More CEOs start work on digital business transformation

An unsettled global political environment has not shifted chief executive officers’ (CEOs) focus on profits and growth in 2017, reports Gartner. Growth is the top business priority for 58% per cent of CEOs, according to its most recent global survey, against 42% in a similar poll in 2016.

The IT research and advisory company has just issued its ‘2017 CEO Survey: CIOS Must Scale Up Digital Business’, based on responses from 388 CEOs and senior business leaders in user organisations worldwide polled in the fourth quarter of 2016.

The new survey finds that product improvement and technology are the biggest-rising priorities for CEOs in 2017. “IT-related priorities, cited by 31% of CEOs, have never been this high in the history of the CEO survey,” said Mark Raskino, vice president and Gartner Fellow.

“Almost twice as many CEOs are intent on building up in-house technology and digital capabilities as those plan on outsourcing it (57% and 29%, respectively). We refer to this trend as the reinternalisation of IT – bringing information technology capability back toward the core of the enterprise because of its renewed importance to competitive advantage. This is the building up of new-era technology skills and capabilities.”

Figure 1: CEO Top Business Priorities for 2017 and 2018

The survey suggests that the idea of shifting toward digital business was speculative for most CEOs a few years ago, but has become a reality for many in 2017. Forty-seven per cent of CEOs are being challenged by the board of directors to make progress in digital business, and 56% said that their digital improvements have already improved profits.

“CEO understanding of the benefits of a digital business strategy is improving,” said Raskino. “They are able to describe it more specifically. Although a significant number of CEOs still mention e-commerce or digital marketing, more of them align it to advanced business ideas, such as digital product and service innovation, the Internet of Things (IoT), or digital platforms and ecosystems.”

A digital-first policy

CEOs have also progressed in their digital business endeavours. One in five now take a “digital-first” approach to business change. “This might mean, for example, creating the first version of a new business process or in the form of a mobile app,” said Raskino. “Twenty-two per cent are taking digital to the core of their enterprise models. That’s where the product, service and business model are being changed and the new digital capabilities that support those are becoming core competencies.”

Although more CEOs have digital ambitions, the survey revealed that nearly half of respondents have no digital transformation success metric. “For those who are quantifying progress, revenue is a top metric: Thirty-three per cent of CEOs define and measure their digital revenue,” added Raskino.

Gartner comments that deeper transformation can only be achieved at scale if it is systematically driven. “Chief information officers (CIOs) should help CEOs set the success criteria for digital business,” said Raskino. “It starts by remembering that you cannot scale what you do not quantify, and you cannot quantify what you do not define. You should also ask yourself: What is ‘digital’ for us? What kind of growth do we seek? What’s the No. 1 metric and which key performance indicators (KPIs) must change?”

Many CEOs have recognised that being open-minded, entrepreneurial, adaptable and collaborative are the most-needed digital leadership mindsets. “It is time for CEOs to scale up their digital business ambition and let CIOs help them set and track incisive success metrics and KPIs, to better direct business transformation,” said Raskino.

“CIOs should also help them toward more-abstract thinking about the nature of digital business change and how to lead it. The disruption it brings often cannot be dealt with wholly within existing frames of reference.”

 

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