Posted on January 3, 2018 by Nicole Geronimo
While some industries may be slower to adapt than others, organizations in every vertical are embracing digitization. The move toward digital presents IT executives with a watershed moment to transform the perception of the IT function from cost center to competitive advantage.
From an internal perspective, this may mean providing the right technology to help people do their jobs. From a customer standpoint, it may be about simplifying the process of doing business.
At our most recent IEF dinner in Atlanta, the members in attendance agreed that “digitization” means different things depending on who’s speaking. However, they also agreed that understanding and harnessing digital disruption would be a core job function for the CIO of the future.
We captured their insights into the benefits and challenges of digital transformation in the article below.
Coming Back from Behind
Recognizing the need for digital transformation is only the first step on the journey. In many cases, IT leaders work in organizations or entire industries where other concerns take priority. The result can be business and technology refreshes that are slow to materialize. As one IEF member from the public sector joked, “We’re getting new carbon paper next year.”
While this example may be exaggerated, IT leaders in some organizations have gone long enough since their last technology refresh, that more radical changes begin to make more sense. One attendee explained that his small organization’s direct shift to the cloud as necessary to correct serious security gaps. After joining, he soon discovered the leadership had a poor understanding of security and PCI requirements.
“They thought they had done enough. In fact, they hadn’t done near enough.”
Another member expanded on the notion, adding that problems with legacy solutions often extend beyond security. “IT engineers generally have a very bad habit of having very tight tunnel vision. Networking is black magic to Windows guys. Linux is black magic to networking guys.”
This narrow view of specific functions within IT often leads to reactive, patchwork solutions that sprawl over time. The successful digital transformation shifts the organization’s mindset toward a planned, deliberate process for developing the IT function.
For years, one member’s organization ran an internal application that grew over based on “monolithic spaghetti code.” After it stopped functioning, there was no path forward but to start again from the beginning. Another member in the staffing and managed services industry outlined the problem:
“For a long time, it was pure ‘cowboy IT.’ No kind of change control, no kind of process management for anything.”
The members agreed that the cloud and digital technology have allowed IT departments to solve many intractable problems with their legacy systems by starting fresh.
“Eventually we reached the point of expansion where we realized that the processes that got us here are not going to get us any further.”
FURTHER READING: Modernizing Legacy Infrastructure (CIO Review)
Defining “Digital Enablement”
Many IT departments have further work to do to mature their processes. Meanwhile, the explosion of digital data and a more sophisticated, tech-savvy customer base creates the need for new tools and applications.
In response, many senior management, shareholders or consultants instruct their IT leaders to drive something called “digital enablement.” It isn’t always clear what they mean.
As one member lamented:
“I think that’s the biggest challenge: There’s no great definition, not even close.”
Another member in attendance posited that “digital enablement” means granting users the power to access real-time information from anywhere at any time. Others suggested it means making things easier for IT’s internal and external “customers.”
A member representing the financial services industry explained that “frictionless” is the term she used to describe the user’s ideal interaction with IT. For internal users, digitization allows faster, easier access to job-related data and capabilities “whether it’s automated sales or guided selling or automatic route picking, or things that used to be manual,” explained another attendee.
When it comes to the customer-facing experience, digital enablement means making it easier for customers to do business with the organization. “The customer, they want the omnichannel experience: When they pull up their mobile phone and they have the same software service access to information, no matter where they are.” As another member asked:
“Who wants to sit on the phone and call a 1-800 number and say, ‘I’m an existing customer’?”
This end-to-end customer experience combines automation with personalization. One attendee used a common example to illustrate the impact of automated personalization on the customer experience. “The one thing about Starbucks I can’t figure is there’s always a line. I hate the line.” By offering consumers the option to repeat their last order via a mobile experience, Starbucks uses digital enablement to add tangible value for the consumer.
“That’s the whole idea of the app economy, right?”
Another IEF member in the children’s toys business described his organization’s goal to provide an “Amazon-like” customer interaction. The company embraces a personalized, trust-driven recommendations system. This approach targets Millennial mothers, a demographic that, the company has found, prefers digital purchasing to a traditional retail experience. “We use analytics to recommend based on what somebody’s looked at, what they’ve bought and what they’re going buy.” Rather than direct selling:
“We suggest. We don’t demand anything.”
Fielding a New Kind of Team
The accumulation of “big data” is a pressing catalyst behind digital transformation. Technologies like artificial intelligence (AI) and the Internet of Things (IoT) have created a greater need for people capable of turning raw data into actionable insights.
As such, the data scientist has had a meteoric rise in influence.
As the evening’s host Erika Van Noort reported, it’s estimated just 10,000 PhD-level data scientists exist in the world today. “For organizations to compete in this space, it’s going to become one of the most highly sought-after skill sets.” The scarcity of qualified data scientists has prompted some members to reconsider their sourcing strategies. Rather than compete for the rare PhD, one member had partnered with a local university to get data science students interested in her organization before graduation.
“We’re actually trying to partner with Georgia Tech and put a curriculum in place so that we can define what we want it to be in two years or four years.”
The growth of data science also presents a “business versus IT” dilemma. As one IEF member asked, “What’s your organizational model for [data scientists]? Is it federated? Because they can’t all be in IT.” Another described an emerging “shadow IT” scenario. “We have a number of analysts who are using Python as far as analytics, but also trying to build applications,” he explained. The creation of applications and tools outside the purview of IT creates friction.
“How do we partner with them so that there are certain things we can control?”
The appearance of shadow IT groups in data science is just one example of the digitization happening at every level of the organization. “It has gotten to the point where IT is considered a must-have. You really have to be business-oriented.” As the need for technology expands, the need to speak the language of business becomes critical. The members agreed that the impact on IT has been significant.
One member in attendance observed that, as a result, the era of the “superstar IT geek” is ending. Today, the ability to work from the cross-pollination point between IT and lines-of-business (LOB) is a high-value trait. Alas, these “techno-functional” candidates can be difficult to find. One member, a CIO with a Fortune 500 company, remarked:
“For the past ten years the hardest people to recruit were those analysts that walk both sides of the field.”
The process of digital transformation requires IT to understand the sources of disruption and how they stand to impact the business. The members concluded that the IT executive is required to be a strategic solutions provider, anticipating and providing answers to business problems before they arise. One member detailed his team’s success in this area:
“We’re very ‘guerilla welfare.’ We can change in a day. It’s very different than the three-to-five-year horizons I was accustomed to.”
FURTHER READING: 7 IT Hiring and Salary Trends for 2018 (CIO)
To recap our IEF dinner in Atlanta, here are some of the key insights into digital transformation our attendees provided:
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