CIOs feel the pressure of digital transformation

As research reveals that digital transformation is putting CIOs under unprecedented pressure and straining relationships with other C-suite decision makers, we look at ways to build bridges between IT and finance.

Digital transformation is taking place in businesses across almost every industry. It's forcing improved collaboration in the boardroom, bringing CIOs closer to the other executives as technology becomes more important to every role. However, it's also putting them under unprecedented pressure and straining relationships.

In particular it's deepening the divide between CIOs and CFOs, especially in the UK. Just 23 per cent of c-suite decision makers questioned in a recent Apptio/Financial Times Focus study said that their IT and finance functions are deeply aligned when it comes to the business' tech strategy; compared to the global average of 30 per cent.

Experts believe a number of factors have intensified this split, including regulations such as the EU GDPR, which has increased scrutiny, procedures and privacy requirements in conducting daily business.

"These new requirements fall disproportionately to the IT department to manage, which has substantially driven costs and budgets up. These elevated costs create tension between the finance and IT groups and require additional cycles to explain, educate, and justify these extra costs to groups who may not fully understand the requirement in the first place," explains Paul Ybarra, chief revenue officer at Fusion Risk Management.

Another business factor that adds to strained relationships between finance and IT departments is the divested budget across Europe, he adds.

"This causes a greater committee decision-making process which further slows the adoption process down. In addition, the uncertainty of Brexit is perpetuating an already tough situation. The tension between the two groups is only expected to worsen unless adequate steps are taken within company leadership."

Blurring responsibilities

To be fair there's always been contention between different areas of the c-suite and this is primarily because each decision-maker has their own priorities. However, as with any big business change, digital transformation is blurring responsibilities, and one of the biggest areas of tension is accountability for technology investment decisions.

"In short, it's all about the money," says Henrik Nilsson, Apptio's VP EMEA. "Digital transformation means CIOs have greater influence over budgets and investment decisions than before, but they're struggling to make a solid case to finance about where spending should go.

"A large reason for this is the lack of effective metrics. Tracking and measuring IT costs is one thing but linking these to business goals is a challenge that CIOs need to solve if they're going to align more closely with the CFO on technology spending," he points out.

But as boardroom dynamics change, the CIO's role is experiencing the most change; wielding more influence and becoming the biggest driver of transformation.

"On average, CIOs expect their priorities to shift over the next three years away from operating and maintaining IT systems towards innovating and developing new products. This is bringing them closer to other c-suite members, and the CEO in particular, as they become the most aligned pairing on technology strategy," says Nilsson.

Under pressure

One of the biggest challenges CIOs face around digital transformation is getting the boardroom on the same page. Rarely does the c-suite agree on what they mean by transformation, so having all areas of the board ‘on board' is a challenge in its own right.

Then there's the grand scale of change needed to make such a project work.

"The biggest problem is around culture - by which we mean organisational structure, skills and ways of working. When people think of ‘transformation' they think of new technologies and new architectural approaches. But in order to properly make use of those capabilities, they also need to think of alternative skills and organising their staff in different ways," says Mark Newman, chief analyst, TM Forum.

"The essentials of flexibility, internal advocacy and good communication can be much harder to achieve than they might appear," continues Leigh Gammons, chief growth officer at Cognifide, WPP's technology consultancy.

"The biggest problem we find is that people want to view digital transformation as a project with a finite beginning, middle and end when, in fact, it's an iterative process and requires genuine change in the way you work in order to bring it to life."

Building bridges

So what can CIOs do to smooth the journey towards digital transformation and strengthen the relationship between the different members of the c-suite and areas of the business?

Collaborative working - at boardroom level is key - and is happening more and more. When starting out however, it's worth identifying potential boardroom advocates, says Darren Fields, regional vice president at Citrix.

"Every CIO has a feel for the agenda of a company and its board in relation to technology investment and digital transformation. Whether or not a fresh approach to digital is needed now, they should take the time to identify and work with those on the board who embrace and understand what is at stake."

It's important to communicate your vision in order to strengthen collaboration across the business. One way of doing this is to discuss technology in terms of what it means for the businesses. Nilsson notes that a growing number of businesses use the technology business management discipline, a framework that matches IT costs to business outcomes to help the c-suite better understand the benefits of digital transformation.

"Digital transformation needs a vision that others can believe in," agrees Fields. "The CIO is uniquely qualified to drive change, but it needs to be communicated well for others to understand and embrace it - so make excellent communication a priority."

Technology is at the heart of digital transformation, but businesses that will be successful in the future will be the ones that embraced digital transformation on a cultural and organisational level, not just an IT level.

"In a changing world the customer is our compass, because while how and what we do as people will change, fundamentally human nature and what drives us remains the same. That is more than just moving to the cloud or a new IT system," says James Moffat, Founder and Principal Strategist at Organic.

"Even if the CIO gets this, without wider support, alignment and collaboration with the rest of the c-suite, the pressures of digital transformation may prove to be too much for any organisation."