Why CIOs need to guide business along the digital tightrope
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Why CIOs need to guide business along the digital tightrope

The majority of business executives are struggling with digital decision-making and clashing over digital priorities, says a new European survey — even when they appreciate the urgency of embracing that new world.

Although they may project confidence on the surface, many European businesses confronted by the challenges of digital transformation are actually racked with uncertainty, competing priorities and a lack of agreement on the best way forward.

But judging from a recent survey of more than 600 CEOs and senior IT decision-makers across the UK, Spain, Germany and Sweden, companies also realize that the stakes are high for those who misread digital opportunities and threats. As one business leader points out in the findings, Walking the Digital Tightrope, executives that over-estimate their level of their digital maturity while simultaneously failing to grasp the complexities of the transformation run the risk of business failure.

Indeed, many companies seem to be unduly bullish about their digital capabilities. The research, commissioned by global ICT company Fujitsu, shows that the vast majority of IT decision-makers (92%) class their organization’s digital maturity as either ‘somewhat’ or ‘extremely’ mature. Two-thirds of respondents class their organizations as “digital leaders,” while three in five believe they are on a digital par with their competitors.

“Organizations are precariously balanced between two opposing digital pitfalls: stagnation and acceleration.”

But dig a little deeper and a contradictory picture emerges. Only a third of the executives questioned say they and their colleagues are aligned behind the same digital priorities, and for half that manifests itself in management conflict. Indeed, around 40% admit that their current digital strategy is “unclear and confused,” while one in 10 report openly competing agendas.


“Organizations throughout Europe are walking a tightrope. Faced with tough decisions, a thin veneer of optimism masks a maelstrom of competing drivers, priorities, stakeholders and budgets,” the reports authors observe. “Organizations are, in fact, precariously balanced between two opposing digital pitfalls: stagnation and acceleration.

Respondents are, at least, agreed on one point: digital transformation won’t wait. Among other benefits, they see the paybacks of digitalization coming from the ability to attract and retain employees (cited by 43% of respondents), greater market responsiveness (38%) and improved customer retention and loyalty (37%).

They are also alert to the dangers of failing to digitalize quickly enough, fearing lower productivity (40%), reduced revenues (38%), an inability to attract and retain talent (38%), increased costs (37%) and even business failure (20%). As one CEO puts it: “The risk of investing in incorrect technologies is lower than [the risk of] doing nothing and slipping behind the competition.”

Digital benefits and challenges


Given that, it’s not surprising that three-quarters of respondents say they want their organizations to move faster towards digitalization. But, as the report points out, in order to make the right choices and successfully tread the digital tightrope, organizations need a clear strategy and strong leadership. One respondent, the CEO of a Spanish retailer, says: “Success isn’t a matter of luck; it’s the result of laying the foundations to bring about successful practices and working to lay the foundation for evolution.”

A major priority for many leadership teams will be working out who should be in control, as the report highlights. When asked which aspect of the business primarily drives the digital agenda, the IT department and/or CIO comes out on top, cited by 23% of respondents. By contrast, the management board and the CEO are in the driver’s seat in only 18% and 16% of cases, respectively.

The problem here is that digitalization is regarded as a technology challenge, rather than a business challenge. In half of organizations, for example, the management of digital projects falls to the IT team. As a result, IT teams, which must also oversee day-to-day ICT operations, are stretched painfully thin.

Who's driving digital transforation

 
This situation could force a rethink at many IT groups, the report suggests. Today, almost half (47%) of respondents concede that their organizations have struck the wrong balance between digital and traditional IT projects when it comes to the time and money invested, for example.

“In order to thrive, businesses will need to accelerate the pace at which they bring technology and new ideas together.”

As a result, say the authors, they are waking up to the fact that a new path to digitalization is needed: one that embraces it as a business challenge first and foremost, then implements the right strategy to ensure progress is made at a manageable pace.

Indeed, two-thirds of respondents agree their organization would benefit from a more balanced approach to digital adoption that effectively combines new technologies with existing solutions. “We’re introducing digitalization steadily so it’s easier in the crossover and everyone, including customers and our workforce, has time to adjust,” reports one.

And, across the management team, there’s a healthy recognition (by 70%) that digital transformation is nothing less than a gamble — but one that every organization has to take. “The trend is generally towards digitalization. We must adapt to remain competitive,” acknowledges one German CEO.

“Duncan
Duncan Tait, head of Fujitsu EMEIA
Ultimately, digitalization isn’t a choice, agrees Duncan Tait, CEO of EMEIA at Fujitsu. “Digital transformation is increasingly core to societal and economic stability, and in order to thrive businesses will need to accelerate the pace at which they bring technology and new ideas together. However, when you scratch the surface, business optimism on digital transformation looks more like bravado [and] the lack of clear ownership and conflicting priorities is a barrier to success.”
An international view
SPAIN
Spanish organizations are the most confident in their own digital maturity and are keenest to accelerate adoption:

● 39% of organizations rank themselves as ‘extremely’ digitally mature, while 40% believe they’re more digitally advanced than their competitors
● 90% wish to accelerate the adoption of digitalization
● It’s more common for IT departments to drive the digital agenda (29%) and oversee projects (63%) than elsewhere
● 57% of companies report a common view of digital priorities across their organizations
.

GERMANY
German companies appear to be succeeding with a methodical approach to digitalization:

● They’re the least likely to want to move faster towards digital adoption, with 29% of IT decision-makers reporting no appetite for this
● 43% “strongly agree” that their organization is taking the right approach to digitalization
● 41% point to a distinct skills gap as their main barrier to success
● Around 60% state that time and money is being invested correctly in digitalization.

UK
UK organizations take a more cautious approach to digitalization than their European peers, but are more confident in the strategies they already have in place:

● At one in three companies, there is no appetite to move faster towards digital adoption
● 61% of respondents agree their organization has a clear digital strategy
● The UK’s digital projects are more commonly stymied by existing technology solutions hindering innovation (cited by 32% of respondents) than elsewhere
● 21% of respondents report openly competing digital goals within their organization.

SWEDEN
Swedish companies aren’t as far along the road to digitalization as their European counterparts, but are making up for lost time:

● 66% of respondents see their organizations as ‘playing catch-up’ on digital, but 87% say they’re focused on accelerating digital adoption
● 38% of respondents say they’re ‘extremely’ confident in advising their organizations on the right digital choices
● 47% of organization are aligned behind common digital priorities, more than most of their European peers
● 72% agree that their company would benefit from a more balanced approach to digital adoption, the highest among the countries surveyed.

• Download the full report:Walking the Digital Tightrope
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