New Zealand enterprises are now knee-deep in the era of digital business and getting deeper, bringing increased market competition, efficiency gains and revenue growth opportunities. Now’s the time for CIOs to shift from systems to platform thinking in terms of their business and operating models, delivery mechanisms, talent and leadership.
A platform provides a business with a foundation where resources can come together — sometimes very quickly and temporarily, sometimes in a relatively fixed way — to create value. Although not every business is ready to be a platform business due to its economic model, the concept is important to all businesses — public or private sector, large or small, information-intensive or physical-asset-heavy.
When we think of all the mammoth tasks and challenges that IT organisations are facing — the emergence of talent as the top barrier to success should be a wake-up call for CIOs.
Digital business now a core competency
It’s promising that New Zealand enterprises have advanced their view of digitalisation from social media, marketing channels and devices, to opportunities for digital platforms and technology-led innovations to reinvent or create markets and fend off competitors. Disruptive technologies like sharing economy platforms (such as Uber, Airbnb and crowdfunding) are the "new normal" propelled by hyperfast global consumer adoption.
CEOs clearly appreciate the opportunities that digital can create and permeate. While accepting a generally flat economic outlook in New Zealand this year, leaders are backing technology led ingenuity. They accept that the digital "service economy" is a reality and is accelerating. CEOs are talking about the need to innovate at speed, turn ideas into value and commercialise IP. However, there’s a propensity for them to see innovation as improvement, rather than generating new ideas.
According to Gartner’s 2016 CIO Survey, New Zealand CIOs are taking note and accommodating demand for both innovation and improvement as they adapt to the fast changing digital landscape. They expect the two major impacts of digital this year will be doing more business through digital channels and generating more revenue from better operations.
Digital business is now moving from an innovative trend to a core competency. Naturally, digital is different for every enterprise and poses unique challenges for each in terms of talent, structure, innovation and the role the CIO plays.
IT budgets growing faster than global peers
Greater importance is being attached to digitalisation as a market growth strategy and budgets are increasing to fund investments. Enterprise IT budgets are forecast to grow three percent in New Zealand, whereas the global average shows slower growth.
CIOs surveyed said their top technology investments in 2016 would be related to big data and analytics, cloud and mobile. Infrastructure and data centre spending continues to be high on the list; however, there is now clearly more emphasis on cloud. This seems to indicate that New Zealand CIOs are leading the way in freeing up budgets and creating the flexibility for more digital focus by reducing their investment in internal infrastructure and data centres.
Take a different approach
Digitalisation is expected to intensify across New Zealand this year. In this environment, it’s becoming clearer that hardcoded business and operating models will not suffice. A different approach is needed.
According to the digital leaders surveyed, focusing on delivery, talent and leadership is an important way to industrialise digitalisation.
CIOs are struggling between two competing pressures: to provide stable, secure, high-performance services and to deliver agile, innovative, technology-intensive services quickly. Bimodal IT provides a way to address both. It involves operating two separate, coherent modes of IT delivery – one focused on stability and the other on agility.
The need to innovate is driving penetration and deepening of the bimodal construct. Gartner’s CIO Survey indicates that New Zealand CIOs are more aggressive in their adoption of bimodal IT than global peers. They have the opportunity to invest in setting up and developing bimodal capabilities, helping their organisations reap the benefits of digitalisation sooner than the competition.
Scarcity of talent is an ongoing problem for CIOs digitalising their enterprise. When we think of all the mammoth tasks and challenges that IT organisations are facing — digitalisation in general, funding issues, benefits realisation capabilities, the advent of the cloud, etc. — the emergence of talent as the top barrier to success should be a wake-up call for CIOs.
There will always be more and better talent outside your own internal talent pool than inside — especially in the current high-speed, highly disruptive waves of digital innovation. So, instead of thinking of talent as a strictly internal asset, CIOs must think about talent as a platform with semiporous boundaries — where internal and external talent meet and collaborate and multiply their potential.
The CIO role is constantly evolving. As digital pervades all aspects of the business model, products and services, operations and workplace, the CIO cannot be thought of as a functional role. Rather, digital leadership must be thought of as collaborative leadership — a team sport.
According to Gartner’s CIO Agenda Survey, more than half of New Zealand CIOs say they are stepping up and taking the digital transformation leadership role, with many taking on innovation leadership; both areas are higher than global peers. Many see themselves as change agents and are enjoying the challenge of impacting business outcomes.
As digital business accelerates, CIOs should prepare the business and IT to both exploit and enhance existing technology foundations, and explore new ideas at an even faster pace. CIOs should act as the prime movers to help their organisations sight, create and capture digital opportunities.
Jenny Beresford is a research director with Gartner's CIO Advisory team. Previously, she served as a CIO, VP and GM in consulting and technology firms, an agile coach and a digital program manager, through to hands-on roles in strategic planning, change management, innovation, enterprise architecture and portfolio management.
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Join the CIO New Zealand group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.