The Digital Tipping Point

In a book in early 2010, titled the  “The Real Value of IT” by Richard Hunter and George Westerman, they aptly said,  “The cost of IT is not the value of IT. It’s time to start communicating in clear, measurable terms non-technical managers can understand how IT improves business performance. Nearly half of all capital spending by businesses worldwide goes to IT, yet many business leaders remain skeptical about whether their IT investments are paying off. Frustrated—even angry—with their IT departments, the only input they seek from their CIO is why IT costs so much.” 

The panacea the authors advocated: “ The escape from IT’s value quandary begins with something as simple and profound as a change of paradigm for the IT organization. We can sum up this paradigm change as rule number 1: it’s not about IT. It’s all about business outcomes and business performance, whether you’re communicating IT’s internal performance or IT’s impact on business operations and financials.” 

If one contrasts this insight to this day and change, the transition to digital is to enable the enterprise to be agile enough to meet the demands of the new economy. Digital means rules need to be rewritten, skills need to be re-calibrated, mindset need to be changed, and the old tech should give way to the new. 

If we look at the APAC region, have we reached a state where we can say that enterprises are aggressively embarking digital? A recent survey from Gartner says so. 

THE DIGITAL JUGGERNAUT 

A recent Gartner CIO Survey reveals digital maturity in Asia/Pacific has reached a tipping point. If we take a closer look at the findings, it says that 31 % of CIOs in Asia/Pacific have evolved their digital initiatives to the scaling stage, up from 19 percent in 2018, according to a survey from Gartner, Inc. This indicates that digital business is maturing throughout the region, from tentative experiments to application at a massive scale. The major driver for scale is the intent to increase customer engagement via digital channels. 

Analysts presented the Asia/Pacific findings from Gartner’s annual global survey of CIOs recently during Gartner Symposium/ITxpo on the Gold Coast. The 2019 Gartner CIO Agenda survey gathered data from more than 3,000 CIO respondents in 89 countries and all major industries — 671 CIOs are from 16 countries within Asia/Pacific, representing $6.1 trillion in revenue and $73.7 billion in IT spending. 

The survey results show that digital business has reached a tipping point. 47% percent of Asia/Pacific CIOs report their enterprises have already changed their business models or are in the process of changing them. 40% percent report evolving consumer demands are driving their business model change.

“The ability to support greater scale is being invested and developed in three key areas: volume, scope, and agility,” said Andy Rowsell-Jones, vice president and distinguished analyst at Gartner. “All areas aim at encouraging consumers to interact with the organization. Generally speaking, the greater the variety of interactions that are available via digital channels, the more engaged a consumer becomes and the lower the costs to serve them are.” 

Rowsell-Jones further recommends that CIOs throughout Asia/Pacific evolve their thinking to be in tune with this new era of rapid increases in the scale of digital business. 

STEADY IT BUDGETS 

The survey results indicate that transformation toward digital business is supported by steady IT budget growth. CIOs globally expect their IT budgets to grow by 2.9 percent in 2019, but Asia/Pacific is the leading region with an expected 3.5 percent growth. However, this is a significant cut from the 5.1 percent projected the budget increase in 2018. 

Boards of directors typically also ask for a set of key performance indicators (KPIs) to measure digital transformation progress. The Gartner survey found that 81 percent of Asia/Pacific CIOs measure the return on investment (ROI) of digital. 

“CIOs should use their financial resources to make 2019 a transformative year for their businesses,” observes Rowsell-Jones. “Stay active in transformation discussions and invest time, money and human resources to remove any barriers to change. Enterprises that fall behind in digital business now will have to deal with a serious competitive disadvantage in the future.” 

 “CIOs in the region excelled at scaling their digital business last year, but they now have to take it one step further and put their growing digital business on a stable and secure base,” said Rowsell-Jones. “Their success hinges on a sound strategy that combines new, disruptive technologies with a rebalancing of existing investments.” 

