Who will drive digital transformation in future?
The chief digital officer’s role assumes greater significance as firms look to intensify their digital push
Mumbai: Anjani Kumar wears the enviable hat of global chief digital officer (CDO). Barely a couple of months into this role and he is already beginning to get lucrative job offers from other companies.
Prior to taking up the position of senior vice-president and global CDO at Collabera Inc., an information technology (IT) staffing and services company, Kumar was the chief information officer (CIO) of logistics company Safexpress Pvt. Ltd.
The transition in Kumar’s role shows the changes taking place in the enterprise IT landscape, globally and in India. Until recently, it was primarily the CIOs who were responsible for taking IT decisions and for spending the allocated IT budget pretty much where they wanted. However, of late, it is emerging that at least two more C-level executives, chief marketing officers (CMOs) and CDOs, are having a say in IT matters.
The CDO’s role, in particular, is increasingly being considered by organizations of all stripes to drive their digital transformation agenda. Digital transformation involves readying an enterprise to better serve customer needs in an era when consumers, employees and other stakeholders are all communicating in multiple ways, especially through smartphones connected to the Internet and on social media sites.
Digital transformation efforts, including investment in technologies such as cloud computing, mobility and big data analytics, will help global spending on IT products and services to grow from around $2.4 trillion in 2016 to over $2.7 trillion in 2020, according to International Data Corp. (IDC), a research and analyst firm.
The tribe of CDOs is growing at a fast clip. In an interview on Forbes.com, David Mathison, CEO of the CDO Club, a global community of digital leaders, said, “At the end of 2015 there were approximately 2,000 CDOs. CDO hires have been doubling every year and I expect there to be 2,500 CDOs by the end of 2016.” According to Mathison, the hires are taking place across all kinds of sectors, including construction, aviation, manufacturing and retail.
Besides the induction of CDOs, another development changing technology deployment in several organizations is that the mandate of CMOs is broadening. Research firm Gartner Inc. is of the view that CMOs’ marketing technology spending is approaching the level of CIOs’ tech spend. “Marketing is now responsible for critical customer-facing, revenue-generating systems and applications,” said Jake Sorofman, research vice president at Gartner, in a media release.
With multiple C-level leaders coming into the picture, the way technology adoption happens at most enterprises is set to become more diversified or complex. “There will be some power tussle in the multiple roles and someone in the top management, either the CEO or the COO (chief operating officer) perhaps, will need to step in and take the digital agenda forward,” said Prashant Yadav, partner, management consulting and lead—data and analytics at consulting firm KPMG.
Not all organizations will have such a conflict, at least not those where the equation between CIO, CMO and other line of business heads is relatively smooth. “I have a tremendous partnership with my CIO and I could not be successful transforming marketing if I didn’t have the right IT support,” said Robin Matlock, CMO, VMware Inc., a provider of tech solutions, including cloud computing.
Matlock further said that without a great partnership, neither the CIO nor the CMO would be effective. Commenting on the emergence of CDOs, she said, “I have seen those roles popping up but in some ways, everything we do is digital. I am having a harder and harder time drawing a line between ‘digital’ and ‘not digital’.”
Experts are of the view that because digital transformation is a relatively new phenomenon, there is lack of clarity on everything that digital involves and on the exact attributes of a CDO.
“Given that digital transformation came on to the scene maybe two or three years ago, no single person is likely to be an expert in all the technological realms such as mobility, social media, cloud computing, etc. So, from the standpoint of hiring an external candidate for the CDO role, companies will probably hire someone who has deep experience in one of these domains but who can easily bring together other associated fields as well,” said Yadav of KPMG.
In many firms looking internally for the CDO, said Yadav, the role is being played by either the CIO or the CMO. Kumar of Collabera said that while CEOs are most ideally suited to also be the digital leaders of their organizations, in most cases, they do not have the time or the inclination to fully handle digital transformation.
A 2015 global CDO study conducted by consulting firm Strategy&, a part of PwC, noted that most CDOs came from a marketing background (34%), followed by sales and distribution channels (17%), and technology (14%). The study further noted that only 6% of the world’s top 1,500 companies had appointed a CDO to oversee their digital transformation.
However, Strategy& pointed out that of the 86 CDOs the study identified, 31 were appointed just in 2014, suggesting a realization among top firms that a dedicated digital leader is needed to drive and transform the business into a fully digital enterprise.
Yadav of KPMG concurs. “Given the focus on digital in most organizations, the CDO’s role is being created or planned going forward,” he said.
Experts say that the interplay of CIO, CMO and CDO roles and its effect on organizations’ digital transformation initiatives will be keenly observed in the next few years.