What It Means to be a Digital-Ready CIO

By Jack Rosenberger  |  Posted 05-15-2014
David Nichols

What It Means to be a Digital-Ready CIO

By Jack Rosenberger

If you're an ambitious and career-minded CIO, you want to work in a highly IT-intensive industry, like banking, IT, life sciences, media and telecommunications. Why? Because CIOs in these sectors are better suited to transform their business—and subsequently achieve their career aspirations—than their peers in other sectors. That's one of the key conclusions from EY's recent "Born to be Digital: How Leading CIOs are Preparing for a Digital Transformation" report, which provides an in-depth view of how CIOs are deploying digital technology in today's enterprise.  

The EY report is based on interviews with more than 180 CIOs and CTOs in highly IT-intensive industries, and these individuals were compared with peers in other sectors. Essentially, "Born to be Digital" is an in-depth analysis of how tech-savvy CIOs are transforming companies like Caterpillar, which is in the process of digitizing its construction and mining equipment, so that its graders, trucks and other heavy equipment can be proactively identified before any maintenance or service is needed. "Born to be Digital" explains how these "digital-ready CIOs" are different than their peers, what lessons can be learned from their business transformation efforts, and offers plenty of career advice for CIOs who aspire to be digital leaders. (For a copy of the report, click here.)

According to "Born to be Digital," CIOs at highly IT-intensive firms are better equipped to transform their business because they are more likely to have a seat at the executive management table (53 percent of CIOs in highly IT-intensive sectors vs. 17 percent of CIOs in other sectors), and they understand the skills, like strong strategic engagement and a focus on growth, that are needed for success. In general, these CIOs are more likely to devote their time to the development of new products and services for the front office, and they better understand the importance of communication and influencing skills in attaining their strategic goals than their colleagues in other sectors.

A digital-ready CIO, as defined by EY, rates an 8 or higher, on a scale of 1 to 10, in his or her performance of six vital roles: managing costs, keeping the lights on, acting as an information broker, taking ownership of IT governance, delivering transformation, and bringing business model innovation.

To learn more about "Born to be Digital," CIO Insight recently interviewed EY Americas IT Transformation Leader David Nichols, who discussed, among other topics, the six traits of a digital-ready CIO, how to be more innovative, gender diversity, career paths and why knowing "tech" but not "the customer" is fatal.

What most surprised you about "Born to be Digital"?

David Nichols: Even for the IT-intensive industry CIOs, only half of them have a seat at the executive management team table. This statistic shows that most corporations still view the CIO's role as being only part of the back-office operations, not as a strategic component of having an impact on the business front. This is very surprising as the technological landscape has changed so much over the past few years. One would think that CIOs would have more input in how technology can help the business.

Tell our readers about the six core traits of digital-ready CIOs and how these CIOs think differently than other CIOs.

What we found is digital-ready CIOs have these traits in common:

1.    They have a strategic vision of how technology will transform the business and know how to implement it. These CIOs are proactive and have the mindset that their role is no longer focused on just operations, but on how to strategically impact the growth of the business.

2.    Digital-ready CIOs innovate relentlessly. Digital-ready CIOs understand the importance of technology innovation because digital presents new revenue channels, as well as new forms of significant cost optimization.

3.    They focus closely on driving growth and the relationships they need to support this effort. This trait of driving growth ties closely with the proactive nature of digital-ready CIOs. They know that technology can drive growth for the business, so they must understand the front end of the business operations along with the back end. The relationships with the front end of the business would need to be fostered in order to know how technology can boost sales.

4.    These CIOs ensure that their vision is understood. Communication is imperative as the message of how the technology will impact the business is necessary in order to get the buy-in for the proposed vision.

5.    Digital-ready CIOs move beyond operations and infrastructure. Unlike the traditional CIOs where the focus has been on back-office operations, these CIOs focus on innovation for the business, such as enhancing business processes or technology that will drive sales.

6.    These CIOs are courageous risk-takers. They take the calculated risks associated with the digital opportunities that are focused on the business, which is unlike most CIOs, who are risk aversive and stick to a "keeping the lights on" mentality.

What It Means to be a Digital-Ready CIO

It seems that innovative and career-minded CIOs who aren't in a highly IT-intensive industry should make the transition to one.

It appears that in an IT-intensive industry, CIOs have a much greater job satisfaction than their non-IT-intensive industry counterparts. That greater sense of satisfaction is correlated with having the ability to impact the business via a digital transformation as these CIOs are more likely to be part of the executive management team.

In terms of gender diversity, CIOs in IT-intensive industries are three times more likely to be female than CIOs not in IT-intensive industries. And in the IT industry, five of the top 25 CIOs are female. Why is this?

IT-intensive industries appear to have made more of an effort to be inclusive. And they are better at attracting female CIOs since the CIO's role in the IT-intensive industries are more empowered and have a stronger voice in the organization. Unfortunately, these numbers are still too low.

