1 April 2013 | 0
Is top management today holding its own organisation back through simple digital ignorance? Does that even apply in the C-suite, with the forward thinking of the CIO being constantly braked by the low levels of understanding or appreciation of the value of newer ICT tools and channels amongst senior colleagues? The answer appears to be that this is can indeed be true and across many different types and scales of organisation. The sector of operation will be a factor, of course, but even in digital industries such as business software, telecomms or content generation, there often appears to be a drag factor in adopting new technologies and strategies at top management level.
A 2011 global survey by CA Technologies with an unusually high European and Far Eastern representation found that 80% of CIOs believed that a lack of digital literacy among their senior management colleagues hampered growth, efficiency and competitiveness. They pointed to problems such as slow response to market change, missed business and investment opportunities, poor competitiveness, slower time to market and underperforming ICT investment. Almost a third said that senior management still sees ICT as part of the cost of doing business rather than a means of growing the business, its profitability and its agility in competitive and rapidly changing markets.
In the USA a PwC survey late last year looked at what it calls ‘Digital IQ’, which is a measure of how well corporations understand the value of technology and weave it into the fabric of their organisations. This survey spanned the US and 11 other countries including Europe and AsiaPac. The stand-out conclusion was that enterprises with strong, collaborative relationships between the CIO and other C-suite colleagues are four times more likely to be top performing businesses in their sectors than those identified as having fragmented relationships. Another, probably unsurprising, conclusion was that in those top performing enterprises the CEO is seen as a champion of ICT, a believer in digital investments and actively involved from strategy to execution.
The most interesting element in this PwC survey and report is the set of common characteristics shared by the top performing enterprises, the ‘Strong Collaborators’ as the report authors describe them. They generally:
- Have a single multi-year roadmap for the business strategy and an explicit process to link it to the IT roadmap
- Are more aggressive in IT capital spending to support strategic corporate initiatives such as new geographic markets, new product and service development, M&A, joint ventures and strategic alliances
- Have more aggressive investment in emerging technologies including mobile, social, big data and cloud
- More likely have everything on a mobile platform
- Are more aggressive in leveraging mobile and social technologies for employees and customers
- Often have more explicit approaches to organise, manage, and measure, innovation
- Recognise differences in ICT needs, e.g. among different generations of employees
Most of these are generally accepted traits of today’s obviously progressive enterprises in all sectors. So they are also in many respects a valuable checklist for any organisation giving active thought to its structure and technologies and HR development in this 21st century.
"Not to be too simplistic, but it all boils down to how well the ICT, which is indispensable to modern business, is actually integrated with the business. IT has always tended to be compartmentalised but that has changed with the Web and individual users and devices and all of that," said David McGee, consulting partner in PwC Ireland. "Progressive forward thinking and flexibility and so on has been a characteristic of outstanding enterprises for decades-even centuries if you think of the great 18th century trading companies from Hudson Bay to Hong Kong."
"Some kind of balance between the go-ahead managers and the cautious ones is also a constant up to the present day. It is understandable and appropriate, especially when you consider the high regulatory and governance requirements in so many sectors. At the same time, today’s ICT offers an unprecedented ability to start small and innovate, perhaps to fail and learn and try again, and then scale rapidly to whatever the market or demand will support," McGee adds.
"As a management consultant I have a habit of asking senior managers ‘If you were starting this business today in a garage, how would you go about it?’ Or you could ask them to take a slightly different tack and in their current roles ask ‘If I wanted to be a serious disruptor in this industry, what would I do?’ Even the most cautious executive is going to reach rapidly for ICT as part of the answer. It is already part of our business culture across the board. Understanding what it can contribute or achieve is no longer a technical issue, however. The techy bits are hidden behind the user interface, the user experience. If you need to go there you need the tech knowledge or you can buy the expertise or whatever. You really only need to know what you want to do, not how exactly it’s done," McGee believes. "That’s what is happening in consumer ICT. We see young graduate trainees starting work with PwC and they can’t see why it should be any different in business-and they’re right."
The importance of a reasonably deep understanding of ICT at top management level depends to some degree on the sector, the type of organisation and often whether the enterprise is new or long established. That is the first response of Jason Ward, EMC area manager for Ireland and northern UK including Scotland. "But in fact we have been seeing in recent years that CFOs usually have a really good handle on ICT and in that context actually work well with their CIO colleagues. In the past that might have been largely confined to speeds and feeds and costs. Today they are happy to look at cloud alternatives, the growing power of business analytics and other ICT developments as well as innovation in the areas close to their direct responsibilities like taxation or compliance as well as financial systems."
But then the Chief Marketing Officer is coming increasingly into the picture as the bulk of promotional and sales channels continue to converge on the web. "There is at least one global forecast that within the next five years the CMO will control 80% of the IT budget," Jason Ward says. "In fact Gartner now says that by 2016 there will be at least 10 global organisations spending $1 billion a year on social media. Whatever about the changing role of the CIO in that scenario, it is already clear that a genuine and relatively deep understanding of ICT is now definitely part of the job for the C-suite financial and marketing leaders while in most organisations the same will apply to the operating or manufacturing functions, not to mention compliance and security and others."
