Across the globe, many forward-thinking CEOs and CFOs continue to fund business technology investments that enable meaningful and substantive digital transformations, ahead of their industry peer group.
That's why CIOs and other IT leaders must now accelerate the quest for value creation and drive digital growth from those ongoing investments, according to the latest market study by Gartner.
"The pressure on CIOs to deliver digital dividends is higher than ever," said Daniel Sanchez-Reina, VP Analyst at Gartner. "CEOs and boards anticipated that investments in digital assets, channels, and digital business capabilities would accelerate growth beyond what was previously possible."
Digital Business Market Development
CIOs expect IT budgets to increase 5.1 percent on average in 2023 -- that's lower than the projected 6.5 percent global economy inflation rate.
A Gartner survey analysis revealed several ways in which CIOs can deliver "digital dividends" and demonstrate the financial impact of their strategic business technology investments.
Survey respondents say the top two objectives are to improve operational excellence (53 percent) and improve customer or citizen experience (45 percent). In comparison, only 27 percent cited growing revenue as a primary objective and 22 percent cited improving cost efficiency.
Meanwhile, the CIO's future business technology plans remain focused on optimization rather than growth. CIOs’ top areas of increased investment for 2023 include cyber and information security (66 percent), business intelligence or data analytics (55 percent), and cloud computing platforms (50 percent).
However, just 32 percent are increasing investment in artificial intelligence (AI) and 24 percent in hyper-automation.
The survey found that 95 percent of organizations struggle with developing a vision for digital business change, often due to competing expectations from different stakeholders.
According to the Gartner assessment, CIOs must reconcile siloed initiatives by using a visual metrics hierarchy to communicate and demonstrate interdependencies across related digital initiatives.
CIOs should also connect with functional and line of business leaders for each digital business initiative to understand what substantive improvement means, and how it can be measured.
Creating a picture that reflects the hierarchy of technical and business outcome metrics for each initiative will enable the chain of accountability that will collectively deliver the dividend in focus.
While strategic engagement with business unit leaders is necessary to accelerate digital business initiatives, the survey exposed an IT leader mindset of "go it alone" regarding solution delivery.
For example, 77 percent of CIOs said that IT employees are primarily providing innovation and collaboration tools, compared with 18 percent who said non-IT personnel are providing these tools.
Moreover, "fusion teams" that combine business process experts, business technologists, and IT technical staff, will catalyze a group that is focused on achieving key digital business outcomes.
However, many CIOs continue to struggle to attract, hire, and retain skilled IT talent to accelerate digital business initiatives. The survey identified sources of talent that are typically untapped.
For example, only 12 percent of enterprises use students -- through internships and relationships with schools -- to help develop technological capabilities and only 23 percent use skilled gig workers.
Why is this problematic? CIOs can be limited by policies related to "preferred providers". To counter this restriction, they must be able to engage all talent sources that can help accelerate the value realization of digital business dividends.
Outlook for Digital Business Investment Growth
"CIOs must prioritize digital initiatives with market-facing, growth impact," said Janelle Hill, VP analyst at Gartner. "For some CIOs, this means stepping out of their comfort zone of internal back-office automation to instead focus on the customer or constituent-facing initiatives."
That said, I believe the dependence on traditional IT organizations, and the staff they hire for digital business initiative delivery, reflects a legacy I&O mindset that can impede enterprise agility.
CIOs must embrace collaborative digital business development models to accelerate time to value creation. Proactively equipping and empowering business technologists is the path to progress. It's also the most effective way to gain CEO and CFO approval for ongoing digital business investment growth.