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Digital vanguard organisations at the forefront of true digital transformation

January 21, 2019 • Digital Transformation

Arun Babu, Digital & Technology Leader for Deloitte Consulting Africa

Are there deliberate actions, behaviours, shortcuts, and avoidable detours that could accelerate and amplify an organisation’s path to an evolved tomorrow? Responses to Deloitte’s 2018 third, and final CIO legacy report ‘Manifesting Legacy,’ revealed measurable differences between baseline organisations and the vanguards, who are a few years ahead on the road to Digital transformation. While these vanguards have not yet reached their digital destination, their journey to date serves as a guide for what the future may hold beyond current digital initiatives.

Changing focus to drive true transformation and top-line growth

Of the 1437 global respondents, 10 percent reported that their organizations have a clear digital vision and strategy, and that the IT organization is perceived by the rest of the business, as a market leader in terms of digital and emerging technologies. These are the vanguards – the role models – who are leveraging their technology and business expertise to become more engaged with strategic business initiatives, while helping to drive true transformation throughout the IT organisation, and across the business. They are set apart from their baseline counterparts by a clear definition of the CIO’s role; the acquisition and retention of IT talent; the allocation of funding and investments; and ultimately the delivery of value to the business and its customers.

Vanguard CIOs recognise the increasing importance of innovation, and are less likely than baseline organizations to be involved with supply chain and finance transformation. They place innovation at the top of their priority list, ahead of customers and growth. Those in baseline organisations place it fourth after performance, customers, and cost.

This refocusing of priorities places them a few years ahead of other organisations in terms of shifting budget allocation from operations to innovation, not an easy task when you consider how the traditional fixed annual funding cycle, and lack of discretionary funds can restrict their options. Less than half their IT budgets (47 percent) is allocated to operations, and they tend to lead in innovation and growth spending (26 percent), with the remaining 27 percent being allocated to business enhancements. Vanguard CIOs are also less likely to measure business results on a case-by-case basis, and are more likely to have a consistent financial model – a leading practice that can improve accuracy, objectivity, and alignment with business strategy.

Primed with the skills and capabilities required to transform their business, vanguard CIOs are 42 percent more likely to be business co-creators and change instigators, who significantly drive top-line growth. They are successfully closing the gap between traditional technology stacks and emerging digital capabilities – including cloud, mobile, social, automation, cognitive, and more – thus enabling streamlined processes, increasing employee and customer engagement, and driving new business models.

While baseline organisations continue to view cyber as a business cost, vanguards view cyber as a strategic asset. They have plans to pursue AI and machine learning far more aggressively than those in baseline organizations too, perhaps because they have built a solid foundation that allows them to increase the impact of these emerging technologies.

Strengthening relationships to develop better customer solutions

Vanguards have become adept at forging strong relationships with other business functions. They are engaged with not only the back-office functions, but also the customer-facing teams, where 65 percent report a strong or very strong relationship, compared to only 50 percent of those in baseline organisations. They are involved in proactive measures such as introducing new technologies to improve customer engagement, establishing joint processes with marketing and sales, and analysing data for customer insights, all of which could result in stronger understanding and appreciation of customer needs and ultimately enable the business to develop better customer solutions.

These forward-thinking CIOs have also taken their stakeholder relationships to the next level by improving technology fluency throughout the organisation. They’re meeting with the board and subcommittees more frequently, and this increased interaction has enabled a shift in focus from IT risk and cybersecurity, to digital and innovation. This allows them to present technology solutions based on business need, ultimately driving business value. Vanguard CIOs are slightly more likely to meet with board members on a monthly basis (38 percent) than CIOs of baseline organizations (33 percent).

Closing the talent gap

Besides money, the other critical element of real transformation is people. As IT tasks are being increasingly automated, IT organisations are retiring many of the specialized skill sets on which careers were built. To close the talent gap and to support the business mandates for innovation/growth and business transformation, vanguards are reimagining IT talent by refreshing traditional skills, rethinking old culture, and looking for a new combination of skills.

Digital vanguards recognise a growing need for augmenting technical expertise with the soft skills needed to collaborate with the business, and they are betting on culture as a talent magnet. Half of these CIOs indicate that stature as a tech innovator helps them attract and retain talent, compared to only 20 percent of baseline organizations. They also credit opportunities to work with new and emerging technologies as the leading attribute that helps them attract and maintain talent (81 percent versus 61 percent of baseline organisations).

Acceleration and amplification is possible

By forming a clear digital vision and strategy, and changing the way that the IT organisation is perceived by the rest of the business, CIOs can help their organisation evolve into a market leader in terms of digital and emerging technologies. By strengthening relationships; leveraging their technology and business expertise to become more engaged with strategic business initiatives; shifting their focus to innovation over operations, and helping to drive true transformation throughout the IT organisation, and across the business, CIOs could help to accelerate and amplify an organisation’s path to an evolved tomorrow.

By Arun Babu, Digital & Technology Leader for Deloitte Consulting Africa

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