Everyday, we are told that digital transformation is a pressing, threatening imperative that concerns us all. But what is it all about? How does it impact the economy and our businesses? What are the challenges of digital transformation for CIOs and IT departments?
Wikipedia presents digital transformation as “the change associated with the application of digital technologies to all aspects of human society.”
We can understand through this very compact definition the extent and inevitability of the phenomenon. It is a revolution that affects all sectors of society, particularly business.
Today, this transformation is taking place in most industry sectors. It is an imperative that has become vital under the impetus of rapid changes that have occurred terms of technology, customer demand, and the competitive landscape.
The phenomenon of Uberisation is often cited as an illustration of this urgency. Uber, a start-up that came from nowhere, quickly disrupted the traditional model of urban transport by using digital technology to bring greater value (ease of access, quality of service) to customers. In this sector, as in many others, the ratio of powers changed rapidly thanks to digital technology.
Many observers have pointed out that the whole value chain has changed. Once built through a company’s own production capacity (e.g., factories, machines, employees, trade secrets, and patents), value can now be extracted from the multitude (e.g., the cloud, big data, artificial intelligence, crowd-sourcing, and open innovation ) within a networked economy.
The impact for businesses
For companies, digital transformation is therefore the integration of digital technologies in all the layers of their organizations, which causes a deep change in their internal mechanisms and the way in which they bring value to their customers.
Embracing this paradigm shift requires an acculturation and a questioning of how to do it. It is about identifying opportunities before competitors seize them, which then becomes your problem. All of this depends on a company’s the ability to rapidly experiment and take risks.
To excel, companies now need to rethink the customer experience, value proposition, and internal functioning they provide.
The IT department redesigned
In this context, each traditional function of a company must mutate, but there is one in particular for which the imperative of mutation is obvious: the IT department.
Often originating from financial departments, traditional IT departments are marked by a culture of wise managers accustomed to limiting risks. For many, the role of CIOs and IT department is limited to offering essential IT assets and equipment and providing the associated skills needed to support the rest of the company.
Perceived exclusively as cost centers, they operate on constrained budgets, and the default response to any request is all too often “No.” This mentality often earns these departments bad reputations within their companies. They are often even perceived as brakes on innovation which explains workaround behaviours, such as Shadow IT.
The problem is that this vision is no longer in line with the aspirations of business leaders, who are now more focused on projects that generate revenue than those that save money.
The emergence of chief digital officers, who either present digital strategies to CIOs or implement strategies themselves, also attest to this. Some see it as a loss of power or even as a threat. In fact, is the appointment of a CDO not already a sign of a refusal to transform oneself or a form of abandonment in the face of the challenges associated with digital transformation?
The opportunity to become champions
However, because of their sharp understanding of technology, CIOs are well placed to grasp its potential and detect its opportunities.
Therefore, IT leaders have to go beyond their traditional responsibilities and catalyze the digital transformations of their companies. Beyond technological mastery, IT executives must mobilize and be a force of proposition in areas such as customer satisfaction, revenue generation, and user experience.
It is a matter of passing from a passive, costly support function to becoming a vector of innovation driven by technology for all other departments.
Through digital transformation, CIOs have the opportunity to regain their seats on executive boards by playing a key role in the performance of companies and fully participating in value generation.