Digital Transformation Fail Point: CIO/CTO Conflict
Waves of fear and anger circulate over digital transformation projects – most of them destined to fail –sweeping the enterprise IT landscape. The technology is willing, but in too many cases the spirit of cooperation between senior managers is weak. The epicenter of digital transformation failure, according to a new study: poor CIO/CTO collaboration.
Michael Gale, a partner at PulsePoint, has famously declared that only one in eight digital transformations succeed. In addition, this publication recently posted two articles examining how and why adoption of new systems goes wrong. In “Why Your Digital Transformation Initiative Will Probably Fail,” a VP at Automic, a business process, application and infrastructure automation specialist, identifies three common yet wrongheaded technology strategies. In “A Wary Look at AI from an IT Implementation Veteran,” an IT project leader delves into misguided management practices, including what could be called “irrational exuberance,” that undermine smart system implementations.
Now Dell EMC and Forbes Insights share findings of a new study, "IT Transformation: Success Hinges on CIO/CFO Collaboration.” Based on data from a global survey of 500 CEOs, COOs, CIOs and CFOs, the study examines why many efforts haven’t delivered significant improvements in customer service and a competitive advantage.
The answer: Less-than-stellar IT Transformation results often center on problems arising between two pivotal players — CIOs and CFOs — and their struggle to work together as a cohesive team.
Key findings from the study include:
- 85 percent of global executives plan to spend up to a quarter of their total enterprise budgets on IT Transformation in 2018
- Nearly all respondents (96 percent) see close CIO/CFO collaboration as being important or critical to business success
- Critical goals include IT cost reduction (75 percent of respondents), be first to market with new products and services (73 percent) and reallocating funds to strategic business projects (67 percent).
- The top three investment areas in the next year will be big data platforms (77 percent), cloud services (76 percent) and social-media activities (72 percent)
- Companies with the most successful transformation efforts see 7+% gains in sales and profits
The study underscores the point that IT transformation extends beyond IT – that strategic perspectives and management structures also need to be transformed. The absence of organization change can lead to what’s called “repaving the cow path” – laying technology over obsolete processes and practices.
In a blog discussing the study, Gaurav Chand, SVP at Dell EMC, writes that CIO/CFO collaboration problems are exacerbated by conflicts “arising from traditional reporting structures and a lack of new incentives aimed at fostering closer cooperation between CIOs and CFOs.” Nearly 90 percent of senior executives surveyed acknowledge that significant barriers keep CIOs and CFOs from collaborating more closely on IT Transformation.
A major source of disconnect: CFOs and CIOs live in separate universes. “CFOs point to problems stemming from a lack of business expertise among CIOs and the conflicting priorities of the two groups – although they also acknowledge that their own attitudes about the role of CIOs are outdated,” Chand said, including the view held by some CFOs that IT is a cost center.
The study also quotes Federal Communications Commission CIO David Bray on the central role CFOs serve in digital transformation projects.
“Left on their own, CIOs may not know the overarching financial goals of the organization,” Bray says. “That’s why it’s important to have a CEO, CFO or COO who can clearly outline the business and financial goals of the organization, and let the CIO identify the technical options for achieving them through IT transformation.”
The study offers six measures to help overcome CIO/CFO barriers, including updated reporting structures to address the evolving roles of CIOs, measure and reward CIO performance according to business outcomes, regard ROI calculations as guides, not hard and fast requirements, establish milestones to monitor project progress of initiatives.