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Digital transformation brings IT and LOB together

CIOs have an opportunity to shrink the distance between technology and line of business as IT takes a leadership role with digital business initiatives. By Beth Stackpole

With IT leading digital business initiatives, the longstanding delta between technology and line of business (LOB) is shrinking as collaboration and cross pollination of strategic expertise becomes the epicentre for enterprise advancement.

The CIO’s rising stature and expanding portfolio of responsibilities are among the key drivers for movement on the ever-elusive goal of IT/LOB alignment. CIOs’ traditional role as technologist with oversight of back-office operations has significantly broadened to a strategist charter, increasing exposure and clout among business counterparts. According to the 2019 State of the CIO, which surveyed 683 IT leaders, 67 percent of respondents said a significant portion of their time is now spent on business strategist activities in pursuit of innovation and advancing go-to-market plans.

“The evolution of technology is exponentially increasing and shaping how consumers think about engaging with different companies, and the technology function is now a strategic leadership role,” notes Angela Yochem, executive vice president and chief digital and technology officer for Novant Health. “CIOs are the digital product and services leads.”

Even with the shift, CIOs are not abdicating functional duties in areas like security management or improving IT operations and systems performance. On the contrary, the 2019 State of the CIO research found CIOs are still wearing the traditional hat in addition to picking up responsibility and oversight of areas far outside of their typical domain.

Respondents to the survey confirmed they are devoting a higher percentage of time to functional activities (85 percent) in addition to transformational efforts (88 percent) like aligning IT initiatives with business goals and cultivating the IT business partnership. At the same time, the strategist portion of the CIO agenda has taken off this year, illustrating an increasing reliance on IT to steer technology-driven business initiatives and digital transformation. In comparison, only 53 percent of respondents to the prior Year State of the CIO spent any significant time on business strategist duties.

As part of the new emphasis, CIOs are channelling energy to efforts they haven’t spent much time on in the past. For example, 35 percent of respondents to the 2019 State of the CIO are actively driving business innovation compared to only 28 percent last year, and 23 percent are developing and refining business strategy, a 2 percent hike over 2018.

Other activities newly heaped on the CIO’s plate include identifying opportunities for competitive differentiation (21 percent), crafting new go-to-market strategies and technologies (19 percent), and studying up on market trends and customer requirements in order to identify new commercial opportunities (16 percent). CIOs are also taking ownership of new domains and responsibilities, among them: Data analytics (64 percent), operations (43 percent), business development (38 percent) and customer service (32 percent).

CIOs new role transcends tradition

As CIOs embrace a portfolio that transcends traditional IT boundaries, there’s no question a tighter partnership with LOB and closer alignment on shared priorities is a foundational element for success. “Everything we do, we do as a collaboration with business,” says Shannon Gath, vice president and head of technology at AMAG Pharmaceuticals. “We co-create the value proposition together and there is alignment around delivering scalable, secure innovative solutions that drive patients’ health.”

Even when LOB spearheads the purchase of their own technology products and services, there remains a desire to work in concert with IT. The rise of cloud services has made it easier for business users to circumvent official IT channels, yet LOB continues to lean on the technology organization for both advisory and oversight assistance. Eighty-five percent of IT heads responding to the 2019 State of the CIO said the department stays involved in some capacity, most (43 percent) maintaining shared project oversight. At 67 percent of responding companies, IT and business are cooperating more frequently on collaborative projects where IT shares responsibility and oversight, another indicator of greater IT/LOB synergy.

While IT is being recognized for stepping up to the strategic advisor role, there remains a gap in perception between CIOs and their LOB counterparts. In this year’s survey, more than half of CIOs interviewed (59 percent) characterized IT as a strategic advisor for technology initiatives (up from 52 percent last year), spending time identifying business opportunities and recommending technology and provider selections. Far fewer LOB respondents characterized IT in that capacity, at only 41 percent; 18 percent still viewed IT as a cautious voice of reason compared to a tiny fraction (4 percent) of CIOs.

To empower the transition, IT organizations are shoring up their ranks with talent versed in business-oriented skills, which helps improve communication between the two functional areas. Technology roles like cloud architects and data scientists are in hot demand, but IT organizations are also seeking out candidates with proficiency in business and soft skills to foster more effective interaction with LOB counterparts and to ensure collaborative efforts don’t get waylaid by miscommunication or competing goals. Forty percent of respondents to the 2019 State of the CIO were on the hunt for employees with change management and strategy building skills while 32 percent were targeting project management acumen and 25 percent business relationship management skills.

Some disconnect remains

While enterprises have made significant strides to align IT and LOB goals, some longstanding perceptions remain a barrier. For example, despite recognition of IT’s contribution to business strategy, there is still a disconnect between how CIOs view their role in digital transformation and how their business counterparts see them. The vast majority of IT leader respondents to the 2019 State of the CIO survey (88 percent) believe CIOs are driving digital transformation efforts more aggressively than any of their business counterparts. Yet that view is only shared by 47 percent of LOB respondents.

There are also differences in both business and technology priorities among the different groups. CIOs are putting emphasis on increasing operational efficiency (40 percent), bolstering cybersecurity protections (40 percent), and improving customer experience (35 percent) as the key areas driving IT investments—a view mostly shared by LOB. However, instead of a focus on cybersecurity protections, which fell lower on LOB’s list, that segment placed a greater priority on growing the business (32 percent).

In terms of the technology agenda, IT leader respondents to the 2019 State of the CIO put the highest priority on data/business analytics (30 percent) followed by cloud computing (27 percent), and enterprise applications and security/risk management (both cited by 26 percent of respondents). LOB, on the other hand, is championing cloud computing (25 percent) followed by security/risk management (23 percent), business process management (19 percent), and data/business analytics (18 percent).

LOB and IT leaders also have slightly diverging views on the challenges CIOs face as they settle into the strategist role. With more on their plate, CIOs continue to struggle with balancing responsibilities that span operational excellence and innovation—an uphill battle for 80 percent of IT leaders responding to the 2019 State of the CIO compared to only 73 percent last year. In comparison, only half of LOB respondents believe CIOs are being stretched too thin by having to juggle simultaneous objectives and agendas.

With digital transformation, CIOs have a real opportunity to take a front-seat leadership role. Yet their success hinges on forging a tight partnership with LOB and creating synergies that put the age-old alignment issue permanently in the rear-view mirror.

In this year’s survey, more than half of CIOs interviewed (59 percent) characterized IT as a strategic advisor for technology initiatives (up from 52 percent last year), spending time identifying business opportunities and recommending technology and provider selections. Far fewer LOB respondents characterized IT in that capacity, at only 41 percent; 18 percent still viewed IT as a cautious voice of reason compared to a tiny fraction (4 percent) of CIOs.
Technology Agenda : 2019 State of the CIO Data/business analytics – 30 %Cloud computing – 27 %Enterprise applications – 26 %Security/risk management – 26 %

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