CIOs Must Embrace Digital Business

In his March 18 magazine cover story, "Goodbye IT, Hello Digital Business," InformationWeek editor Chris Murphy exhorts IT organizations to get out of their "back-office, support-the-business role" and finally become developers of "products and apps that customers use directly" -- that is, take the reins of the modern "digital business."

The MO of the digital business is that it's adept at using mobile, social and analytics platforms to boost sales and improve marketing and customer service. Those CIOs who aren't at the center of their companies' e-commerce, social networking, mobile application and CRM initiatives risk being shunted into an infrastructure and operations role -- to the non-growth, non-happening parts of their companies.

Consider the digital business that Starbucks has become. Since creating Digital Ventures, a marketing-IT partnership funded like a startup in 2009, Starbucks has become a retail leader in mobile payments, improved its loyalty card system with complementary smartphone apps and other innovations, and created a nationwide digital network that offers free in-store Wi-Fi and third-party content. Those responsibilities now fall mainly to chief digital officer Adam Brotman.

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Starbucks CIO Curt Gartner, meantime, oversees what the company calls global technology and engineering services, including retail technology, software engineering, information security, finance systems and global infrastructure.

Both sets of responsibilities are critical, and both executives are members of Starbucks' senior leadership team. And while Garner's responsibilities appear to paint him into the "infrastructure and operations" corner, he led the revamp of the company's entire in-store retail system, which greatly improved Starbucks' traditional customer service and is the platform for in-store mobile payments. Garner's software engineering team is the backbone of Digital Ventures innovations.

Or consider the evolving role of Dow Chemical's long-time CIO, David Kepler, who recently added the title of chief sustainability officer and appended "business services" to his CIO title. As part of his business services charter, Kepler oversees processes, purchasing, environment, health and safety (EH&S) and shared services. Dave Bent, CIO of office supply wholesaler United Stationers, added the title of VP of e-business services as he took on responsibility for a business unit that sells marketing services and software to United's retail customers.

Titles come and go. This isn't about the title -- chief digital officer may yet go the way of the chief evangelist. It's about the role of business technology leaders in a commercial world that puts a premium on innovation and growth and considers everything else a cost center. Especially as more and more applications and infrastructure get moved to the cloud or to some offshore third party, IT leaders whose main job is to keep the lights on will be fewer and farther between.

Look at what happened to the central CIO job in the British government. As my colleague Gary Flood reports, the British Cabinet Office announced earlier this month that it had eliminated the government CIO position, mostly because it had devolved into that of a procurement and supplier manager, not a champion and facilitator of cross-agency innovation. So the powers that be decided to move those operational responsibilities to the Cabinet Office's Government Digital Service group, under GDS executive director Mike Bracken.

Reports Flood: "You don't need a CIO if, as Bracken holds, you are moving away from a large procurement approach to technology and are becoming 'adept at commissioning and co-delivering digital public services' instead." In other words, individual British government departments were getting really good at deploying their own digital services, so it was decided they don't need a CIO overseer. The rough parallel in enterprise IT is when the marketing, sales, HR and other departments start buying more of their applications and infrastructure on their own when they see their CIOs as little more than slow-moving, even obstructionist purchasing agents and IT standards enforcers.

As I argued in a recent column, "Are The CIO And IT Organization Replaceable?" CIOs shouldn't apologize for their technical expertise and experience. CIOs must be technically savvy just as CFOs must be financially savvy. But CIOs are in a unique position to take on more of a central innovation role, as their IT organizations are "already intertwined (or should be) with every other company department," I wrote. And in keeping with the digital business mantra, they must take on formal customer-facing responsibilities outside of traditional IT -- in e-commerce, customer loyalty, product development and other core business areas.

This isn't to suggest that every CIO needs to run a business and be a rain maker. At the other extreme, however, our recent Global CIO survey finds that the customer-facing CIO is still the rare exception. Only 33% of the 188 IT executives who responded to our survey said their key IT staffers regularly visit with customers, only 23% said their CIOs regularly visit with customers, and a scant 19% said their CIO leads their company's e-commerce or customer-facing Web operations. Those percentages are too low. Speaking at a breakfast meeting in Tampa recently, I asked the audience of mostly CIOs: Who among you meets regularly with customers? One or two hands went up. The prevailing sentiment: We know we should get out more, but we're just too busy with day-to-day operations.

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