The year 2014 was saw big advances in digital transformation. Digital excellence is no longer simply a way to outperform competitors, it is table-stakes for the long term existence of businesses.
Research firm Gartner just released its 2015 CIO agenda, a survey of over 2800 global CIOs who represent nearly $400 billion in IT spending. Their primary finding? That “Digitalization” is no longer a sideshow — it has moved to center stage and is changing the whole game. CIOs have a unique opportunity, but they must “flip” their information, technology, value and people leadership practices to deliver on the digital promise.
The primary piece of advice from Gartner is to flip information and technology leadership from “legacy first” to “digital first.”
Seizing the digital opportunity requires agility, adaptability and speed. However, existing business processes, business models, information, technology and talent suffer from legacy inertia and “bad complexity,” the Gartner report declare. “Even IT planning horizons do not reflect the new era, with its potentially massive disruptions. IT simplification to make space for and enable digital business is a good start, but simplification needs to extend to the entire business stack: business processes, business models and the business ecosystem.
CFOs should ensure that technology budgets are aligned with the needs of becoming a digital business, and to that point, here are 5 important questions CFOs should be asking CMOs and CIOs in 2015.
1. How are we investing in improving the digital customer experience?
According to a study from Watermark Consulting, delivering a great customer experience has a enormous impact on revenue growth and customer acquisition cost. And these both have a huge impact on stock price. Companies who emphasize customer experience outperformed the broader market, generating a total return that was 26 points higher than the S&P 500 Index while laggards trailed far behind, actually posting a negative return during a period when the broader market rose sharply.
While digital customer experience is a clear driver of growth, many organizations are held back by legacy technology platforms and a “channel-centric” view of the customer. In fact, Marketing departments are often organized around specific channels, like web, mobile, social, and email, resulting in a silo’d customer experience strategy. Consumers don’t see marketing channels, and expect companies and brands to be everywhere they are.
2. What is our cloud strategy?
According to a recent survey from Atos, 75 percent of CFOs think their business is missing out on revenue opportunities by not having the right cloud applications and infrastructure in place to support digital business transformation. As a result, 70 percent of CIOs and CFOs fear their business will become uncompetitive with the majority (76 percent) of them estimating this will happen as fast as the end of 2015.
Cloud computing services from Amazon and cloud-first digital platforms have changed the way corporate IT teams source, provision, manage and spend on technology -- especially digital experience technology. This is more than a mere trend; IT shops that for decades sourced, built, maintained and staffed corporate data centers and managed application stacks see salvation in a cloud-first focus.
The cost and complexity of building and staffing data centers, managing and scaling servers, grappling with security, deploying and managing on-premise software (and paying yearly software maintenance fees) is an inefficient way to run a business today. Cloud options should be making CFOs and other business execs rethink how they invest in technology: subscribing to cloud-based infrastructure and software reduces overall spending and shifts costs from a capital expense to a recurring operating expense - like paying your electric bill each month. Moving to cloud reduces costs for all that hardware and the people needed to manage it, freeing up time and money so the company can focus on high-value activity like creating great digital experiences, writing great digital content, and other things. And, moving to the cloud brings agility and flexibility to the hard work of digital teams, which translates into real money via quicker time to market for new sites and experiences, and reducing the overall effort to keep the lights on.