By Christina Johnson, EMEA Staff Writer
As we know, the pressure on technology leaders has never been more intense, and COVID-19 accelerated the adoption of new tools and practices in completely new ways. In this article I’ve rounded up some recent research related to the value CIOs can get from adopting new technologies – and how advanced technology uptake has a significant impact on revenue growth and operating margins.
When we look at McKinsey’s annual IT survey, they asked nearly 700 CIOs about various transformation initiatives. And more than three-quarters of the initiatives their companies pursued have produced some, or significant, cost reductions and improvements to employee experience. What’s more, over two-thirds of respondents say these change efforts increased revenue from existing streams, and more than half cite the creation of new revenue streams such as a new product line or new business (see Figure 1).
It does go without saying however that simply adopting technology will not deliver optimal value. But when automation is deployed effectively – and sometimes alongside hybrid cloud and AI – it can create substantial benefits.
IBM’s ‘The CIO Revolution’ study explores how CIOs are driving transformation and business value in the midst of uncertainty. And one thing it looks at is the ways in which technology leaders are delivering business value. IBM surveyed 5,000 C-suite CIOs and CTOs, and assessed them on three measures of their technology function:
Technology maturity – the stage of their cloud, AI, automation and security journeys
Technology effectiveness – their agility, data management, governance and resilience
Technology ROI – the return on their technology investments, normalised by industry
CIOs need to reconsider how they think about value, and how they get to that value. They need a more expansive view of the role technology plays in doing so. And they must be bold to reach beyond the ‘where’ to discover freedom.
And the results make for an interesting read. They indicate that organisations reporting higher technology maturity, effectiveness and ROI achieved better business performance. In particular, financial gains accelerated during the pandemic – and organisations with higher technology measures enjoy a substantial advantage over their peers.
A strong CIO-CTO partnership is key
IBM also found that organisations enjoyed additional financial gains based on the strength of collaboration between CIOs and CTOs. Companies in which the CIO and CTO both work together and define each other as ‘strategically critical’ had operating margins 32% higher than those that didn’t.
What’s more, businesses with strong collaboration and high technology measures reported operating margin improvements that averaged 39% above organisations with low levels of collaboration and low technology measures.
So, it’s clear that combining an advanced technology function with a strong CIO-CTO collaboration has a significant impact on revenue growth and operating margin (see Figure 2).
It’s clear that combining an advanced technology function with a strong CIO-CTO collaboration has a significant impact on revenue growth and operating margin.
How to generate new value
When we look at how IT leaders can create further value, Gartner sets out three key areas to focus on.
1. Lead and empower
Gartner forecasts that by the end of 2022, the share of workers working remotely will increase to 47% (up from 27% in 2019). And if you’re looking to attract and retain the necessary IT talent, it recommends:
Designing a human-centric workplace: This allows innovation and performance to thrive, and that focuses on what impacts employees’ ability to perform and be productive – wherever they may be.
Harnessing the power of business technologists: According to research, 41% of employees identify as business technologists, meaning they report outside of IT departments and create technology or analytics capabilities for internal or external business use. Organisations that successfully enable business technologists are 2.6 times more likely to accelerate digital business outcomes than those that don’t.
Building an internal talent marketplace: Internal talent marketplace platforms use AI and skills data to support business demand for reskilling and flexibility in connecting workers to roles and short-term assignments. These marketplaces identify what talent exists in the business, what the talent knows, what they have worked on, and with who. This gives access to a broader talent pool, and provides more growth and development opportunities for employees.
2. Nurture connections
CIOs can’t go it alone, so IT leaders should focus on three types of partner connections: one-to-one, one-to-many and many-to-many.
A one-to-one connection can be taken to the next level where the enterprise and technology partner work together to create and build a solution that doesn’t currently exist. The resulting assets are co-owned and produce benefits and revenue for both partners.
Beyond one-to-one connections lies the formation of ecosystems of multiple partners. One-to-many partnerships work best when a single enterprise needs to focus many players on jointly solving a single problem – such as a city bringing together public and private entities to serve residents.
Many-to-many partnerships are created when a platform brings many different enterprises’ products and services together, to be offered to a host of different customers. Often called platform business models, these marketplaces and app/API stores enable the many to help the many at ecosystem scale.
3. Reach beyond the ‘where’
When the ‘where’ of work, innovation and business value shifts, it allows CIOs and IT executives to reach beyond the constraints of current thinking.
Daryl Plummer, Distinguished Research Vice President and Gartner Fellow, says: “CIOs need to reconsider how they think about value, and how they get to that value. They need a more expansive view of the role technology plays in doing so. And they must be bold to reach beyond the ‘where’ to discover freedom.”
Gartner analysts say that technology can help CIOs gain freedom from historical insights, legacy business practices and bias. And freedom from historical insights allows CIOs to use technology to solve world-class problems which may help uncover new sources of value.
If you’re interested in looking into the research cited in this article in more detail, you can find them below:
McKinsey: Seven lessons on how technology transformations can deliver value IBM: 2021 CIO study: The CIO revolution Gartner: Gartner identifies three key focus areas for CIOs to drive value
