In the next 2-3 years, one of the biggest challenges for the CIOs will be the turnarounds in the business conditions, like economic recession or data breach. To come out stronger on the other side of these turnarounds, they will have to make their organizations fit and take actions to prepare for the looming disruptions.
Ninety percent of businesses have experienced the disruption in the last four years, which impacted their normal operations, turnover, adverse regulatory interventions, etc. Despite this, only 25% of the businesses are fit enough to emerge stronger ahead of these disruptions, according to Gartner’s annual global survey of CIOs. The survey further reveals that the role of the CIOs will be very crucial to lead the businesses through disruptions and transformations.
“You can’t read much about business today without coming across the word ‘disruption,’ especially market, economic, trade and political. Uncertainty has become the watch word for business leaders,” said Andy Rowsell-Jones, vice president and distinguished analyst at Gartner.
“Being digital is no longer enough to manage changing business conditions. We’re seeing most enterprises optimize existing business models for today’s environment, rather than thinking about preparing for the next turn, leaving them exposed when the next crisis hits. CIOs need to take specific actions to increase their organization’s fitness now if they want to grow stronger and more competitive after the coming turn,” he added.
The survey classified the CIOs into two categories— fit and fragile. The fit enterprises are the ones which came out stronger from the turns, while fragile enterprises emerged less capable.
On average, the fit enterprises witnessed a 5% rise in their revenue over the last three years. Whereas, fragile enterprises could only increase their revenue by 3%.
What do the CIOs in fit enterprises do?
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Align to changing business scenarios
CIOs play a crucial role in keeping their businesses fit. What they do is actively search for latest and emerging trends that may need a change in business strategies. They use the IT organization as an instrument to navigate the required changes.
To make enterprises fit, more CIOs should shift their focus on aligning, anticipating, and adapting to the changing business scenarios.
“A big take-away for CIOs is that fit enterprises increasingly view IT as a point of leverage for the business,” said Mr. Rowsell-Jones. “Having a clear and consistent overall business strategy ranks as one of the most distinctive traits of fit enterprises. In such organizations, digital technology will drive that strategy.”
Aligning to the changing business scenarios is an area where the fit enterprises are mostly outperforming the fragile ones. The main area to enable alignment is having a CIO with clear and effective leadership.
Related read: Key steps for CIOs to prepare for new era of enterprise IT: 2019 CIO Agenda
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Communicate business needs to IT
Around 50% of the fit enterprises said that their leaders are very effective on “accurately communicating business needs to IT”. Whereas, only 30% of the fragile enterprises reported the same about their leaders.
Furthermore, the CIOs in fit enterprises are more likely to have a consistent overall strategy and a strong relationship with the CEOs.
“A big take-away for CIOs is that fit enterprises increasingly view IT as a point of leverage for the business,” said Mr. Rowsell-Jones. “Having a clear and consistent overall business strategy ranks as one of the most distinctive traits of fit enterprises. In such organizations, digital technology will drive that strategy.”
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Make disciplined IT investment
The turns in business conditions have a temporary impact on the revenue and profit of the organizations. But, the more important thing/ bigger risk is that these turns can erode the fundamentals of running a business. For example, it can impact the launch of new initiatives. Hence, it is important for CIOs to make a disciplined IT investment by measuring the risks and considering the rising demands.
Gartner’s CIO survey shows that fragile enterprises will increase their IT investment by a mere 0.9% in 2020, compared to a 2.8% overall sample of organizations.
When it comes to making decisions about disciplined IT investment, CIOs in fit enterprises are excellent at it. Fit CIOs make trade-offs among competing priorities and increase investment on IT, whereas fragile CIOs increase IT investment to boost operational efficiency.
“Although a downturn is not the likely scenario through 2020, the risk is high enough to warrant preparation and planning,” said Mr. Rowsell-Jones. “The research shows that those that prepare are better placed to win in a turn than those that do not. CIOs should actively search for emerging situations that require a change ahead of time and take measured risks in order to prepare if they want to outperform their reactive, fragile counterparts.”
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Adopt modern technologies
Fit CIOs prioritize the adoption of modern technologies like artificial intelligence (AI), robotic process automation (RPA), and cybersecurity capabilities. These CIOs work on modernizing the core of IT and adjusting the investments as needed. As per Gartner, fit enterprises will be increasing their spending on analytics, app modernization, and several forms of cloud computing in 2020.
Source: Gartner
