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8/6/2014
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CIOs Cede Digital Transformation Ground To CMOs

With a majority of businesses realigning technology and business this year, CIOs must step up and assume an active role, according to Altimeter Group research.

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With a majority of businesses undergoing a digital transformation this year, CIOs need to take a more active role to emerge successful, according to a new report from technology advisory firm Altimeter Group.

Altimeter's "2014 State of Digital Transformation" report defined digital transformation as "the realignment of, or new investment in, technology and business models to more effectively engage digital customers at every touch point in the customer experience lifecycle."

Some 88% of executives and digital strategists indicated that their company is undergoing a formal digital transformation effort this year, according to the report. But only one quarter said they mapped out the digital customer journey and have a clear understanding of new digital touch points.

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"We had learned in other research that businesses small and large tend to suffer from shiny object syndrome, meaning they consider tech first and strategy second," said Brian Solis, principal analyst at Altimeter, in an interview. "We found that people are still investing in technology without looking at it long-term. They all can benefit from learning how digital customers are different, which will inspire and inform them of what their next steps should be."

For businesses undergoing digital transformation, culture is key -- and changing it is the No. 1 challenge (63%), according to the report. "I've heard folks who work in IT say that culture never comes up as a challenge," Solis said. "It always surprises me, because change is so emotional. If you don't know that culture is a problem, then you're not changing at the right level."

Businesses also reported that they struggle with thinking beyond a "campaign mentality" in digital strategy (59%), cooperation between departments and team silos (56%), resources and budget allocation (56%), and understanding behavior or impact of new connected customers (53%).

However, it's not the CIO who's championing these changes, either, the report found. Some 54% named the CMO as the digital transformation leader, followed by the CEO (42%), and finally the CIO/CTO (29%).

This doesn't mean that IT's involvement isn't necessary to the success of digital transformation efforts. But to address the needs and expectations of digital customers better, the CIO and CMO need to work together better, the report said.

Solis pointed to research from Gartner that predicted that CMOs were on pace to outspend CIOs. While it's easy to understand why -- marketing has become more tech-based, and big data has become key to a business's competitive advantage -- it's not necessary, he said. Similarly, it's easy to understand why the CMO may be leading digital transformation at a business, but CIOs shouldn't step back and watch.

"CIOs need to reach out and start to solve these problems. They have roadmaps that look so far out and look to solve so many problems that it's easy to get caught up in that," he said. "CIOs are in control of how this evolves. If they don't take control, decisions will be made with our without them."

Instead, CIOs, CMOs, and CEOs should focus on three main points on their journey to a successful digital transformation, Altimeter advised. First, don't focus solely on the technology. Behavior related to customers, employees, values, or expectations is just as important. Second, focus on employees, who are at the heart of the change. Finally, no matter how digital transformation is pursued, businesses are changing along the way.

"What's important to realize, however, is that investing in new digital technologies, such as social, mobile, big data, cloud, etc., doesn't in of itself equate to 'digital transformation,'" Solis said. "It's about uniting individual technology efforts around a common vision supported by an updated, integrated infrastructure to effectively compete as a unified business in connected markets."

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Kristin Burnham currently serves as InformationWeek.com's Senior Editor, covering social media, social business, IT leadership and IT careers. Prior to joining InformationWeek in July 2013, she served in a number of roles at CIO magazine and CIO.com, most recently as senior ... View Full Bio

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Kristin Burnham
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Kristin Burnham,
User Rank: Author
8/10/2014 | 8:09:28 PM
Re: I'm not sure what "digital transformation" really means
@Doug Where businesses go wrong -- especially with social -- is adding because it's "something they should do." If there's no plan, no strategy, it's bound to fail. Like you said, it all needs to have meaning.
SaneIT
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SaneIT,
User Rank: Ninja
8/8/2014 | 7:21:56 AM
Re: I'm not sure what "digital transformation" really means
I get the feeling they think they will like the fancy new paint job but when they start going through the process they realize that they are still limping down the road in clunker.  I'm sure some executives only care about how they look and how the company looks but a smart executive is going to care if they can keep the company moving down the road in the long term.  I'm not against corporate branding or re-branding but it should not be the thing you look to if the health of the company is your concern.
kbannan100
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kbannan100,
User Rank: Strategist
8/7/2014 | 10:41:23 PM
Great line
"We had learned in other research that businesses small and large tend to suffer from shiny object syndrome, meaning they consider tech first and strategy second." This is so true, and when you bring in projects that are redefining IT and the operating model at the same time strategy has to come first.  

--KB  http://bit.ly/1iMdSE5    
BrianS640
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BrianS640,
User Rank: Apprentice
8/7/2014 | 10:05:45 AM
Re: CIO/CMO
Among more advanced companies on this front, we heard just that...CMOs/CIOs are indeed partnering up. This was detailed in Part 1: http://www.altimetergroupdigitaltransformation.com/ Cheers!
ChrisMurphy
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ChrisMurphy,
User Rank: Author
8/7/2014 | 9:13:09 AM
Re: I'm not sure what "digital transformation" really means
You won't get digital transformation if it's only the CMO driving this change. You need every executive looking at their role and asking "how do new digital channels change what we do and should do?" Look at John Deere's implementation of remote, wireless diagnostics of tractors and trucks -- that takes engineering and product managers making that digital element part of the development cycle, it takes customer service re-thinking how they interact, it takes the channel (dealers) having to respond differently, it takes IT crafting a different relationship with product managers. Marketing is only one slice of that change.
Laurianne
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Laurianne,
User Rank: Author
8/7/2014 | 8:36:21 AM
Re: I'm not sure what "digital transformation" really means
@Sane IT thanks for chiming in, and unfortunately, some CEOs love fancy paint jobs at face value.
SaneIT
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SaneIT,
User Rank: Ninja
8/7/2014 | 7:07:48 AM
Re: I'm not sure what "digital transformation" really means
@D. Henschen, I am right there with you.  I see a lot of the transformation being a very surface level effort.  It takes money to paint a picture big and bright enough for the world to see so I can understand where the figures come from but I don't see CMOs doing much process change which is where the real transformation takes place.  I think we're going to see a bunch of companies driving around with fancy paint jobs and no brakes in the coming years.
D. Henschen
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D. Henschen,
User Rank: Author
8/6/2014 | 10:46:25 PM
I'm not sure what "digital transformation" really means
I think a lot of companies go throught the "digital" motions, adding social, mobile, and big data projects or capabilites, for example, without really changing the way they do business. If it's a thin veneer of digitization, it's all for show. For me it gets down to the level of innovation, business transformation, new products, new services, and new business models that are created. It has to be meaningful, and that's hard to capture in a study.
Laurianne
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Laurianne,
User Rank: Author
8/6/2014 | 1:47:49 PM
CIO/CMO
I wonder what the data would have said if they had an option that said CIO/CMO leading digi biz efforts together -- which is of course the ideal, but more common in tech companies than other verticals. I heard the digital business culture challenge described this way at the recent MIT Sloan CIO symposium: Many businesses are trying to go from caterpillar to butterfly, but they end up just being faster caterpillars.
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