Organizations need to embrace digital transformation immediately, as digital disruptors are emerging in nearly all industries.
That was the message of Peter Sondergaard, executive vice president and global head of research at Gartner, Inc. at last week’s Gartner Symposium/ITxpo. Sondergard spoke to more than 7,500 chief information officers and IT leaders at the event.
The need for CIOs to embrace digital transformation is urgent, Sondergaard says. In fact, once digital revenue for a sector hits 20 percent of total revenue, digital transformation can’t be stopped, he explained. Digital disruption has been seen in industries such as in “book publishing, clothing, and it’s beginning in other industries such as traditional grocery markets.”
Digital disruptors are doing two things: finding new opportunities, and attacking the weakness of incumbents, Sondergaard explains.
"Digital disruptors serve unmet customer demand. They find ways to use excess capacity in the supply chain, exploit new platforms for awareness and marketing, and they also capitalize on new distribution channels," Sondergaard says. "Digital also exposes the weaknesses of incumbents."
Get Digital to Stay Competitive
Gartner data shows that two-thirds of all business leaders believe that their companies must pick up the pace of digitalization to remain competitive. The new breed of CEO believes their companies must use technology to gain a competitive advantage.
"That puts CIOs in the spotlight. You play a part in the digital transformation," Sondergaard says. "But it does not mean the exact same thing to every CIO. To meet the digital challenge, you must understand both what will be expected of you, and what you truly aspire to be."
Within the enterprise, on any given day, and with any given partner, the leadership the CIO provides may vary, Sondergaard says. There are three situational roles for the CIO that include: a partner CIO; a builder CIO; or a pioneer CIO.
“The IT Partner CIO is expected to operate in a more transactional way, with a focus on managing services, core IT, value for money, while also preparing for digital,” Sondergaard says.
“The Digital Builder CIO is designing and enabling new products and services, and working with others across the enterprise,” Sondergaard says.
“The Digital Pioneer CIO is acting an entrepreneur, leveraging technologies to build new capabilities, new business models, and new revenue streams to achieve digital value and scale,” Sondergaard says.
"The digital value may be either optimization – just efficiency – or full transformation in the form of growth. It is best used to invent something entirely new," Sondergaard says. "This is critical because if your organization is not creating new digital business models, or new ways to engage constituents or customers, you are falling behind."
Sondergaard pointed out that scale does not merely mean getting bigger. The largest organizations are not the only ones that will win. In the emerging world of interconnected platforms and ecosystems, smaller organizations can very rapidly compete with the largest.