April 25, 2017 by Canadian Underwriter
More than four in 10 CEOs around the globe have begun the process of digital business transformation, according to a new study from Gartner, Inc., an information technology research and advisory company based in Stamford, Conn.
Mark Raskino, vice president of Gartner and a Gartner Fellow, said in a press release on Monday that 20% of CEOs are now taking a “digital-first” approach to business change, for example, by creating the first version of a new business process or mobile app. “Twenty-two per cent are taking digital to the core of their enterprise models,” he added. “That’s where the product, service and business model are being changed and the new digital capabilities that support those are becoming core competencies.”
The survey, titled 2017 CEO Survey: CIOs Must Scale Up Digital Business, involved 388 CEOs and senior business leaders in user organizations worldwide to examine their business issues and some areas of IT technology agenda impact. Most responding organizations were those with annual revenue of US$1 billion, Gartner reported.
The survey found that growth was the number one business priority for 58% of CEOs, up from 42% in 2016, while product improvement and technology were the biggest-rising priorities for CEOs in 2017. “IT-related priorities, cited by 31 per cent of CEOs, have never been this high in the history of the CEO survey,” Raskino said, noting that almost twice as many CEOs are intent on building up in-house technology and digital capabilities as those planning on outsourcing it (57% and 29%, respectively). “We refer to this trend as the reinternalization 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.”
Gartner noted in the release that while the idea of shifting toward digital business was speculative for most CEOs a few years ago, it 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, Gartner said. “CEO understanding of the benefits of a digital business strategy is improving,” Raskino said. “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, or digital platforms and ecosystems.”
Still, despite the digital ambitions, the survey revealed that nearly half of CEOs have no “digital transformation success metric.” Noted Raskino: “For those who are quantifying progress, revenue is a top metric: Thirty-three per cent of CEOs define and measure their digital revenue.”
In conclusion, many CEOs have recognized that being open-minded, entrepreneurial, adaptable and collaborative are the most-needed digital leadership mindsets, Raskino reported. “It is time for CEOs to scale up their digital business ambition and let CIOs (chief information officers) help them set and track incisive success metrics and KPIs (key performance indicators), to better direct business transformation. CIOs should also help them toward more-abstract thinking about the nature of digital business change and how to lead it,” he said. “The disruption it brings often cannot be dealt with wholly within existing frames of reference.”