The role of the Chief Digital Officer in digital transformation
The focus on Digital Transformation initiatives has never been greater. Organisations are increasingly looking to make sure their business strategies are underpinned by the right technologies and that lack of digital maturity isn’t stopping them when making key business decisions. According to Gartner, CEOs expect their digital revenue to increase by more than 80 per cent by 2020, while IDC expects the percentage of organisations with digital transformation initiatives to grow from 22 per cent today to almost 50 per cent in the next four years.
It comes as no surprise then that some industry figures have been calling for the creation of a new C-level role – namely Chief Digital Officer (CDO) – a digital transformation evangelist who would take responsibility for all things digital. While their enthusiasm to embrace a digital agenda should be commended, it opens up an interesting debate. Do organisations really need a separate figure to drive digital leadership and what does that tell us about our Chief Information Officers (CIOs)?
A challenging transformation
The focus on digital transformation is, in many cases, fuelled by concerns that companies are not responding to market challenges quickly enough and thus missing out on opportunities presented by a rapidly growing digital economy. Hence, calls for appointment of a CDO often stem from insecurity about a company’s digital future. No wonder that hiring a digital guru, focused solely on driving organisations’ digital maturity seems like a no-brainer.
But aren’t CIOs the ones that are supposed to be thinking about how to best use technology and information to improve customer service, drive more revenue and open up new markets? In theory – yes. In reality, not all CIOs operate in that way or in fact have the resources that would enable them to focus on digital transformation initiatives. Add to this the fact that many mid-sized organisations might not even have a CIO and the confusion grows.
And since digital disruption is about much more than just technology, spanning business strategy, processes management and company culture, it often poses a significant challenge for organisations. It involves putting together governance frameworks that enable companies to mitigate risks involved with innovation, designing new operating models that can make the most of emerging technologies, vendor management, and finding and managing the right talent to do the job – responsibilities that would ultimately fall to the CIO.
Making the right choice
In addition, organisations are often confused about who should be owning digital projects – the IT department, marketing, a dedicated digital team or a blended team from across the business. In such scenarios, adding a CDO to the management mix makes perfect sense. A separate CDO could give the CIO some much needed breathing space and help the organisation refocus on digital initiatives. He or she would support the CIO in communicating the value of digital to the rest of the C-suite and help inspire confidence in company’s digital ambitions. In other companies, where the CIO has a broader remit, the role could be provided by the CIO or merged into a CIO/CDO role under one person in the future. In many mid-sized organisations, where the role of the CIO might not exist, putting a focus on driving digital across the entire organisation, rather than giving that responsibility to one person, might make more sense. One thing is certain – hiring a CDO solely as a box-ticking exercise won’t further a company’s digital agenda and can do more harm than good.
The biggest mistake to avoid is isolating the CDO or treating his or her responsibilities as separate from the rest of the organisation. For digital transformation to take place, it’s crucial that CDOs work hand in hand with CIOs, driving digital leadership from the top and across each department, project and team. Ultimately, the need for a separate CDO comes down to the type of organisation and the type of CIO currently in place but one thing remains clear – a fresh injection of digital know-how, if well thought-through, is never a bad strategy for companies looking to invest in digital transformation.
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