Ask line-of-business executives (LOBs) what IT people really do, and you might get a blank stare. Sure, they troubleshoot email and website problems, but herein lies the rub. Tech workers only seem to jump into action whenever their technology breaks. We’ve always known about this perception problem, but it’s bigger than most people think.
Here’s an interesting stat from a recent McKinsey & Company survey: 51 percent of IT respondents reported undergoing a major transformation in the past two years, yet just 36 percent of their business peers reported the same. This means a good chunk of business people probably had no idea the tech people were stressed with a big project, nor did they grasp the project’s business benefits.
The McKinsey survey goes on to report more disheartening news. Respondents don’t think IT’s performance is very effective in areas critical to a company’s success. That is, IT isn’t good at designing the online customer experience, developing analytics use cases, identifying cutting edge technologies, and leading digital transformation across the company. (For channel partners, this is a laundry list of value-add opportunity.)
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“As a result, technology leaders aren’t often the clear owners of technology-related activities and capabilities, and many respondents – especially on the business side – see their IT organizations as replaceable by third-party providers,” say McKinsey senior partner Naufal Khan, partner Jason Reynolds and associate partner Christoph Schrey, in the survey report.
More than two out of five business respondents said IT can be significantly, even fully, replaced by vendors and third-party providers. Among all respondents, nine out of 10 believe the central IT organization will undergo fundamental change in the next five years, according to McKinsey.
That’s not to say IT is doomed. Not only can a strong CIO change IT’s perception, she’ll have to for the sake of the company over the next few years. Technology innovation and integration are paramount in digital transformation, delivering real business outcomes and turning the tables on disruption. IT is in the best position to lead the charge.
In fact, a strong CIO can be a secret weapon in digital transformation. McKinsey says CIOs involved in overall business strategy lead to more successful digital initiatives. Forty-three percent of respondents with involved CIOs report significant business impact from digital initiatives, compared to 22 percent of others.
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First, though, CIOs should “rewrite their job descriptions” in order to play this leading role, McKinsey says. That’s a nice way of saying the CIO faces heavy lifting on multiple fronts.
One of the most important pieces of the makeover is for CIOs to become immersed in business strategy and display great business leadership skills. That is, they must break out of the cultural limitations of traditional IT. It helps if the CIO is able to report directly to the CEO, because employees are more likely to view the CIO as strategic. McKinsey found that nearly half of CIOs involved in business strategy report to the CEO.
Next, CIOs must fix IT’s ineffectiveness. Traditional governance models and work-intake processes are simply too slow in a fast-moving digital world. Instead, CIOs should be looking at bi-modal architectures, DevOps, and new digital transformation skills.
“The results point to three critical areas of IT ineffectiveness – a lack of priorities, operating-model weaknesses, and issues related to talent – on which organizations must make quick progress,” Khan, Reynolds and Schrey say.
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Looking ahead, the great value prop for CIOs, IT and channel partners lies in integration. Digital transformation cuts across all business units and fundamentally changes how companies operate. It’s a monumental undertaking that only a few companies are tackling today but more companies will soon.
As LOBs, especially chief marketing officers, make technology buying decisions in the quest for digital transformation, the next era will be enterprise-wide integration.
“CIOs, then, are in a unique position to observe these activities at their organizations and serve as a central architect to help manage the technology-enabled innovations and capabilities,” Khan, Reynolds and Schrey say.
Based in Silicon Valley, Tom Kaneshige writes the Zero One blog covering digital transformation, AI, marketing tech and the Internet of Things for line-of-business executives. You can reach him at [email protected].
