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by Clint Boulton

CDOs in scarce supply at large global companies

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Jan 7, 2016
ÍæÅ¼½ã½ãIT StrategyTechnology Industry

Only 6 percent of the top 1,500 global companies have chief digital officers, says consultant PwC. But it doesn¡¯t matter, as the role is largely transitional in nature and the ÍæÅ¼½ã½ã continues to rule IT.

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Despite some reports that chief digital officers would replace ÍæÅ¼½ã½ãs as innovators of corporate products, only 6 percent, or 86, of 1,500 largest global companies have installed a CDO, according to recent PwC research. While 31 of those CDOs were hired last year, suggesting that more companies are assigning importance to the notion of a dedicated digital leader figure, the CDO role will ultimately fade as companies complete their digital transformations, PwC reports.

PwC CTO Chris Curran says it’s irrelevant who leads the digital transformation as long as the companies complete the necessary work, which can include anything from delivering online services and mobile applications to consumers, to analyzing data generated from those services, to empowering internal workforces with emerging technologies. “People get all bent of shape whether the ÍæÅ¼½ã½ãs own this [digital] stuff or not,” Curran tells ÍæÅ¼½ã½ã.com. “There is a lot of work, particularly in consumer-facing businesses, and I don’t have any problem splitting the load.”

Chris Curran, CTO of PwC.

Chris Curran, CTO of PwC.

Some CEOs choose CDOs over ÍæÅ¼½ã½ãs to lead digital transformations

CDOs emerged as CEOs came to view their ÍæÅ¼½ã½ãs as primarily managers of back-office technology unlikely to fuel digital innovation. Pundits and researchers continue to fuel the CDO frenzy. IDC says that 60 percent of ÍæÅ¼½ã½ãs in global organizations will be supplanted by the CDO for the delivery of IT-enabled products and digital services by 2020. Forrester meanwhile tells companies not to hire a CDO, as it will create clashes between the ÍæÅ¼½ã½ã and CMO.

[ Related: All hail the next big job, the chief IoT officer ]

Yet some CEOs continue to contemplate hiring CDOs to lead digital transitions, which PwC says will require as much as 50 percent of capital spending over the next five years. Curran says that one business-to-business client is looking for a CDO after concluding that his ÍæÅ¼½ã½ã is unlikely to “push the envelope.” The CEO wants someone who can think about reinventing user experiences, and seek out emerging technologies from universities and startups. When a CEO seeks a CDO, what they’re really trying to do is jumpstart innovation and offer a fresh perspective to avoid losing market share, according to Curran.

“You need to either mix things up with a new leader to accelerate the transformation, or you need to be real aggressive in terms of getting everybody on the same page,” Curran says. “The CDO model is a way to catalyst change and get the organization fired up.”

Some ÍæÅ¼½ã½ãs – especially those who have already imitated their own digital strategy — find that logic offensive and view the emergence of the CDO as an affront to their capabilities.

[ Related: 5 reasons 2016 will be the year of the ‘new IT’ ]

If you fall in to that category, you might agree with the perspective of SAIC ÍæÅ¼½ã½ã Bob Fecteau, who : “Appointment of people into positions like Chief Digital Officers (CDO), Chief Knowledge Officers (CKO) or other Chief Officers to support desired business needs are indicators that the ÍæÅ¼½ã½ã is not fully empowered, trusted, valued or cannot deliver the full breadth of support needed or is not the right person for the job. Efforts to separate job responsibilities of the ÍæÅ¼½ã½ã like these serve to dilute the authority, the budget and the scope of the ÍæÅ¼½ã½ã’s responsibility.”

Fecteau further recommended that CEOs empower ÍæÅ¼½ã½ãs with the right authority, access and support for them to be effective. Let the ÍæÅ¼½ã½ã hire a digital director if necessary. It’s incumbent on the ÍæÅ¼½ã½ã to demonstrate leadership and management skills that drives value for their companies/CEO. But don’t hire a CDO to taunt him or her, Fecteau says.

The bull case for the ÍæÅ¼½ã½ã-CDO pairing

The relationship doesn’t have to end in a C-suite death match, however. Some ÍæÅ¼½ã½ãs-CDOs are comfortably sharing the responsibilities, providing a two-headed attack to the challenge of using business technology to spur growth. Witness McGraw-Hill Education ÍæÅ¼½ã½ã Angelo DeGenaro and CDO Stephen Laster, who form a one-two punch for a company with a lean IT staff.

Laster’s team builds teaching and learning software, using a DevOps process of continuous deployment and integration. DeGenaro provides the infrastructure, operational uptime and security to support the digital products. “[DeGenaro] keeps our customers happy and whole, freeing my team up to understand deeply how teaching and learning happens with technology and create software products that fulfill those needs,” Laster says.

[ Related: ÍæÅ¼½ã½ãs must collaborate with a new ‘digital champion’ – the CEO ]

DeGenaro meanwhile says it’s crucial that he and Laster present a unified front and cultivate a high level of respect between the teams. “There may be some points of disagreement, but it’s always handled professionally and egos never come into play here.”

McGraw-Hill’s ÍæÅ¼½ã½ã-CDO dynamic is likely the envy of other organizations where a CDO is introduced. Curran says he has seen the alternative scenario, in which some clients’ CDOs have come into organizations like tornados, adopting cloud software with reckless abandon before they realized that they don’t have a single view of their customer, social, supply chain, and operational data. Then they had to grudgingly turn to the ÍæÅ¼½ã½ã to integrate and normalize the data before they could analyze the data.

CEOs need to avoid such nightmare scenarios by fostering collaboration from the start. Enterprises must come to an explicit agreement around who is in charge and unify the strategy, IT, analytics and marketing departments. “Someone has got to be on point to own the single view of the investments, the strategies, the third-party relationships,” Curran says. Failure to do so will lead to distraction, disruption, organizational chaos and, ultimately, wasted spending on competing technologies.

Ultimately, Curran suspects the CDO role will slowly fade, much like ecommerce vice presidents were pulled out as standalone positions before being rolled back into IT 15 to 20 years ago, as it dawned on CEOs that ecommerce was simply a new sales channel. “We’ll get more CDOs over the next couple of years and then it will start tapering off once the early adopters figure it out,” he says.