The newest C-suite member may not be an employee of your company

But will have as much input into the business strategy as the rest of the executive team. So what does this mean for CIOs?

Organisations across both public and private sectors have reached a tipping point where they can no longer play in a world where they are not connected and open to their customers.

“Flourishing enterprises are typically those that work closely with their partners and suppliers and, more particularly, have strong, effective employee networks and engagement, says Rob Lee, managing director of IBM New Zealand.

The business landscape has fundamentally changed, says Lee, as he releases the New Zealand component of The Customer-activated Enterprise, a global survey among C-suite executives by the IBM Institute for Business Value (IBV).

“The emergence of social, mobile and digital tools means we’re faced with a new dynamic, one where the customer has a greater say than ever before in their relationships with organisations,” says Lee.

“It’s forcing businesses to rethink how they work and has introduced the customer as the newest member of the C- suite.”

Related: CIOs have a new boss – customers: IBM

“The digitally activated customer moves to the top of the C-suite agenda,” says Lee, quoting the report, which was based on interviews with 4183 CXOs in 70 countries. IBM interviewed 52 executives (CEOs, CFOs, CIOs, chief marketing officers and chief human resource officers) from public and private organisations in New Zealand. IBM says nearly half (42 per cent) of the local respondents are from government.

“What the survey is telling is a real recognition of the power of the customer, and how businesses - large or small - have to think about their strategy and how they are going to include customer input in their strategies and actions,” he says.

“Customer expectations are having a dramatic influence on all aspects of the enterprise, everything from the development of new products and services, right through to long-term business strategies that will determine the very shape and nature of what a company stands for,” he says.

“We’re already seeing clients reshaping their business models to capitalise on this ability to understand and respond to customer influence. Mobile banking, for example, provides customers with information at their fingertips and aims to deliver a more convenient experience with more functionality than they’d expect in a branch.”

It’s forcing businesses to rethink how they work and has introduced the customer as the newest member of the C- suite

Rob Lee, IBM New Zealand

Lee says the New Zealand results reveal organisations aim to position themselves for this shift by dramatically improving their understanding of customers, while increasing internal and external collaboration.

The majority (82 per cent) of New Zealand respondents anticipate truly understanding their customers within the next three to five years, up from just 16 per cent today. And while just 28 per cent of local respondents believe they strongly collaborate with customers today – compared with 46 per cent internationally – they expect to triple this to 96 per cent over the next three to five years.

Currently, 34 per cent of NZ executives believe they collaborate strongly with business partners and suppliers, compared to 47 per cent internationally. When asked about employee collaboration, just 32 per cent of New Zealand executives rated this as strong, compared to 50 per cent elsewhere globally.

The digitally activated customer

The report highlights how the business landscape has changed much since 2004, as digitisation has given customers far more clout and transformed their expectations.

“For the CIO, it is all about how they need to involve the customers,” says Lee in an interview with CIO New Zealand.

A lot of the interactions with customers will be digitally based, which are across three systems.

The first category is the “systems of record”, or those needed to run the business.

The second are the “systems of engagement”, which is how the organisation interacts with customers, suppliers and the market in general.

The third, says Lee, are the “systems of discovery”. This takes the information from the systems of record and systems of engagement and what is happening out there in the market, and analyses the data to make it “valuable for the business and the decisions they make”.

“There is a required interaction among all of the C-suite to make this stuff happen,” he says.

“You can’t do this stuff in isolation; it is a collaborative effort of the C-suite. When you are forming strategies and making decisions and executing those decisions, if you have walls (among the executive functions), it will not be as effective.”

“This is why the CIO needs to be involved in these particular engagements. Otherwise, the organisation will not be able to have an end to end [system] where the customer can come in or the business can go out to the customer.

“People will know they can’t go off and do it without the CIO, they will get the CIO involved because it needs to be seamless across the organisation, for themselves, for the clients and for their partners.”

“What is happening more and more is the recognition of the role that the CIO needs to play, and where it needs to be at the table - with the rest of the leadership team.”

Click here for a high resolution infographic.

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