Quit Dithering On Digital Business Strategy

There will be speculators trying to cash in on any hot industry, and startups will come and go, but the digital business movement is no bubble -- nothing like the dotcom/ecommerce irrational exuberance of a dozen years ago. For one thing, the infrastructure is far more stable and mature than it was at the turn of the century. The Web itself and all manner of Web apps are now everyday tools for providers and customers, old and young. Business professionals and consumers expect the companies and organizations they buy from to provide a rich digital experience.

Just as important, a range of industries are in desperate need of a digital overhaul. Much of the impetus in healthcare and education is to rein in runaway costs: Customers simply can't afford services whose prices increase 5% to 8% a year in a no-inflation economy, so providers need ways to administer services less expensively. Airlines and banks have gone the digital self-service route for the same cost reason.

CIO's Digital Demise?

So where will the CIO and IT organization end up amid all this digital disruption? Some pundits say they'll play a lesser role, especially as spending moves from IT to marketing, sales and other departments. Some go so far as to suggest that specialized digital teams, led by chief digital officers or similarly titled execs with non-IT pedigrees (see Starbucks, MGM Resorts and Harvard University), will relegate business technology organizations to mostly architecture and infrastructure roles.

Not likely. Most CIOs have been leading their companies into the digital realm of analytics, mobile and social for years now. They're hardly the baggy-pantsed plumbers and hidebound resistors the digerati make them out to be. But if a company's CIO isn't comfortable, even aggressive, with the strategy and tools of digital business, then that company needs to find a new CIO.

Some 18% of CIOs surveyed by Gartner earlier this year said they're already their organization's de facto chief digital officer. That's swell, but that percentage should be closer to 100. And even among those 18%, "saying you are a chief digital officer does not make you one," wrote Mark McDonald, a former Gartner analyst and now an Accenture managing director in charge of the firm's digital business practice, in a recent blog post.

But let's not get hung up on titles. The chief digital officer will probably go the way of the chief evangelist and process officer. That is, the title either won't last or it will be appended to some other one (as in: CIO and digital officer). Titles are a dime a dozen. Action is what matters.

Whether or not the CDO title survives, McDonald sees digital leaders focusing on any one of four main areas: generating new revenue from digital lines of business; developing marketing programs to grow digital revenue; developing and executing digital strategy; or (most broadly) leading the transformation effort from within the organization as "digital champions."

In my view, the first two roles are merely extensions of top sales and marketing positions. The last two are more fundamental and right in the CIO's wheelhouse.

Whether a company needs to hire or name a chief digital officer to oversee or accelerate the digital strategy, McDonald says, depends on how well the CIO already works with the rest of the senior leadership team on such initiatives. At Vail Resorts, CIO Robert Urwiler collaborated with the company's CEO and CMO to conceive and deploy EpicMix, a social/mobile/analytics app that's now a vital part of many customers' skiing and snowboarding experience and almost synonymous with the Vail brand. A chief digital officer would be redundant at Vail. But perhaps other companies and their CIOs will need a hired digital gun.

What McDonald exhorts companies not to do, however, is form a discrete "digital organization" (Starbucks took that route back in 2009) similar to the ecommerce organizations-to-be-spinoffs of yesteryear. McDonald calls them "digital cannibal business units." Usually, once those units generate about 10% of company revenue, they require a substantial capital injection, he says, at which point they compete with the "core" business for resources -- and usually lose. "It's a weak strategy," McDonald says. "It starves the business on two sides: The unit is starved of the resources of the parent company, and the parent is left off the hook of having to be innovative and responsive."

Digital business is everybody in the company's business. But somebody needs to lead. Who better than the CIO?