CIOs unprepared for the ‘digital dragon’
- 15 January, 2014 12:39
The survey shows many CIOs feel overwhelmed by the prospect of building digital leadership while renovating the core of IT infrastructure and capability for the digital future.
The survey finds over half - 51 per cent - of CIOs are concerned the digital torrent is coming faster than they can cope and 42 per cent don't feel that they have the talent needed to face this future.
Gartner notes this figure is higher in Australia, where 59 percent agree they are unable to respond in a timely fashion to digital opportunities, thus impacting the success of the business and credibility of the IT organisation.
"2014 must be a year of significant change if CIOs are to help their businesses and public sector agencies remain relevant in an increasingly digital world," according to Gartner vice presidents Dave Aron and Graham Waller, in Taming the Digital Dragon: The 2014 CIO Agenda.
The survey, held in the fourth quarter of 2013, included 2339 CIOs, representing more than $300 billion in CIO IT budgets in 77 countries.
If the dragon isn't tamed, businesses might fail and the relevance of the IT organisation will almost certainly disappear
Gartner explains the first era of enterprise IT focused on how IT could help do new and seemingly magical things — automating operations to create massive improvements in speed and scale, and providing business leaders with management information they never had before. The last decade represented the second era, and covered industrialisation of enterprise IT, making it more reliable, predictable, open and transparent. However, while this second era has been necessary and powerful, tight budgets and little appetite for risk left scant room for innovation, according to Gartner.
In the third era, trends such as the Nexus of Forces (social, mobile, cloud and information) and the Internet of Things, are changing everything. Gartner says these trends also fundamentally change businesses, the basis of competition and create new industries.
"The behaviours mastered in the second era of enterprise IT, like treating colleagues as customers, are potential hindrances to exploiting digitalisation," says Waller, who is also executive partner for Gartner Executive Programs, which conducted the survey. This year, he says, CIOs must face the challenge of bridging the second and third eras. “They have to build digital leadership and bimodal capability, while renovating the core of IT infrastructure and capability for the digital future."
To capture digital opportunities, CIOs need to deal with speed, innovation and uncertainty. This requires bimodal capability — operating two modes of enterprise IT — conventional, or 'safe and steady' IT, and a faster, more agile nonlinear mode
The Gartner survey finds most businesses have established IT leadership, strategy and governance but have a vacuum in digital leadership. In order to exploit new digital opportunities and ensure that the core of IT services is ready, there must be clear digital leadership, strategy and governance, it states.
Related:Gartner on surviving – and thriving – in the digital world Linda Price of Gartner on the new opportunities and threats businesses must address if they are to survive in the next decade.
Related: Digital strategist or traditional CIO? Our 13th annual State of the CIO research reveals the great career divide.
Amidst these changes, however, budget pressures remain for IT organisations. Aron says the survey showed CIOs expect their IT budgets to remain essentially flat (increasing 0.2 per cent on average) in 2014. “This is especially challenging since there is a need to both renovate the core of IT systems and services, and exploit new technology options."
CIOs report a quarter of IT spending this year will happen outside the IT budget — and that is the spending they know about; the reality may be significantly higher. This is a direct result of the new digital opportunities that are more entwined with customer and colleague experiences, and that may, in some cases, reflect concerns that the IT organisation is not fast enough or otherwise ready for more digital opportunities.
"There is an inherent tension between doing IT right and doing IT fast, doing IT safely and doing IT innovatively, working the plan and adapting," says Waller. "The second era of enterprise IT has been all about planning IT right, doing IT right, being predictable and creating value while maximising control and minimising risk. However, to capture digital opportunities created by the third era, CIOs need to deal with speed, innovation and uncertainty. This requires bimodal capability — operating two modes of enterprise IT — conventional, or 'safe and steady' IT, and a faster, more agile nonlinear mode."
Next: Taming the ‘digital dragon’
In order to deliver on this bimodal future, CIOs are planning for significant change in 2014 and beyond:
• A quarter have already made significant investments in public cloud, and the majority expect more than half of their company's business to be running over public cloud by 2020.
• Seventy per cent of CIOs plan to change their technology and sourcing relationships over the next two to three years, and many are seeking to partner with small companies and start-ups.
• Forty-five per cent of companies have implemented agile methodologies for part of their development portfolio, although most need to go further to create separate, multidisciplinary teams, with lightweight governance and new, digital skillsets and alternative sourcing models.
"If this transition succeeds and CIOs and their businesses 'tame the digital dragon,' massive new value for businesses can be created, and with it, a renewed role and greater credibility for the CIO and the IT organisation," says Aron. "However, if the dragon isn't tamed, businesses might fail and the relevance of the IT organisation will almost certainly disappear."
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