Digital business strategy is a digital question, with a business answer.
That's the view of Dave Aron, research vice president and Gartner Fellow, when asked to share his views on how the digital age is impacting CIOs today and into the future.
There is a lot of talk about the digital world and digital strategies. However, what does “digital” mean?
Digital refers to the superset of all electronic forms of information and technology. Including online, mobile and social marketing channels, smart devices, sensors, factory networks, technologies embedded in products like cars, the internet of things.
It is different to what enterprise IT normally refers to, because it includes operational technology, technology outside a company’s control (e.g. consumer devices) and technology in products as well as processes. It is not just digital marketing.
Is digital the same as IT?
It might seem like it, since everything we are talking about is information and technology, but the way the IT department and the use of the term IT has evolved in most companies and public sector agencies, it is much more limited – normally focused on automation services for the main processes of the company, e.g. ERP. Digital is much more than that – front office/products as well as back office/ processes, IT/OT, consumerization, digital business strategy etc.
Does a digital business strategy replace an IT strategy? Does a CIO need both?
IT strategy is almost always downstream from business strategy. Once the business strategy is decided, the IT strategy answers the question “How can we use IT to help the business win/ succeed?” Digital business strategy is not a separate artifact – it is a part of top level business strategy, and answers the question, “How can our business survive and thrive in an increasingly digital world?” IT strategy is a business question with a technical answer.
Digital business strategy is a digital question, with a business answer, which may include non-digital solutions, such as getting into different businesses, or changing strategic posture. A classic example is logistics companies such DHL, UPS, FedEx getting into financial services for their clients, based on digital (informational) capabilities.
What is a Chief Digital Officer (CDO)?
There is a need for someone who advises the board on digital business strategy, who helps the board answer the question “How will our business survive and thrive in an increasingly digital world.” This is the digital strategist role – Gartner recommends this is called Chief Digital Officer.
Some companies are using CDO to refer to the head of digital marketing – whilst this role is also important, Gartner doesn’t believe it is a C-level role; it often reports to the CMO. A third use of the term is for the head of an online business unit – if there is a separate business unit.
Can/should the CIO be the CDO as well?
A small minority of CIOs are already playing the CDO role, while some CIOs aspire to be the CDO. Some may want to stay running traditional IT.
The CDO needs board-level knowledge and credibility around business strategy, as well as an understanding of the digital world.
Some CIOs may have a knowledge gap and/ or a brand/ reputation gap. It is still the case that the vast majority of companies do not have CIOs on their boards, and the CDO needs to have board and executive-level access and credibility. This means that the CDO should probably report to the CEO.
Is the CDO role expected to be a long-term position?
Gartner believes the CDO role will be an interim role, but the interim might last a while (5-10 years). After that time, digital will be embedded in everything we all do. But for the interim, it needs a separate champion/ sponsor.
That doesn’t mean they do all the digital innovation – just that they encourage/support/orchestrate it.
How are CIOs leading the digital transformation?