Digital Transformation and IT: The CIO´s balancing act
We are sure many of you frequently use the saying “two sides of the same coin.” It usually indicates there are two ways of looking at the same thing, and potentially two different interpretations of a specific situation.
If you look at the arrival of the “consumerization of IT” a few years back, the industry saw a shift of IT investment decision power away from IT and toward lines of business. Business executives were sick of waiting too long for project results and did not feel well-served from their own IT organizations. Consequently, they ran off alone and got the freedom of choice from various “best-of-breed” offerings to drive business innovations without keeping an eye on the overall company context. The Line of Business executives became the quintessential gold diggers, and we saw innumerable cloud and mobile solutions plugged in here and there. This is obviously the shiny side of the coin. Many companies keep polishing the shiny side but ignore the shadowy side …
However, if they would flip the coin over, many are in for a surprise.
With the arrival of more disruptive technologies and the digital transformation, it’s not enough to simply copy the analog world and digitize it. Companies need to rethink their processes and adopt new ways to create better business outcomes (see). The mess of point solutions is becoming unmanageable, and now those same companies are hamstrung in their ability to be more agile and reactive to changing market demands.
For new reasons, they are trapped in exactly the same situation they wanted to escape from, now that decision power has been transferred to Line of Business executives. The back of the coin represents the necessity for a center of gravity that brings operations back together and develops use cases as well as strategies built on new, disruptive technology.
And this center of gravity needs a leader who can focus efforts and usher the company into the digital age.
We live in times of accelerated change. Smart and innovative challengers leapfrog industry borders and disrupt business models, selling digital services into former physical product markets and leaving established market leaders perplexed and behind. The digital Darwinism predicts that not the strongest (market leaders), but those companies that are able to adopt change the fastest, will survive.
And as an example – the arrival of the smartphone taught us that torch producers and camera producers, for example, ended up between a rock and a hard place. Their business model was disrupted from outside the niche. Smartphones disrupted several other businesses and will keep doing so – financial credit card organizations are next in line.
With every new mega-trend, established enterprises have to change quickly to stay in business and ahead of the crowd. If they don’t, they will simply be out-innovated by peers and new challengers. And given today’s technology, a handful of smart people can do what once required an entire enterprise infrastructure – including IT departments – just a couple of years ago.