April 21, 2016 by Canadian Underwriter
Half of CEOs worldwide expect their industries to be “substantially or unrecognizable transformed” by digital change, according to a survey released on Wednesday by Stamford, Conn.-based information technology research and advisory company Gartner Inc.
The 2016 CEO Survey: The Year of Digital Tenacity involved a poll of 400 senior business leaders in user organizations worldwide, most with annual revenues of US$1 billion or more. The results showed that while business conditions are challenging, CEOs remain confident enough to sanction strategic investments, particularly when it comes to digital business transformation, Gartner said in a press release.
CEOs have underlined that growth will be their top business priority for 2016. But despite indications that the global economy is struggling in early 2016, CEOs do not plan to significantly change their priorities, the survey found. After growth (54%), the second and third business priorities are customers (31%) and workforce (27%).
In a bid to stick to their digital business transformation plans, more and more CEOs are choosing to head up digital change in the business, Gartner said in the release. The survey found that CEOs now understand that digital business is substantial enough to warrant them leading it personally. If they delegate primary responsibility, then the next most likely leader is the chief information officer, the release said.
The rise in the number of CEOs heading up digital change is unsurprising given that half of those surveyed expect to see substantial digital transformation in their industries, or for their industries to be “almost unrecognizable” within five years. Examples of digital changes in industries include self-driving cars, the rise of blockchain in banking and the potential impact of Internet of Things-fuelled data science in insurance.
The results also showed that chief executives appear to see digitalization as a positive force, not a destructive one. Overall, they are very bullish about the effects of digital change on the gross (pretax) profitability of their businesses. Eighty-four per cent of CEOs said that they expect digital change to bring higher profit margins.
“One explanation for CEOs’ optimistic attitude toward digital change may be because they can see how it helps with the product innovations that matter to customers,” suggested Mark Raskino, vice president of Gartner, in the release. “We asked CEOs what proportion of the customer perceived value of products and services they think is digital. Thinking about the product features that customers are choosing and believe they are buying, CEOs said the value percentage is already 30% on average, and will rise to 46% by 2019.”