Are You a Digital Leader?

By Ram Lakshminarayanan, Partner, Management Consulting, KPMG Singapore

Ram Lakshminarayanan, Partner, Management Consulting, KPMG Singapore

Digital disruption is a clear and present opportunity for businesses to reinvent themselves in preparation for the new digital economy. While economic uncertainty is making business planning difficult for many organizations, it is clear digital strategies have infiltrated businesses across the globe at an entirely new level.

In Singapore and the region, CIOs are placing more emphasis on building sustainable business models by leveraging technology to drive top-line growth. Many organizations are no longer simply talking about digital strategy, but moving on to making it happen.

According to the Harvey Nash/KPMG CIO Survey, digital transformation has become a strategic imperative for most organizations and a matter of survival for some, with a proportion of organizations with enterprise-wide digital strategy up to 52 percent since the last survey.

Almost half (46 percent) of all CIOs in Asia Pacific are currently investing in, or planning to invest in digital labor, cognitive automation, or robotic process automation, placing the region far ahead of the global average that stands at 34 percent.

Strategy, not technology drives digital transformation

CIOs remain in an ideal position to lead their company’s digital transformation. This is a result of deeply understanding their current technology estate and emerging disruptive technologies, as well as their cross-enterprise perspective and familiarity with key business processes.

My experience shows that digital transformation starts with a board-driven, enterprise-wide digital vision and strategy. This requires substantial technology enablement to bring it to fruition. By virtue of their cross enterprise perspective, CIOs can work with the C-suite and business leaders to help them understand and take advantage of synergies across the enterprise, spread leading practices, eliminate the duplication of effort, and align resources and priorities that maximize benefits enterprise-wide.

To survive digital disruption, companies are required to step up their game and innovate to enable the business to be competitive. Too often however, good governance is ironically the antithesis to innovation because it is designed to minimize or even eliminate risk, whereas innovation is synonymous with taking risk. CIOs must work with business leadership to define a governance framework that effectively manages and mitigates risk to embrace and encourage innovation.

To survive digital disruption, companies are required to step up their game and innovate to enable the business to be competitive

Current operating models are also not sufficient to address digital disruption. IT is an essential component of a digitally driven world, and businesses expect the IT organization to be able to understand their complex needs seamlessly, and be far more agile and responsive than it has been in the past.

A new operating model is required that can leverage emerging technologies and sourcing alternatives to satisfy stakeholder expectations.

For the foreseeable future, the IT organization must continue to support the current portfolio of systems where the focus is on stability, reliability, security, and cost efficiency. At the same time, it will need to become more agile and innovative to support new digital initiatives that drive revenue and growth.

Dealing with digital

Old rules around skills and organizational structures simply cannot hold in today’s businesses. CIOs need to go beyond traditional methods for obtaining the digital talent they need.

An interesting point to note from the survey is that six in ten respondents are facing a shortage of appropriate technology skills. In particular, big data/analytics remained the most in-demand skill at 51 percent of respondents in the Asia Pacific.

My experience suggests that building the right skills and capabilities – either through recruitment or through development can take time. Strong technical and project management skills are no longer enough to sustain an IT organization.

New skills and capabilities are now required, including expertise in emerging technologies such as analytics, mobile apps, and social media as well as non-technical skills such as vendor management, account management, and product management.

These new skills are not found in many organizations and CIOs therefore need to focus on acquiring the right talent, either by developing internal resources or by recruiting from outside of the organization.

It also seems that culture, not capital, is the biggest impediment to digital success for 43 percent of CIOs. Organizations must adapt their culture to think digital for everything including their internal processes.

The digital space is a multi-device, multi-mode, omni-channel world where quality is measured not by schedules, budget, and defects but by user experience including both external customers as well as employees.

Most importantly, collaboration must become embedded in the culture. Digital capabilities are not built by long, serial projects but by cross-functional teams that work collaboratively to develop solutions and then incrementally add capabilities through rapid iterations.

CIOs of the future

Digital disruption presents a paradox for most organizations. On one hand, it threatens the very core of their business. On the other hand, to those organizations with vision and the ability to execute it, it represents an opportunity to innovate and distance themselves from their competitors.

With a deep understanding of technology and internal business processes, coupled with a cross-enterprise perspective, CIOs are in a perfect position to make the difference between being a victim of disruption and a digital leader.

Effective CIOs of the future are going to be those who are service oriented, business-minded, more willing to take on risks, and use innovation in intelligent ways that do not put the business at risk; for the elevated role and business demands we are seeing today.