Organizations, in general, should make a stronger effort in recruiting female talent for these CIO and other top IT roles. EY acknowledges this issue, and we have a long-standing effort in recruiting outstanding females and developing their skills while providing leading IT opportunities.

"Born to be Digital" notes that digital-ready CIOs innovate relentlessly, and it quotes an anonymous Chinese telecommunications CIO who says, "I spend 30 percent of my time on innovation." How can CIOs be more innovative?

CIOs can be more innovative by focusing more of their attention on exploring new ways of providing existing services or new products and services for the organization with the use of digital technologies. CIOs can provide these new ideas by inquiring their front-end businesses about opportunities for new client service delivery channels, along with innovating existing processes.

To the same degree, innovation relies on a corporate culture that accepts learning and allows failure, so a shift needs to be made if the organization does not embody this disposition. This is a good example of a situation in which digital-ready CIOs must balance their technical skills with their leadership and management skills.

Why is it important for CIOs to create a closer relationship with their CMO?

Digital technologies have impacted the business landscape in such a monumental way. It is a means for marketing and business development. The CMO provides the insights on customer trends and expectations and the CIO's responsibility is to deliver the systems and processes to exploit these insights. The CIO-CMO relationship is a bridge that makes it possible to reach new markets, new products and new opportunities.

"Born to be Digital" includes a lengthy section on the career paths of digital-ready CIOs. What are the key takeaways?

The career path of these digital-ready CIOs provides a great deal of insight as to the personalities, experiences and skills of these CIOs. The background of a digital-ready CIO typically includes a MBA or a business degree as management is an important aspect in the success of being a CIO. It's just as important to have the business acumen along with the technical expertise in this digital landscape. In accordance, the experiences of these CIOs in different sectors and roles provides the wide array of knowledge, such as marketing, messaging, market trends, etc., and the ability to think from different perspectives. All of this is needed in order to have a holistic understanding of the business and how digital technologies can enable the engines of growth.

What actions should CIOs take to create a digital enterprise where one doesn't already exist?

Before developing new functionalities or exploring new business ideas, there needs to be a foundational architecture. The foundational architecture is necessary to have an integrated environment that will be able to accommodate and maximize the effectiveness of future changes. In addition, the focus needs to be placed on data as the digital technologies, such as cloud computing, lessen the need to focus on applications and infrastructure. Standards and governance also needs to be in place to guide technology selection. The CIO must also have an understanding of the current operating model and business processes of the organization in order for the digital technologies to be strategically aligned with the rest of the business. In order for the CIO to manage the new, upcoming digital projects, the CIO must take a multidisciplinary approach by ensuring different internal functions interconnect with third parties. The CIO will also need to plan the sequence and pace of change based on the risks and opportunities associated with the digital opportunities.

What It Means to be a Digital-Ready CIO

What CIOs in "Born to be Digital" do you feel an affinity for? And why?

One of the report’s conclusions, that leading CIOs take a multidisciplinary approach, aligns to EY’s foundational belief that an integrated and holistic enterprise approach is among the single largest success factor. Whether it is enhancing performance or identifying and addressing risk, an executive’s ability to understand, draw from and leverage "cross-border" knowledge and experience stands out, especially as it relates to the digital onslaught. For example, knowing "tech," but not knowing "customer" is fatal. Understanding how digital impacts all aspects of the business—supply chain, customer acquisition and retention, regulatory compliance, IT budgeting, operations, legal and more—can turn digital from just another fad into a true competitive advantage. The CIOs that can do that are true leaders.

Anything else you'd like to discuss about the report?

Rather than marveling at the pace of change or at the rate at which digital is impacting the business and its customers and markets, CIOs need to quickly adapt to understand, appreciate and leverage the opportunities created by this advancing wave. Leading CIOs are increasing their business DNA, as well as their own thinking, to enable them to more quickly adapt and exploit these great opportunities. Clearly, a critical success path for leading CIOs is the ability to learn quickly, take calculated risks, learn from those efforts that go awry and rapidly industrialize those efforts that really propel their enterprises toward success.

Digital is moving fast, perhaps too fast for some. While catching up with this torrid pace is important, it is nearly as important for executives to look for and be aware of what they don’t know. Realizing that they may not know everything is a completely acceptable, as long as there is an honest and transparent approach toward digital. Identifying areas in which there is only marginal knowledge and expertise paves the way for executives to identify the means to address those gaps. As our survey shows, not everyone knows everything about all things, which is okay. But what is critically important is the follow-up appreciation of the importance of these issues and to ensure—for both stockholders and shareholders—the C-suite has an integrated and holistic plan to really leverage digital.

About the Author

Jack Rosenberger is the managing editor of CIO Insight. You can follow him on Twitter via @CIOInsight. To read his previous CIO Insight article, "Big Data Overview: How's Your Company Doing?", click here.