Apptio Study: How Digital Transformation is Changing Boards of Directors

The Apptio Study 'Disruption in the C-suite: How the digital transformation imperative is changing CxO dynamics’ was produced in partnership with Financial Times (FT) Focus, an independent 'thought leadership' division of the Financial Times. The findings show: Digital Transformation, which is happening in pretty much all businesses and industries, means that agility, persuasion and data are the new IT currency.

"Digitalization is fundamentally changing the IT operating model, and that means CIOs and CFOs need to work together," said Sunny Gupta, CEO of Apptio. "Executives from these areas need to accelerate new delivery models like cloud and agile methodologies, optimize technology investments to drive innovation, and become more financially agile for resource-based decisions aligned with the speed of business development."

The study shows that digital transformation initiatives have led to a new way of working together in boardrooms. In addition, trust in the IT organization has increased throughout the company. However, the study also shows that the boundaries of responsibility are softening, tensions are emerging between IT and finance, and CIOs are playing a critical role in organizational change for sustainable growth.

"Technical leaders are in a stronger position to drive change in the organization: their priorities are shifting and they are taking a more agile approach to IT strategy," says Sean Kearns, editorial director at FT Focus. "Customer expectations and the accompanying pressure to act in business units are changing boardroom dynamics."

Strategy at full speed

More than half (56%) of companies committed to digital transformation say they are taking an agile, flexible strategic approach that is constantly evolving based on new customer and business insights. Technology leaders are committed to driving growth through innovation. At the same time, they expect to spend nearly the same amount of time and effort over the next three years to enable changes in the business model with the goal of balancing the necessary growth with the operation of existing IT systems.

The new management

More than two-thirds (68%) of global respondents believe digital transformation has improved collaboration among boardroom executives in developing new products and services. But 47 percent of senior executives also say Digital Transformation is blurring the lines between roles and responsibilities. That doesn't necessarily mean all executives agree on business priorities or technology strategies. The biggest discrepancies are between CIOs and CFOs - only 30 percent of global respondents said the two functions are largely in agreement. This new dynamic is creating tension - especially between finance and IT leadership.

49 percent of study participants from Germany said that the allocation of IT investments for new digital technologies leads to the most heated disagreements between their company's CIO and CFO - globally, this is true for only 29 percent.

The power of conviction

This dynamic presents a tremendous opportunity for CIOs to drive change. The survey results show that compared to their executive peers, CIOs are considered the most effective when it comes to customer-centric change - even more so than CMOs or CEOs. This is more pronounced in the U.S., where 28 percent of executives consider the CIO to be the most effective, compared to the global average of 18 percent. For Germany, the figures here are 25 percent. However, in order for CIOs to capitalize on the tremendous opportunity to be the key change agent in their organization, they must communicate effectively with the rest of the business and win over all stakeholders. Seventy-one percent of finance leaders say IT's ability to persuade needs to improve in order to make the change their company requires. IT leaders should also develop communication skills in their teams and ensure they have the right mix of technical and business skills coupled with persuasion.

Decisions and where to make them

There is a lack of clarity in the enterprise about how to make and evaluate key technology decisions. The cloud is critical to achieving digital goals. But fears of loss of control pose a challenge to deployment and migration, which is why only 30 percent of executives are confident that IT can manage cloud applications across the enterprise. Agile methods add value to accelerate the adoption of new technologies and the implementation of digital transformation. But more visibility is needed to monitor performance metrics. Less than a fifth of organizations (16%) use a clearly defined framework to measure success across the enterprise.

Leading with data

Real-time data gives IT executives the ability to evaluate their investments in new technologies and make better decisions. According to the study, 51 percent of executives say IT is taking a more proactive stance on data as a management tool across the organization than other departments, and they also believe this approach is paying off. Of those who believe the IT function is taking a more proactive stance, 58 percent say this approach is very effective in contributing to growth goals.

More information and access to the full report, "Disruption on the C-Suite," are available at available here.