Published on the 08/02/2023 | Written by Heather Wright

The rise of the digital business, and increasing decentralisation of IT in businesses, is changing forever the role of the CIO – and throwing up new challenges for them to tackle.  

Louise Francis, research director for A/NZ and IDC New Zealand country manager, told iStart Australian and New Zealand businesses local businesses are embracing the concept of being a digital business, but it is creating challenges around managing internal and external processes, including how companies engage their customers, patients, partners or even in the case of education, their students.

“There’s no point calling yourself a digital business unless you have quantifiable business value creation occurring.”

Around 30 percent of local businesses now see themselves as a ‘digital business’ – defined by IDC as an organisation where value creation is based on the use of digital technologies. That’s up from 15-20 percent just 12 months ago. 

And Francis notes that being a digital business isn’t about spending money on technology. 

“It’s a mindset and an approach for the business, it’s not about what technology you are investing in or that sort of thing,” she says. 

The CIO as orchestrator and influencer 

For CIOs a key change is their evolving role. Forget about being the controller of IT, CIOs are now orchestrators and influencers instead. It’s something IDC has been talking about for a number of years, but Francis says it’s starting to become more formalised now.  

“Those who are fairly switched on when it comes to the digital business are at that point now. And again, it’s about a mindset: ‘I’m not necessarily going to be in charge of those budgets for IT’. 

Instead, she notes, it’s about collaboration skills with the ability to bring all the parts of the business together. 

“One of the biggest changes we have seen is with the rest of the business, line of business and executives.” 

In 2019, 31 percent of Kiwi IT leaders said there was heavy involvement from senior business leaders. In 2020 that quickly rose to 59 percent and by the end of 2022, about three-quarters of businesses said line of business was heavily involved in IT decision making. 

“Business is making a lot of the technology decisions right now, so it’s about how you manage that and ensure you are on the right path. 

“If you’re a digital business, you want to be going in a specific direction, but you are now working in such a divergent environment, working with people, machines, a lot of augmentation going on and the lines between what is IT and what is not are really starting to blur.” 

Governance gets pervasive  

While the changing role of the CIO has been a topic for discussion for several years, Francis says where the big change is at the moment is in the concept of pervasive IT governance. 

“IT is becoming more and more decentralised. It’s going more and more into the line of business, so the big challenge and the big question with that model, particularly as businesses move into a digital business model is how do you adapt your governance processes around that? 

“There is a danger with so many new tools available as part of a digital business that companies aren’t making the right decisions around ethics or safety of employees or customers.” 

Case in point: An IDC survey last year looked at employee tracking technologies. In New Zealand about 40 percent of those surveyed were using the technology. But that’s just one part of the story: Another 40 percent said they had tried it but pulled it out, mostly due to employee pushback. 

“There is this temptation to move very quickly on these technologies. 

“We keep hammering it home about [governance around] AI and that but all technology to a certain extent needs to incorporate that safety feature or someone just taking a check to say ‘is this the right thing that we should be doing for our business and our customers?’,” she says. 

“You can’t just have a roadmap and a plan based on old governance processes and IT control. That’s just not going to fly in an organisation anymore particularly if you want to move forward and incorporate digital business concepts. 

“If CIOs don’t become the orchestrator and embrace the concept of pervasive IT governance, they’re not going to reach the goal of being a digital business, because you’re working in such an evolving and changing environment now that you need to be adaptive to do that.” 

The digital alloy 

Francis says companies which are starting to mature around the digital business concept are also changing their skills approach. 

“Because they realise it is a business concept, and not necessarily an IT concept, they are thinking about talent in a different way and looking outside the IT department, and inside the rest of the business, for that talent – that aptitude for thinking as a digital business, rather than specific technology skills.  

Francis refers to these staff as ‘digital alloys’. 

“Alloys are about creating hardness in a metal, about improving the flexibility, reducing corrosion.  

“That workforce is going to be what I call the digital alloy because you are going to see people in the business starting to build those technology skills as appropriate to that part of the business. They’re not going to be IT people and they’re not necessarily going to strictly be business people. They are going to be that hybrid mix, that digital alloy.”  

Shadow IT 2.0 

Blame it on ChatGPT, but Shadow IT, this time around AI applications, is again a topic of conversation.  

“We’ve seen a rise in interest around ChatGPT. It’s a bit hit and miss when people are using it, but it’s one of those things people pick up very quickly and start using, so that’s another danger. It comes back to that pervasive IT governance across that environment – so how are you, not necessarily going to rein it in, but make sure it’s used for the business the way it should be used,” she says.  

She’s urging businesses to be proactive in assessing which parts of the business are starting to AI applications and to be proactive in how they’re built into the digital business strategy rather than just saying they can’t be used. 

“I think we found out that telling people they couldn’t use applications or technology, just doesn’t work,” she notes, wryly.   

The importance of metrics 

Francis is blunt: “There’s no point calling yourself a digital business unless you have quantifiable business value creation occurring, so you need to be able to quantify what it means to your organisation.” 

She says too often companies say they’re a digital business, but are unable to articulate what that actually means in terms of business value. 

“You need to be thinking about what a digital business means in terms of developing digital products and services, how it is about engaging with customers, how it impacts that, how it is going to create employee retention and what skills you need to develop. 

“And when you’re looking for talent start planning for now, but broaden your scope and hedge your bets with a multi-talented approach, or aptitude for technology, rather than the technology itself. Because we are talking about the metaverse, Web 3.0, ChatGPt and all that. Who knows where those technologies are going to go or if they are going to be the ultimate technology. So it’s more important to have the aptitude for developing skills around technology is more important than seeking out the skills for the technology itself. 

“Given the number of changes we have seen over the last 12-24 months have shown that if you are planning for what is happening today you are going to miss out on what is happening tomorrow. 

Technology for good 

There’s another sentiment Francis says she’s hearing increasingly from local businesses, and that’s a push for ‘technology for good’ whether sustainability, or around ethics or contributing to the community. 

“It seems to be a theme we are hearing, but it’s not something quantifiable. And it’s something we don’t necessarily think about when we’re thinking about technology, but it’s definitely something we’re hearing back from CIOs more and more.”