Published on October 30, 2023, 5:04 am
Digital transformation is a key focus for many companies looking to unlock growth and expand into new markets. However, before this can happen, the c-suite, particularly the Chief Information Officer (CIO), needs to align with the long-term benefits of digital transformation.
While some companies have reduced IT spending recently, studies show that 81% of enterprise technology decision-makers expect their company’s investment to increase in the coming year. Additionally, around half of these decision-makers anticipate a growth in AI budgets by at least 5%.
However, despite the potential of technologies like generative AI to aid digital transformation efforts, some companies remain cautious about investing in them. Research indicates that it’s not hesitancy among CEOs and board sponsorship that’s the problem; rather, it’s a lack of awareness about the return on investment (ROI). This lack of confidence among IT teams affects overall buy-in for digital transformation. This is where the CIO plays a crucial role.
The CIO acts as a bridge between the IT department and the rest of the business. They use their expertise to identify areas within operations that would benefit from transformation while improving efficiencies and reducing costs. However, there can be reluctance among the c-suite to break away from legacy systems and embrace change. This reluctance can lead to technical debt, which hinders innovation for many tech executives.
Despite the risks associated with digital transformation, not embracing it can have even greater consequences. To convince stakeholders who may be skeptical or resistant to change, CIOs need to demonstrate its value. One approach is starting small with test projects that showcase potential commercial value without requiring a full financial commitment upfront.
James Welch, Chief Innovation Officer at Embryo, suggests running test projects behind-the-scenes without informing employees. If successful, they can be scaled up and adopted more widely within the company. However, while test projects can demonstrate value in digital transformation efforts, risk-averse stakeholders may still need convincing to invest in expensive technology.
To gain support and commitment, CIOs must work closely with the CFO to craft a compelling vision for digital transformation supported by financial details that speak convincingly to the program’s ROI. The relationship between the CIO and CFO is crucial when it comes to planning spending for digital initiatives. Companies with a strong CIO-CFO partnership are more likely to find funding and achieve business outcomes.
Successful collaboration between the CIO and CFO requires alignment. The CFO should understand the CIO’s vision for digital transformation, while the CIO should grasp the CFO’s goals in financial decision-making. Together, they can demonstrate the value of investments by understanding intended business outcomes and calculating ROI with other stakeholders’ input.
Communication around ROI is important but transparency is equally vital. Steven Salaets, CIO at Rimini Street, advises demonstrating a progressive plan that builds towards long-term goals instead of attempting a sudden switch from legacy platforms to new technology. Clear milestones reassure stakeholders resistant to change while spreading out investment costs over a manageable time period.
In summary, digital transformation has immense potential for companies seeking growth and new markets. CIOs play a critical role in aligning the c-suite on the long-term benefits of this transformation. By starting small with test projects, collaborating closely with CFOs, and maintaining transparency throughout the process, CIOs can propel their organizations forward into successful digital transformations.