For Australian CIOs, digital transformation is firmly anchored in their organization’s formula for success, and the focus in their role is shifting to reflect this change.
“With their extensive knowledge of how the company works, they are now seen as the agent of change management, the guardian of data excellence, head of business intelligence and the governor of ethics and ESG [environmental, social and governance]Louise Francis, research director at IDC ANZ, told CIO Australia.
Digital transformation has become so important that it improves the career prospects of CIOs. It has also become a measure of success in line with the changing expectations a CEO has of his CIO. Francis points to a 2021 survey of ANZ CEOs that found that half now plan to promote their existing CIO to a senior leadership role with a focus on digital transformation.
“Due to the pace and increasing unpredictability of these changes, the CIO must be able to adopt an adaptive, flexible design approach to digital transformation,” Francis said.
By 2023, 40% of Australian CIOs will be measured primarily by their ability to co-create new business models and outcomes through extensive collaboration between enterprises and ecosystems, IDC predicts. “There are no standard engagement rules and CIOs need to understand their digital ecosystem to see changes on the horizon before they happen,” she says.
Looking at the changing formula, digital transformation is creating a central role for customer experience and the need to turn data into meaningful intelligence, Karan Khosla CIO for Sekuro tells CIO Australia. An effective CIO must think commercially with a consumer-centric view, rather than looking inward and helping the company day in and day out.
“The CIO must align closely with the company’s commercial strategy and objectives to help understand the hordes of data, be able to contribute ideas, and then quickly help deliver the solutions to work through the new ideas and products ,” Khosla says.
The Opportunities and Misconceptions of Merging IT and OT
In a recent conversation with many Australian CIOs about the demands of digital transformation, Verizon Business CEO Sowmyanarayan Sampath noted three shape-shifting forces rewriting the role of CIO. The need to go digital, borderless cybersecurity threats, and the convergence of OT and IT create new opportunities and risks for organizations and their technology leaders.
Where the role of the CIO used to be ‘keeping the rain on time’, according to Sampath, it has fundamentally changed to be about changing the business model. “There is so much pressure on the CIOs because their skills have to change, because most of the changes in the business model are now moving to digital. The interaction with customers and employees is also changing. They are now also part of the operations team, they are part of the business change and part of shareholder return,” said Sampath.
While OT and IT were historically separate, now that has changed, those two worlds have collided, Sampath says.
“CIOs need to reach down the aisle with operations. Ops needs to reach CIOs and that’s a big change. It’s never happened before,” he says.
This means that silos should be a thing of the past. “The role of a CIO is to ensure that the entire network is visible and that data from any source is usable – be it IT or OT. Today it is critical to understand how both work together within a company,” says Khosla.
Francis from IDC sees it as a bridging function, specifically integrating new data management technologies and dealing with the dynamic and asynchronous environments of IT and OT.
Over the past two years, Australian CIOs have become virtuosos at collaborating and bringing diverse business leaders together, she says. “It is this capability that will facilitate a shift from traditional IT/OT convergence to a much more effective ecosystem-centric orchestrator approach,” she says.
Digital as an engine of innovation
Digital is now part of the business model, Sampath says, citing statistics showing that companies that are good at digital have 2.5 times higher shareholder returns than those that don’t. “Even legacy companies that do well digitally have 1.5 times higher shareholder returns,” says Sampath.
“Digital and the CIO used to be mainly a cost item. It is now a revenue center and facilitating businesses,” he says.
As digital has evolved from a cost center to a growth driver, it is now a driving force that contributes to the depth and breadth of the CIO role within organizational development, said Francis of IDC.
It has led, she says, to the “innovator CIO” who is “leading and driving the delivery of business model transformation, ecosystem orchestration, and new revenue streams for their organization.”
One in five CIOs consider themselves innovators, and in 2021 only a third viewed their roles as operational and focused on cost reduction, risk management and business process optimization, a recent IDC survey found.
But successful innovation needs discipline, but also cooperation and integration from within. “Organizations succeed when technology leaders work closely with business leaders to fully understand the capabilities and bring the capabilities to life,” said BPay CIO Angela Donohoe.
No one wants to find out that they have freak projects and expensive misdirections, says Donohoe, “that may not take advantage of the capabilities already in place in the organization, or that can be exploited by other parts of the organization. Digital is definitely about it.” creating access to great customer experiences powered by great digital experiences is key,” she says.
BPay has found growth through APIs, but across the board Donohoe sees the immense importance and value of digital support. “One of the challenges for a CIO is to help paint the art of the possible and that can be ideas from within or ideas from outside the organization and bring that into the discussion of how to explore the opportunities to help business strategy realize,” she says.
Where the CIO meets the CISO
Cyber knows no boundaries, according to Verizon’s Sampath, and the growth of digital is like a passport to cyber-attacks. “The number of cyber attacks has increased significantly in recent years. Why? Because there’s money in it,” he says.
The ROI on cyber-attacks and the borderless security risk environment is once again changing the role of the CIO, looking at risk profiles and the security attitude of the organization beyond just the CISO office.
With different objectives, however, this has its challenges, according to Sekuro’s Khosla. While one is more focused on security, the other is more driven by operational efficiency. The challenge is to try and share some of the same objectives. “Today’s CIO needs to be more aware of security and understand the risks as much as the technology,” Khosla said.
“They should think about building in security from the start and use their CISO to do that instead of being at odds all the time. Today, a CIO must always understand where the risk is coming from and build security into the organization’s processes and products,” he says.
By becoming more digitally enabled, BPay’s Donohoe also sees how this is changing the risk profile for organizations – and the role of CIO. While adopting infrastructure and application platforms, while they must fit within digital and service strategies, the CIO must also fully understand how they fit within an organization’s risk profile, notes Donohoe.
As a financial company in a regulated market, this is vital, but the same lessons apply more widely. “When looking at digital capabilities, cybersecurity and providing trusted, protected services are paramount,” said Donohoe.
It includes supplier due diligence to mitigate supply chain risk and external assessments. “Understanding how organizations design and deliver their services is something we spend a lot more time on. There is a strong appetite for innovation with a conservative lens to ensure risk appetite is tested and solutions fit in,” she says.