There is certainly still that element of caution or even scepticism because of a lack of ICT knowledge. That is just one of the factors behind EMC Ireland’s partnership with UCC, the IMI and SAS in setting up a new executive education programme for managers who wish to develop skills that will enable them to exploit the huge volumes of data that modern business and society now generate. The programme is a part-time combination of live sessions and distance learning and offers a Diploma and an MSc in Data Business.
Tech tipping point
The point about social media is extended by IBM Ireland’s senior business consultant Ronan O’Connell. "We have passed some sort of tipping point because ICT in the enterprise is now being driven at least as much by customer expectations as by the internal needs of the company. Customers have expectations of how they should receive information and interact with business. They want to do it their way, their web way, and certainly in all consumer markets the enterprise has to keep up or lose ground to competitors."
Another huge factor is the generation of data, says O’Connell. "We are now generating every two days the new data equivalent of all recorded history up till about 2003. Every enterprise is faced with the question of how to manage and use that, plus the fact that many of them are generating huge volumes of data on their own account and not exploiting anything like the full potential value. The CIO and usually the CFO are well aware of this and trying to introduce appropriate ICT strategies."
In general in Ireland the emphasis until very recently has been on ICT investment in back office and internal systems, led by the CIO and IT department and with the CFO as their principal partner colleague. The sales and marketing people had, generally speaking, comparatively modest ICT systems demands other than communications and connectivity. "That has now changed almost completely but although it is clearly important that this all be understood at boardroom level," O’Connell said, "it is a stretch for many directors and top management.
"That has been the basis for a series of workshops and exercises IBM has been holding with customers and partners in recent years. We call it ‘accelerated visioning’, working through the possibilities, the promise and what other leading enterprises are doing so that they can develop their own business vision. The aim is to help them understand the ICT and the potential, then develop strategies and identify the priorities."
John Purdy of Ergo Group, long established ICT services provider, has the insights of someone who has been selling solutions to Irish corporate decision makers for even longer than the 20 years of Ergo’s existence. "There are two types of CIO or whatever the job is called-and there have always been. There is the one who wants to move the organisation along, identify the next wave and trend and see what potential there is in it and use often scarce resources to take some advantage. Then there is the conservative, legacy approach, the IT managers who are proud of keeping the lights on and exert tight control of their area of responsibility."
The point is that both of those deliberately somewhat exaggerated profiles tend to match the management culture of their organisations, Purdy believes. "Boards of directors tend to hire senior managers who reflect their own backgrounds and attitudes. Every organisation needs a balance, which is fair enough. But ICT has been fast-moving, fast changing for the past decade and more so keeping up is a survival requirement in a competitive recession."
Now the enlightened CIO and top management team," Purdy says, "is not attached to legacy systems-including hierarchical management structures-and is constantly looking to take advantage of anything that might impact on the successful performance of the enterprise." With this mentality, he suggests, we are now in a pre-boom cycle and those game-playing, iPhone addicts we are recruiting are digital natives with minimal training needs-at least in electronic areas. That certainly includes social media.
Like IBM and others, Ergo has in the last 18 months or so been holding small group workshops and private briefings for senior management to give them some deeper appreciation of today’s ICT and its potential value to them. "This is not techy, more business examples and anecdotes about what similar enterprises or sectors are successfully doing. Mostly the people are C-suite level, CIO and CEO with finance, marketing, operations or others. With their understanding comes confidence. We now have lots of tech stories of senior and often older execs using smart ICT, like videoconferencing and the whole range of mobile tech. That is proving very important in changing the culture of an organisation from the top down."
Irish Computer Society CEO Jim Friars takes a holistic view: "There is a digital divide right through society and work and organisations. Yes, some of it is generational-older people and today’s digital natives. But very many individual people of pre-digital age have embraced today’s ICT. Organisations of similar vintage, however, often find it more difficult. That is in part the background to the surveys that have established that up to 80% of CIOs internationally believe there is now a problem arising because of the deficient understanding of modern ICT at senior management level. The digital divide at that senior leadership and authority level can have serious consequences."
In Friars’ view one part of the solution is ‘Just-in-Time’ training for the C-suite and their counterparts in all organisations. "Continuing professional development is now normal best practice in the professions. Its ICT equivalent is surely important at top management level. It really is the same old thing throughout commercial history-the world changes and enterprises fail to change with it and eventually die. Countless examples might include Kodak. Who could have predicted its demise? Today’s ‘Kodak moment’ is digitally captured on smartphones."
Conservatism at the top level is one element, and certainly there have been fads that faded and solid survivors had some reason to be a bit smug. But in today’s fast-moving market world, especially in global business-to-consumer sectors, complacency can be a more dangerous enemy than competition. Taking action speedily is still not the norm in the culture of larger organisations, Friars accepts. "That is in part fear of failure and quite understandable and indeed normal. One great balancing factor is that today’s technology offers the flexibility to try things easily and quickly at a small scale or locally or in a niche market. If you fail, you fail quicker and learn and no great harm done. Succeed and you can follow through and scale up very quickly.
"You can also choose to stand still. If you do, that’s quite likely to be where you stay."