The lines are blurring between who funds and decides on technology investments
A new report by IDC finds 65 per cent of New Zealand businesses already have a digital leadership team.
“The emergence of a digital leadership team reflects the growing status of digital as the lifeblood of a successful organisation,” reports IDC in its C-Suite Barometer, 2017: Collaborating for Digital Transformation Leadership.
IDC says this year’s survey results indicate that on average, Kiwi organisations have three to four members on the digital leadership team with the most common members being the chief executive, CTO/CIO, CFO and COO.
More than half (51 per cent) of digital leadership teams are driven by the board agenda and 43 per cent are driven by the CEO.
Building successful DX teams
IDC notes successful DX (digital transformation) leadership teams can influence change down through the organisation and are characterised by multiple stakeholders and a clear digital strategy.
“There is a high correlation between higher digital maturity and the existence of the ‘embedded digital business leadership structure’ such as a digital leadership team,” it states.
“The digital dream team will include representation from all functional lines of business.”
The survey was conducted in June 2017 and involved 223 New Zealand organisations which comprised of 80 CIOs and 143 New Zealand C-suite executives (CxOs) including CEOs and executives from finance, marketing, and operations.
The survey results, meanwhile, show that as C-suite partners align for digital transformation, “the lines are blurring between who funds and decides on technology investments".
Business metrics need to be clearly defined and legacy systems must be decluttered to set the stage for integrating digital innovation into the business framework
"Multiple stakeholders from the C-suite now have a greater role in determining where ICT budgets will be directed, what technologies will be adopted and the areas of digital transformation that will shape the strategic direction of the business,” notes Louise Francis, senior research manager, IDC New Zealand.
The survey results reveal line of business (LOB) influence of ICT budgets continues to rise - 61 per cent of the LOB now fully/partly funds ICT, up from 55 per cent in 2016.
“At this rate, the LOB will be pervasive across almost all ICT budget decisions by 2020. This does vary by industry and company size putting success metrics under the spotlight,” she states.
Survey highlights include:
Escalating costs are becoming a big headache for CEOs. Cost are once again at the top of the CEO's agenda but this time it is being driven by multiple factors; The need to change business models to keep up with competitors, changing customer behaviours, operating in a global market and overcoming the commoditisation of products and services.
A digital transformation (DX) strategy is now considered a must have, but most organisations are still light on the detail. The survey finds 83 per cent of New Zealand organisations say they have a DX strategy but only a fifth are aggressively using DX to compete.
DX metrics are business metrics: DX outcomes can be difficult to identify and measure. However, since the board and CEO are driving DX strategies it will be critical to define the right business metrics. In New Zealand, the top three metrics are Market recognition (digital leader), share in digital marketplaces, and market share growth
Change management is the biggest obstacle in business transformation. Cultural change management is integral but it will be the biggest challenge and ultimately the most critical success factor for value creation from DX investments in technology, process, and people. But, 52 per cent told IDC that cultural change management is still a big barrier to embedding smart IT into the organisation.
Integration is the big CIO priority for 2018. Innovation is the alluring part of DX but the integration stage is where the real business benefits and value emerges. However, 60 per cent of organisations are still exploring options or struggling to make integration work within the organisation. Legacy systems, disparate DX initiatives that don't gel with each and a lack of integration capabilities are amongst the big challenges facing CIOs grappling with the integration dilemma.
"Digital transformation is inseparable from business transformation and that requires a willingness and intent to collaborate for business success," concludes Francis.
"But intent only translates into business success if cultural change is addressed, business metrics need to be clearly defined and legacy systems must be decluttered to set the stage for integrating digital innovation into the business framework."
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