Digital Transformation: 3 Common Mistakes CIOs Need to Avoid

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Posted by Luke Zaki on 07 Feb, 2020

 

Digital transformation is at the top of the list of many corporate boards but it is such a widely used term, that its definition seems to have become fuzzy over time.

The business mandates behind the term, however, largely remain the same: rethink old operating models for increased productivity and efficiency; experiment with technology; and respond to moves made by the competition.

Digitisation and emerging technology has had such a disruptive impact on businesses that they have altered entire roles within an organisation. One role which has been impacted the most by this movement is the CIO’s.

Unfortunately, this shake-up hasn’t always been favourable to the CIO role; fatigue from constantly needing to keep up with change and to ensure its smooth implementation has seen 70 percent of digital transformation projects fail.

With the rapid introduction of technology, such as big data, artificial intelligence (AI), the cloud, and the Internet of Things (IoT), it’s no wonder CIOs are feeling the pressure.

 

The New CIO Role

As digital change relies heavily on the introduction of new technology, CIOs are in the driving seat. Businesses usually push for digital transformation as they are aware of the benefits that can be experienced through it: increased profitability and productivity, savings on operational costs, brand awareness, and economic growth.

In 2017, Michael Porter of the Harvard Business School predicted that 40 percent of businesses would fail in the next ten years. Porter also stated that 70 percent would attempt to transform themselves digitally, but only 30 percent will succeed.

Two years later, a separate 2019 study by Everest Group confirmed that 73 percent of businesses failed to extract any value from their transformation efforts. This confirms that digital transformation is no mean feat.

Therefore, the modern CIO role is as much about technology as it is about creating and evaluating business value and risk management. CIOs must be responsive to what is happening in their environment, including any internal changes the company must make as a response to those external forces.

For established businesses, this could mean dismantling silos, finding new tools for collaboration and communication, or new ways to develop relationships with clients.

 

How to Stay Ahead

Digital transformation, by nature, is about change. CIOs need to rethink how their business is run, and what should change in their existing processes, technologies, information systems, and customer relationships.

CIOs need to be constantly thinking of potential scenarios and to anticipate future disruption. Increasingly they are also relied upon to help drive the business forward, to define and design new digital propositions and create new revenue streams.

With this as a driver, it is not enough to dabble in new technologies, just for the sake of digitisation. It’s not about focusing on shiny new tech but about discovering how you can introduce utility to change your business for the better, and this must be driven by purpose.

Your business purpose should drive your transformation. There will be varying levels of digital transformation which will depend on your industry, company needs and wants, size, and more.

Retail is one industry where you can really see the impact that digital transformation has had. Many retailers have been successful in meeting this change head on, like Zara and Walmart, for example. Others, like Toys R Us, struggled and eventually went out of business.

As Kate Hardcastle from Insight With Passion explained, kids changed but the retailer struggled to change with them:

“An eight-year-old now, they can download an app in 30 seconds to distort their face and make them look like Spiderman. Retail almost can’t keep up.”

 

Kids (and parents) started to become drawn into the experiences that technology could provide.

“That wasn’t something Toys R Us was able to get into very successfully,” Hardcastle said.

Keeping up with digital and technological changes is a must, which is why CIOs have so much pressure to stay one step ahead. But all this pressure amounts to CIOs making some very common mistakes.

 

Common mistake #1: not defining a purpose

The number one thing that should drive your digital transformation strategy is a company purpose. This should be aligned to your unique business goals and needs. CIO’s need to validate their remit with the c-suite and create a really clear mandate that focuses on business value, thus empowering them to make swift decisions.

Image from Pexels

 

Your purpose should drive your strategy and should also include learnings about your customer needs, competitor capabilities, potential new threats, and emerging technological trends.

The CIO needs to be the one to ensure that the purpose drives the project, and this takes good leadership as well. You can be armed with all the right instruments – customer data and the newest technology – but if the team doesn’t have a clear vision, your digital strategy will be at risk of failure.

 

Common mistake #2: not working in an agile way

Many businesses embark on a digital transformation using a waterfall planning process but successfully transforming the business is as much of a cultural change as it is a technical one. It requires businesses to learn how to continuously adapt, to challenge the status quo, and experiment and fail often, which also requires regular and rapid adjustment.

As Dion Hinchcliffe, VP and Principal Analyst at Constellation Research, put it: “The top IT executives in today’s rapidly evolving organisations must match the pace of change, fall behind, or lead the pack.”

In other words, you’re either meeting expectations, struggling to keep up, or you’re ahead of the competition

An agile mentality at both the strategic level and the operational one, allows CIOs and the wider business to make quick adjustments based on how the programme is developing.

How do you become more agile in your approach? Break your project up into short-term goals or sprints which can deliver measurable outcomes that are aligned with your overall purpose and vision. Then, as you build your learnings from each sprint, you will become faster at responding to change – making everything more manageable and taking some of the pressure off.

 

Common mistake #3: taking a technology-first approach

Yes technology is important for digital transformation but a common mistake businesses make when they embark on this journey is to forget about their customers.

Transformation projects that focus more on operational efficiency and exciting new technology will still deliver benefits, but they will be for the business, not the customer.

This means that you can miss opportunities to impress your customers, which could potentially drive them toward your competitors, who may have a better-developed customer journey.

CIOs should start with understanding how their business needs to change in order to deliver the best experiences for customers and employees, and then focus on finding the technology that will help them get there.

Use small agile experiments to test new tech with customers to determine the benefit to them, and ultimately the bottom line before investing heavily in terms of time and effort to ensure that tech implementation becomes a benefit, not a roadblock.

 

How to Get Started

One of the biggest misconceptions CIOs have about digital transformation is that competitors are much further ahead. This is because there is a lot of buzz around the fastest transformers and not much information about how hard it actually is to become a digital business.

“There’s much admiration of (and popular press around) the fastest transformers, but little critique of how hard transformation is or how long it may take for a typical Global 2,000 company,” says Tim Yeaton, CMO of Red Hat.

So don’t get caught up and try to rush your way through your business transformation. Start by defining your purpose and vision, use sprints, and take a balanced approach to technology, customers, and employees. These steps will set you up for success.

Here are some additional resources for further help on your journey:

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