Digital transformation: from first movers to early adopters and fast followers

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Organisations report positive RoI but need to cultivate a pool of digitally proficient people in-house, according to research

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17 January 2019 | 0

Digital transformation is now recognised as key to the success of the enterprise, and many organisations are experiencing a positive return on their digital investments.

“There is a link between digital transformation leadership and company revenue”

The latest survey by Constellation Research finds 68% of respondents reporting positive return on investment (RoI) on their digital transformation strategies. The report examines the state of digital transformation among the first movers, early adopters and fast followers in Constellation Research’s subscriber base.

The research shows more chief information officers (CIO) and chief data officers (CDO) are leading digital transformation projects, compared to the previous year. Thirty-three per cent of survey respondents indicated their CIO leads their organisation’s digital transformation strategies, with the chief executive officer (CEO) leading in 23% and the CDO leading in 20%.

In 2017, CEOs led the highest percentage of digital transformation efforts, at 29%; CIOs guided 19%; and CDOs headed just 8% of such efforts.

While more CIOs are taking the rein in digital transformation efforts, the report notes the rise in the prominence of the CDO in these initiatives, according to the authors of the report, R ‘Ray’ Wang, principal analyst and founder, and Courtney Sato, director of research development, at Constellation Research.

They attribute this change to the growing emphasis on digital transformation among large (over $1 billion (€877 million) in revenue) enterprises. There is a link between digital transformation leadership and company revenue, they state.

Smaller business
Among small businesses, or those with revenue of less than $10 million (€8.7 million), CDOs and CEOs lead an equal share of digital transformation efforts, at 33% each. The CIO leads none of digital transformation efforts among the SMBs surveyed.

However, it is a different matter for larger businesses, or those with $10 million to $500 million (€438 million) in revenue. Among these, CIOs lead 60% of digital transformation efforts; and CEOs, 17%. Among these organisations, too, CDOs guide 3% of such efforts.

But for enterprises with over $1 billion in revenue, CDOs are the leaders of choice. Thirty-two per cent of these enterprises said the CDO leads their digital transformation efforts, with CIOs at 24% and CEOs at 12%.

CDO prominence
The lesser prominence of the CDO in organisations with less than $1 billion in revenue may be attributable to some organisations not having a CDO or having a CDO who reports to another executive in the C-suite.

However, as Constellation Research has predicted, more organisations have appointed CDOs to take responsibility for the digital strategy.

This trend will continue, it states, but as digital initiatives continue to integrate into the business, the CDO eventually will report to the CEO on matters pertaining to the implementation of new business models or the CIO on matters concerning the improvement of technology.

“Eventually, as organisations complete their digital transformations, the CDO role may be phased out.”

Constellation Research says the report is based on the survey of 81 respondents in the second and third quarters of 2018.

All respondents had purchasing authority for their organisations, with 51% being members of the C-suite: CIOs (25%), CEOs (12%), chief digital officers (10%), chief technology officers (6%), chief marketing officers (1%); CFOs (1%) and other C-level executives (3%). Senior VPs, board members/non-executive directors and IT managers (up to director) made up 33% of the sample. Line-of-business managers and IT employees made up 7% of the sample.

Talent war
A constant in the survey is the prevalence of the war for digitally proficient talent.

“This shows no signs of abating,” says Constellation Research.

When asked if the organisation has the workforce talent necessary to implement digital transformation projects, just 5% of respondents said yes.

In contrast, 94% of respondents said their organisations need to hire additional people to implement digital transformation projects, and 51% reported needing to make significant talent acquisitions to support their projects.

The report says the introduction of new, emerging technologies such as 5G, AI, IoT and blockchain will further drive demand for qualified talent.

It is imperative that organisations focus on the supply of digitally proficient people in-house or their digital transformation efforts will be hindered by lack of talent, the authors advise.

Organisations should hedge against the threat of competitive recruiting while preventing a hollowing out of the midlevel workforce by cultivating a pool of digital talent within the organisation.

Constellation Research calls on all enterprises undergoing digital transformation to implement a strategy to provide training, share best practices and inform the workforce of the digital transformation methodologies.

This strategy, it says, must also try to identify and develop leaders within their existing staff.

 

IDG News Service

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