Last week The Economist held its annual “innovation forum” in Chicago and, for an event aimed squarely at general business managers rather than IT specialists, the fact that its agenda was so full of digital technology topics is yet more proof of how central tech has become to any business endeavor.
CEB data from over 550 business leaders show that 80% believe digitization is a long-term transformation rather than a fad, and that 78% are actively promoting it in their own companies. But while digitization promises the chance to understand customers much better and run companies more efficiently, there are four risks that all companies need to watch out for.
Disparate approaches miss efficiencies: Just one in four IT functions has a digitization strategy that covers the entire company, and most firms have more than one source of funding for digital initiatives.
While this isn’t surprising for a discipline where many are just starting to experiment, disparate strategies mean that many companies may be missing opportunities for economies of scale, leaving themselves open to duplication and inefficiencies.
Digitization requires more technical skills across the IT function than currently exist: IT leaders already know how fierce the war for tech talent has become, and it’s about to get a whole lot fiercer.
Nearly 80% of managers outside of IT are hiring technical staff to deliver or manage technology, competing with IT, service providers, and startups for already scarce skills.
Digital opportunities present tough prioritization decisions: The multiplicity of opportunities for digitization in the world’s companies mean it’s tough to figure out where you should be investing first, particularly when the technology is new, upfront costs can be dissuasive, and any returns on all that investment are so unclear.
CIOs need to help their senior colleagues define the firm’s digital ambitions and then shape IT to support those ambitions; this post has more.
The role of IT leaders needs more clarity: Just 37% of IT staff believe their senior managers actively promote digitization initiatives, and fewer than 40% of business leaders recognize the involvement of the CIO in defining these initiatives.
While it is right that senior line managers should play an active role in encouraging digitization, IT leaders’ expertise in company systems and information is invaluable in ensuring successful digitization efforts. IT leaders should display openness and a willingness to collaborate to get a seat at the table for digitization discussions.