Is your organization a digital laggard or a member of the digital vanguard?
I’ve been reading Deloitte’s 2018 CIO Survey, which makes a point of distinguishing between “vanguard” organizations where IT actively contributes to creating new businesses and business opportunities and everyone else. The traditional role of the CIO has been to be an operational leader, “keep[ing] the lights on and the trains running,” the report notes. Yet as digital products and digitally-enabled services become a bigger part of every business, the CIO ought to be taking a bigger role in defining those opportunities – and strategies for pursuing them.
The top two priorities listed by survey respondents were aligning IT with business priorities and transforming business processes, with IT operational excellence ranking third. “Yes, CIOs should build and maintain solid back-end core systems,” the authors state, “but they also need to leverage digital technologies to streamline business processes, engage employees and customers, and drive new revenue generating business models.”
I couldn’t agree more. At a time when so much business innovation requires technological innovation, Rimini Street has positioned itself to help enterprises optimize and extend their stable and mature back end systems so they can devote more energy to the front end – to making stronger connections with customers and enabling new digital-enhanced products.
You won’t achieve that by striving for the next x percent increase in database performance, or even by helping finance close the books incrementally faster. You get there by rethinking how to use technology to enable new ways of doing business, drive revenue growth and competitive advantage. We need technology with a business purpose, not technology for technology’s sake.
Deloitte identifies the vanguard organizations as those where two things are true:
- The IT organization is perceived as top notch and ahead of market peers (13%).
- Digital strategy exists at the enterprise level or business areas (claimed by 58%)
Outside of that intersection, even if an organization recognizes the importance of digital strategy, it’s more likely to be entrusted to an outside agency.
Today, only about 40% of CIOs say they are leading their organization’s digital strategy, according to Deloitte’s survey. Of the 60% who reported that they don’t, 27% still wind up leading the execution of whatever strategy is defined. One take-away: if you fail to assert digital leadership, you could wind up being responsible for executing someone else’s strategy – whether it makes sense or not.
I can’t help but see parallels to the survey we sponsored showing that organizations are spending too much on keeping the lights on, versus innovation spending.
Deloitte suggests leadership strategies to help change that equation. Digital vanguards lead other organizations shifting funds so that less than half (47%) goes to operations with 27% redirected to business enhancements and 26% to innovation and growth. Over the next few years, they expect to reduce spending on operations to about a third of the IT budget, while increasing innovation spending to 38%, according to the report.
While the survey narrative certainly echoes very familiar arguments about CIOs needing to be more business savvy, it also suggests business leaders need to be more tech savvy. One of the things they found the most successful technology leaders doing was investing in “technology fluency” for the whole organization. No one expects business people to become techies, but they ought to understand basic concepts about the importance of core systems and cloud apps, why they are important, and the basic reasons behind the organization’s technology roadmap choices.
Deloitte says the digital vanguard organizations are more likely to formalize their technology fluency programs, rather than relying on ad hoc conversations to fill in the gaps.
One of the ways vanguard CIOs are showing the worth of digital investment is by taking full advantage of new cloud technologies that deliver business value with less technological overhead. They are weaving new technologies into core operational systems but trying to move beyond the basics.
Having stable and reliable core systems will always be important, and 64% of CIOs said they were making new investments in their ERP systems. However, less than half of digital vanguards 47% are focused on ERP “perhaps because they have completed their foundational investments,” according to the report.
Makes sense to me. In fact, in the coming years I would expect to see more budget and focus shift away from ERP to new technologies and innovation. If your ERP is not broke, don’t fix it – but do optimize it to support the other, more exciting parts of your business. Although a large part of Rimini Street’s business revolves around supporting ERP systems, we do not believe ERP support should have to be one of the largest items in your budget, year after year. Once the core system is fully implemented and stable, you ought to be able to get support for it at a reasonable price.
Then use the money you’ve saved to put your organization on the vanguard of digital business innovation.
