You’re Investing More in Technology, But Is It Making Any Difference to Growth?

November 08, 2022

Contributor: Janelle Hill

The 2023 Gartner CIO and Technology Executive Agenda identifies four actions that CIOs can take to accelerate the impact of their digital technology investments.

CEOs have been increasing investments in business digitalization and information technologies since at least 2018. With the current economic headwinds, they are losing patience; they want to see top-line or bottom-line benefits from those investments now. The bad news for CIOs is that demonstrating tangible results poses a significant challenge. The good news is that four actions can make it easier.

Demonstrating the business value of IT remains a struggle for many CIOs — as shown by the continual demand for advice from our clients. But in today’s souring economic conditions, CEOs are getting even more demanding — seeking proof of enterprise “digital dividends” from tech investments, not just siloed or indirect benefits.

What are digital dividends?

CEOs expect that digital technology will accelerate growth beyond what was previously possible with people and machines. Those “digital dividends,” as we call them, are derived from augmenting the physical world with advanced digital technologies. For example:

  • Digitalizing physical assets to create smart products and services
  • Digitalizing interaction channels, such as mobile apps and e-commerce
  • Digitalizing business capabilities, such as “bill customer” via a touchless interface

A “digital” strategy is especially key in today’s recessionary environments, and CEOs want digital dividends — in the form of top- and bottom-line financial impact — to be delivered sooner rather than later. Many organizations, however, are still deciphering what “digital” can mean for their business or mission.

Four CIO imperatives to ensure digital dividends

Understanding exactly what financial outcomes are expected is the first of four critical steps for CIOs wanting to ensure digital dividends.

Step No. 1: Prioritize the right digital initiatives

Based on Gartner survey results, roughly half of digital initiatives don’t meet CEO or executive expectations. Most take too long to complete or too long to realize value (or both). 

The greatest hindrances relate to people and organizational issues, such as siloed behavior, talent gaps, change resistance and leadership (issues exacerbated by talent shortages). To overcome these inhibitors and accelerate initiatives with the greatest potential impact on enterprise financials, CIOs need to form alliances. 

Prioritize in-progress initiatives based on the potential impact to the top or bottom line. To protect resources for these priority projects, be prepared to pause initiatives with less impact.

Step No. 2: Create an outcome-driven metrics hierarchy

Accountability is key to delivering digital benefits. However, many organizations lack visible, explicit metrics to monitor progress and attainment. Lack of such metrics allows leaders to evade responsibility for poor results. 

First, CIOs should identify metrics grounded in business performance and collaborate with the appropriate accountable leader to confirm what “improvement” means and how it can be measured. For example, if the CEO’s goal is to improve profit margins, the CIO might prioritize an initiative focused on improving customer and constituent experience. The first step for the CIO is to clarify with the CMO what success looks like — what kind of improvement should be made to deliver the improved profit margin.

Next, identify all the other initiatives underway that will collectively contribute to the desired business outcome and financial impact. Create a visual metrics hierarchy to show the contribution of each. Metrics further down in the hierarchy are indirect. This provides visibility into which initiatives generate desired outcomes, and who is responsible for each contributing activity within the value stream.

Step No. 3: Contribute IT talent to a business-led fusion team

Having identified high-impact initiatives, be sure to deploy key digital talent to big opportunities — especially ones targeted by business-led fusion teams. The mindset within an IT organization(s) is often to go it alone in many aspects of solution delivery. However, achieving shared goals or vision requires a range of competencies from both IT professionals and business experts, including business technologists

Embrace the strengths of democratized access to technology, expertise and data. Equip others to participate in delivering digital solutions as part of an ecosystem, breaking down psychological and bureaucratic barriers to strategic partnerships. 

Building partnerships by contributing IT talent to business-led fusion teams also opens the door for integrating subject matter experts from the business into an IT-led fusion team. This adds business perspective to internally focused initiatives and builds business acumen in IT teams — as well as accelerating the impact of the fusion teams themselves.

Step No. 4: Reduce talent gaps with unconventional talent approaches

Despite the threat of recession, the competition for digital talent remains fierce. Many CIOs face tightening budgets and won’t be able to hire enough workers or pay for outsourcing to accelerate digital initiatives. It’s time to consider unconventional ways to access digital skills, especially for lower-priority, internal initiatives.

While key talent contributes to high-priority actions, use nontraditional talent pools such as students and gig workers to backfill necessary but nondifferentiating business capabilities.

Unconventional talent utilization may take extra time, supervision and training, but it can often be achieved at low cost (such as hiring interns). In addition, startups may be willing to develop assets for your enterprise if they can retain the intellectual property.

In short: 

  • CEOs increasingly expect to see top- and bottom-line benefits from technology investments.

  • Delivering “digital dividends” means accelerating growth beyond what was previously possible with people and machines. 

  • To deliver “digital dividends,” first know the financial outcomes to target. Then, talk about digital in terms of the collective enterprise impact, deploy digital talent to high-priority projects to speed time to impact and think outside the box to backfill everyday talent gaps.

Janelle B. Hill is a Distinguished VP and Chief of Research for Gartner’s CIO practice. In this role, she looks across CIO research agendas to ensure they are client-centric, relevant and integrated. Her research focus is on transitioning to digital business at scale.

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