Gartner predicts in three years 90 per cent of large companies will have a chief digital officer (CDO) role.
“It’s a logical step to create an executive position – the CDO – to handle the many opportunities and responsibilities that arise from industrial-scale collection and harnessing of data,” notes Mario Faria, research vice president at Gartner.
Air New Zealand has already jumped into this space, having recruited Silicon Valley executive Avi Golan for the inaugural CDO role.
Golan was vice president at Intuit Small Business Group based in San Francisco, who holds an MBA and a Bachelor of Computer and Information Science. His portfolio includes ICT, making him the first CDO to be profiled in CIO100.
“I know Christopher Luxon as CEO is hugely supportive of my new role... The leadership group at Air NZ certainly see it as a key driver for the company’s future success,” he says.
He shares additional insights on one of the most watched business technology roles in New Zealand.
“Air NZ’s Digital function has been strategically established to ensure the airline can evolve at pace with the rapidly changing world of digital technology. The airline aims to succeed in the highly competitive global airline industry with a focus on using digital innovations to create a seamless customer journey,” he says.
Organisations need to think about how they can incorporate an end-to-end technology mindset into their culture so the customers’ needs and customer inputs are at the forefront of design concepts.
The role involves getting products to market faster through continuous delivery, embracing cutting-edge innovation, continually assessing new and emerging and disruptive technologies, leading an enhanced customer and journey centric digital experience, moving more of the services ‘on demand (whether on or off premise), applying more lean techniques (e.g. lightweight governance, testing) and using data to drive decision-making and leveraging customer data.
“Air NZ’s digital transformation brings a new perspective to the way technology is used and more specifically that it all starts and ends with the customer, which in turn has a direct impact on key business results.”
There are four areas Golan will focus on in his first year in the role: Digital innovation, customer feedback and design first development approach, increasing business impact across all product areas and applying Lean techniques to get products to market faster. So how can CIOs transition to the CDO role?
“In order to transform the digital experience, organisations need to think about how they can incorporate an end-to-end technology mindset into their culture so the customers’ needs and customer inputs are at the forefront of design concepts,” Golan states.
“The era of IT focusing on internal cost savings and efficiencies can no longer be the key element of CIOs’ responsibilities. Instead, CIOs will have direct revenue and business impact responsibilities. This means they will need to think more in terms of external customers, impact on business and be more Agile. In short, I believe those who can transform the business’ mindset will be able to transition into this new CDO role effectively.”
As digital businesses become the norm, Golan believes CDOs will have significant influence on key business results and KPI. “This will result in CDOs having more career path options in many other business functions and up to a CEO role.”
The CIO as CDO and vice versa?
John Emerson of Tait Communications says the need to appoint a chief digital officer – separate from the chief information officer role – will depend on the enterprise.
“I would argue that the CIO with the wider business focus – not the IT-focused CIO – is already functioning as a chief digital officer,” says Emerson, who joined the Christchurch based company as global CIO in 2012.
“The job of a CIO is to improve the performance of the organisation and to support or enable the strategy of the organisation,” he adds.
The CIO with the wider business focus – not the IT-focused CIO – is already functioning as a chief digital officer.
“If you focus on those two things, particularly if the solutions you are using are around the cloud rather than traditional IT, you are already performing the CDO role itself.”
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Tait Communications is a multinational radio communications company with headquarters based in Christchurch and offices in 10 countries.
He says the CEO at Tait Communications made him responsible for not just leading digital in IT but digital in terms of all the products and services in other parts of the organisation. He says enterprises have to be careful with bestowing the digital title.
At Tait, for instance, there are roles in digital marketing because Tait has digital products. But for organisations that are not technology based like Tait, the chief digital officer is a group approach with a remit wider than IT.
For instance, at a previous CIO role, Emerson did not have responsibility for IT as this was done by the CTO. “The CEO wanted me to change the organisation, not be burdened with managing IT.”
In this instance, it could create a conflict of interest if the CIO were in charge of business transformation and the business situation was resolved with solutions not within the IT department. At the same time, if the chief digital officer is free of IT, he or she can have much broader responsibilities for resolving the issue.
Whether the digital transformation is led by the CIO or CDO, the task has its own set of challenges.
"Going digital is a radical shift in how you do business," he explains. “You have connected products, smart products and it redefines industries.”
He says this shift is exemplified by the likes of Amazon, Uber and Airbnb.
He says technologies that led to the building of these platforms are often called disruptive. “I would call it evolutionary,” he says, particularly for companies like Tait that still have legacy systems.
“Most of us in the real world have to keep all the old stuff going, while we have to put in the new.”
With the launch of Digital Tait nearly two years ago, Emerson says the company has been moving the company's systems into the public cloud.
“Except for three of our systems, the rest of them are all on the cloud. We are in the process of replacing these three systems but it will take a couple more years just because they are so complex and so embedded.
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“But we will get there,” he says. "The board is absolutely behind us and has approved the removal of these systems.
“The digital story for us is a global story. For example, by going to the cloud, we eliminated a lot of IT costs.”
The team in Christchurch provides support for the global network.
Emerson says the shift to cloud services had impacted his staff.
“We support, resolve and train using the cloud.”
“About half of my staff are directly involved with customers either or in apps, or in supporting hardware and enabling customer interaction.
"We have collaboration projects with customers either or in apps or in supporting hardware,” he says. “We share information with them and with partners.
“It has evolved into a global ecosystem.”
He says the staff prepared for the shift by upskilling and reskilling.
Tait also had to hire new people to work on cloud services. He says he hired one such staffer from Singapore who was working on AWS technologies. This was three years ago. “At that time there were not many cloud people in New Zealand.”
He says there is an important message he wants to share with CIOs who are working on business transformation projects.
“I know a lot of people looking at digital are worried about costs,” he states.
“What I can tell you is we have already reduced our capex in ICT by 62 per cent, and we have reduced our opex by 27 per cent. And the key to that is to consolidate systems as you move to digital.
“The CIOs looking at this need to know they can reference that when they are doing business cases to the board."
This article is part of the 2016 CIO100 report on the top ICT using organisations in New Zealand. Read the full report here.
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