UPDATED 13:36 EDT / OCTOBER 02 2015

NEWS

Digital transformation becoming a board-room issue, PwC study says

The seventh annual Global Digital IQ Survey from Pricewaterhouse Coopers LLC US (PwC) is out, and the news isn’t great for CIOs, at least on the surface. The survey of 2,000 executives in 51 countries found that 68 percent of digital spending is now coming from budgets outside of the IT organization, up dramatically from 47 percent the prior year.  CIOs drive about 40 percent of digital efforts today, but that figure is expected to fall to 35 percent in three years’ time. Nearly two-thirds of respondents said that by then the CIO’s main responsibilities will be limited to managing internal IT resources.

The glass isn’t necessarily half-empty, however. The growth of technology investments outside of the IT organization is also recognition of the importance of digital technology to the future of the business. “The vast majority (86 percent) of CEOs we spoke with in our annual survey felt it was crucial to champion the use of digital technologies,” the report says. In fact, the percentage of CEOs who are championing digital business initiatives has risen from 57 percent in 2013 to 73 percent this year (interestingly, it’s 84 percent in the Middle East).

In other words, 12 years after Nicholas Carr famously declared that IT Doesn’t Matter, it’s turning out that IT matters very much indeed. With leading companies like Target Corp. insourcing IT operations that are now deemed to be strategic, CIOs’ decades-long quest to be given a seat at the strategy table finally appears to be over. IT is now so important that it can no longer be entrusted solely to the IT department.

While much of the chatter in the industry has focused on the disruptive potential of digitization, the PwC survey found that most executives are actually eyeing incremental change. Just one percent said their top expectation is for digital to disrupt their industry. Rather, the benefits they expect are somewhat more prosaic: 45 percent say the top priority is growing revenue, 25 percent expect to deliver better customer experiences and 12 percent see higher profits down the line.

CEOs are little more fidgety than their peers about the whole disruption thing. Sixteen percent of them said the value of digital investments will be disruptive, compared to six percent of CFOs, eight percent of CIOs and four percent of CTOs.

PwC identified 10 attributes of companies that are effectively transforming themselves digitally. They boil down to a high level of executive involvement, effective communication of the strategy throughout the organization, openness to new ideas, a strong bias toward data analytics and a well-understood set of measurement criteria. Effective organizations also have a multiyear digital enterprise roadmap.

The technologies that leading companies identified as being most strategically important over the next three to five years are cyber security, data mining and analysis, data visualization, digital delivery, and private cloud. Other popular choices were NoSQL databases, sensors and enterprise wearables.

Ultimately, though, the message from this year’s study is that digital transformation is a companywide exercise that requires clear goals, executive buy-in and measurable outcomes. It isn’t just the CIOs job.


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