TIDING TRANSFORMATION BLUES 

If you are a CIO and still struggling to digitally transition, here we suggest 5 best practices aimed at making your digital journey easier. We think going Digital hence is a judicious blend of policy and technology execution. And digital readiness is indeed a painstaking exercise. With the multi-pronged ramifications, it is vital for IT organizations to fast track their digital transformation initiatives to stay relevant in the marketplace. So enterprises need a combination of best practices and indulge in enterprise re-calibration initiatives. Here we suggest 5 best practices that improve your digital maturity. 

Five best practices to jumpstart digital transformation: 

#1: Map your digital priorities: It’s a given fact that enterprise IT organization suffers from technology plurality and information overload, legacy, and silos. The starting premise hence for a CIO or a CXO on the road to digital transformation is to indulge in a due diligence on the current state of technologies that run the enterprise. Once when the technology inventory is done, experts suggest that a relevance analysis of the current business demands need to be done. 

In this process, the enterprises will clearly ascertain how relevant is their existing IT- hardware, software, and apps, and update to newer ones meeting the business demands of the current new normal digital economy. Based on the tech assessment a digitally savvy business transformation plan needs to be inked. That plan must in its ambit have all the relevant ingredients of transition. 

#2: The CEO-CIO Collaboration: According to a Gartner survey last year, it said that product improvements and technology are the biggest-rising priorities for CEOs in 2017. IT-related priorities, have never been this high in the history of the CEO survey,” stated Gartner. 

Almost twice as many CEOs are intent on building up in-house technology and digital capabilities as those plan on outsourcing it. Gartner refers to this trend as the ‘reinternalization’ of IT — bringing information technology capability back toward the core of the enterprise because of its renewed importance to competitive advantage. This is the building up of new era technology skills and capabilities. 

Deeper transformation can only be achieved at scale if it is systematically driven. Experts say that CIOs should help CEOs set the success criteria for digital business. It starts by remembering that you cannot scale what you do not quantify, and you cannot quantify what you do not define. You should also ask yourself: What is ‘digital’ for us? What kind of growth do we seek? What’s the No. 1 metric and which KPIs must change. 

Experts like Gartner say that many CEOs have recognized that being open-minded, entrepreneurial, adaptable and collaborative are the most-needed digital leadership mindsets. “It is time for CEOs to scale up their digital business ambition and let CIOs help them set and track incisive success metrics and KPIs, to better direct business transformation. CIOs should also help them toward more-abstract thinking about the nature of digital business change and how to lead it. 

#3: Create a tech Eco-System: At the end of the day, digital transformation is all about how IT can enable business for more profitability. In more ways, you can call it an IT-led, digital-driven business transformation. Clearly, the starting premise lies in the creation of a technology ecosystem and a seamless blend of hardware and software. So it starts with managing your PC fleet, server sprawl and the kind of apps and software one is running. So the IT infrastructure has to be in sync with times and agile enough to take in all the elements of transformation and be able to evolve as the organization grows and need to be relevant and updated all the times. 

#4: Reimagine and Reinvent: Again, this might sound cliché, but there is no escaping it. This is more of a mindset problem. When things are going fine, the most organization goes into the ‘Niagara Falls’ syndrome and they fall into the trap of ‘If things are going fine, why change it.’ But today IT has reached an inflection point and the writing is clear on the wall- ‘Go Digital or Perish’. It is in this backdrop, experts suggest that organizations must put in place a staged digital transformation plan that is realistic and achievable. The key takeaway here is that transformation will not be overnight, rather phased and consistent. So from legacy- in terms of thinking and technology, the organization must pass through various stages of digital transformation and achieve a level of technology and process maturity that can drive digital initiatives. 

#5: Digital transformation is a journey and not an end: Clearly, this is an ongoing exercise. One of the biggest challenges is to create a tech adoption model that is agile enough to explore and experiment. So once when you have aligned your IT towards digital demands, the emphasis should be on metrics. As a technology decision maker and the one driving the digital transformation, irrespective you are a CIO or CTO or a CXO, you need to provide tangible RoI benchmarks. By providing benchmarks, one is also creating an on outcome driven digital transformation model.