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How digital transformation will dominate business strategy in 2018

December 12, 2017 • Digital Transformation, General

How digital transformation will dominate business strategy in 2018

Pascal Matzke, Forrester VP research director serving CIOs.

CIOs will need to look beyond just technology if they hope to turn their tech management departments into the digital transformation office. In 2018, CEOs will be putting pressure on their CIOs to deliver on platform-based business models and new partnership ecosystems.

Experimentation, minimum viable products, and labs are so 2017. In 2018, digital business transformation will be played out at scale, sparking shifts in organisational structure, operating models, and technology platforms. In 2018, CEOs will expect their CIOs to lead digital efforts by orchestrating the enabling technologies, closing the digital skills gap, and linking arms with CMOs and other executive peers better positioned to address the transformational issues across business silos.

By the end of 2018, around 40% of the revenues of global industrial firms (like GE or Siemens) will be based on asset usage or other software-enabled service schemes. In addition, more aggressive companies will shift their traditional business models into business platforms, reaching customers directly or through intermediaries and partners.

While some companies may build their own platforms, most will have to learn to deliver over one, regardless of the ownership. CIOs will need to gear up their underlying technologies and supplier relationships in order to meet the new business model.

CEOs will find ways to replicate the agility of smaller, non-listed companies, going so far as to spin off or divest parts of their business to allow unencumbered focus on their digital ambitions. Change will be the constant companion for the CIO next year and they will need to make use of concepts like Agile, DevOps, and design thinking to enable faster delivery of capabilities across the enterprise.

Key to effective change in 2018 will be CIOs being able to find and retain the necessary talent as well as upgrading both culture and structure of their organisation to meet customer expectations. This will present CIOs with the unique opportunity to position themselves as leaders of transformation and even the enterprise.

Co-developing skills with partners; cross-training tech staff in business skills; tapping into the gig economy; and automating where appropriate will allow CIOs to address their skills issues.

On the plus side, the growth in cloud will result in a shift in operations to third-parties. At the same time, Agile, DevOps, automation, and low/no code will become the norm in more mature technology shops and quality technology will be delivered faster, and at a more cost-effective price point.

CIOs should collaborate throughout the organisation, starting with marketing to help bring a more Agile and flexible approach to serving the customer.

Technology forms a cornerstone of digital transformation and the report points out that turning to new technologies and developing predictive analysis capabilities will allow organisations to continuously stay ahead of changing customer desires.

Artificial intelligence and the Internet of Things will remain a focus for CIOs next year, although those expecting major upheavals from blockchain-based networks will be disappointed. However, quantum computing will continue to attract both interest and investment throughout 2018.

Finally, CIOs should think like venture capitalists to ensure success. By adopting a portfolio management approach to tracking, testing, and implementing new technologies, CIOs can back the best-performing products and solutions, ensuring success. In fact, the evolved positioning of the CIO will ultimately make the role of the chief digital officer (CDO) obsolete.

By Pascal Matzke, Forrester VP research director serving CIOs

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