dirty with Digital

Digital Technology is a bit different from the standard IT systems and is still evolving rapidly. A CIO should get hands-on with the digital technology to be able to understand its true potential and use cases to be able to advice the business teams on its potential.

Define IT success

The CIO is expected to deliver IT projects successfully. Phew, almost all the CIOs live on the edge, in terms of defining IT investment success.

CXO’s measure the success of an IT investment primarily as delivery of a project; that is, based on budget versus actual, time schedule versus actual, and user satisfaction. Just a handful of CXOs view business value realization as a measure of success, and only a few measure the business value after the IT solution went live.

The contribution of IT to the business is generally undervalued because the focus is more on project metrics rather than business results. Delivering results is about delivering business value through IT services & projects. The standard of success also depends on each individual CXO’s perspective, and the CIO has to manage this wide range of expectations.

The CIO is seen as the primary responsible party for delivering success, regardless of its definition. They should be held accountable for benefits but also have authority over what needs to happen in the organization for those benefits to be achieved.

Create a Heterogeneous Team

Given the fact that the digital technologies are recent technology innovations, its suggested that the CIO creates a hybrid team of experts on current technologies and real, experienced & young experts in the digital domain.

This mix not only ensures you get it right the first time, but also brings in a culture of digitization and creativity. We know that the Generation Y has not seen a world beyond the digital world.

It could also be beneficial to have external consultants during the ideation phase of the digital transformation journey.

Understand the Role of the CIO

CXOs describe varying expectations for their CIOs, and perceptions of the role can differ even within one organization. Basis, the degree of strategic influence of a CIO within an organization, CXOs perceive the role of a CIO across three levels:

The service partner role is defined by a low degree of strategic influence. In this scenario, other executives view the CIO role as that of a technical service provider and support staff person. The extent of their expectations goes no further than the CIO keeping the infrastructure running smoothly and fixing IT problems as they occur.

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The solution partner role is characterized by a higher degree of strategic influence. These CXOs expect a relationship in which they present business problems to the CIO and the CIO finds IT solutions to address them. They expect the CIO to actively understand their problems and behave like a consultant or business partner in designing solutions for them.

The strategic partner role is viewed by other executives as a peer in the top management team. The strategic contributor is expected by executives to engage with them at a strategic level, in addition to providing IT solutions and services. This CIO must act as a strategic advisor to the operating executives, proactively bringing to the table IT-enabled ideas that can potentially influence business strategy.

These roles follow a collective course, a CIO viewed as a solution partner is also expected to be an effective service partner. Similarly, a CIO who is perceived as a strategic partner will also be an accomplished solution & service partner.

An individual who fulfills one role may not have the skills, perceived capability or willingness to mature to a higher level of strategic influence. A CIO who is able to focus on the two different aspects of a business – both the business side and the innovation side – will be able to effectively ensure that a business has both the rigour, uniformity & discipline required for efficient development & maintenance of core IT systems, as well as the quicker, agile & adaptive capabilities required for business innovation.

Many CXOs view the CIO role as encompassing strategy and innovation but still treat the CIO as a service provider only. Failing to see the flaw, they want their CIO to be a miracle worker and achieve major impact without having to trouble them – as they themselves could be ill-equipped to embrace digitization & engage in the necessary discussion, in most cases.

Drive Change at an Appropriate Pace

CIOs are often hired or promoted to be change agents (e.g., CDOs being hired to drive the digital agenda and digital transformation). In certain transitions, the new CIO has a relatively high degree of discretion to push change into the organization. However, he or she should push change at the right pace.

Conventional wisdom on CIO transitions focuses primarily on the first 90—100 days. This wisdom suggests that CIOs make changes early in their tenure to send a signal to the organization that they are having an impact. For turnaround transitions in particular, the new CIO should accomplish a couple key goals to get off to a good start. These quick hits are usually focused on fixing IT service delivery problems that are creating a poor customer experience for end users. Another form of quick hit might entail stabilizing an IT project that is failing. If these actions are needed and the new CIO delivers results, he or she will likely build strong & positive perceptions. A bias for action is a trait of successful new CIOs.

Clearly, new CIOs must make an impact, but at the right pace? If the new CIO introduces change beyond the organization’s change capacity, failure is likely. Understanding the capacity for change should not inhibit introducing change but rather moderate the speed and degree of change that could be introduced. There is a finite capacity for change within an organization, and the CIO must pace the speed of change according to that cultural capacity.

References
  1. https://www.accenture.com/us-en/insight-new-cio-agenda-transforming-digital-world
  2. http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/five-questions-boards-should-ask-about-it-in-a-digital-world
  3. http://www.gartner.com/smarterwithgartner/six-cio-responsibilities-for-digital-business-leadership/
  4. http://blogs.forrester.com/tim_sheedy/17-01-09-in_the_digital_world_cios_need_to_help_the_business_move_faster
  5. https://www.forbes.com/sites/sap/2015/08/21/how-cios-are-adapting-to-the-digital-world/#67586a47552e
  6. https://www.forbes.com/sites/forrester/2017/01/11/in-the-digital-world-cios-need-to-help-the-business-move-faster/#4bd8964e4594
  7. https://www.forbes.com/sites/ciocentral/2017/02/14/leading-in-a-digital-world/#60e87b7a5fa9
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