Zero One: Can Companies Get Back on Track with Digital Transformation?

Like the rabbit in Aesop’s tortoise-and-the-hare fable, business executives seized the technology initiative and raced past the plodding CIO to get to business outcomes faster. Turns out, they ran around in circles.

Not all, mind you, but enough for Forrester to predict that 2018 will be the year of the CIO comeback.

Business executives and, in particular, the new chief digital officer charged with speeding things along, started buying all kinds of business technology subscriptions from cloud service providers. It was fast and easy, and for a time appeared to deliver real results.

Who could blame them? Companies were running the great digital transformation race against potentially disruptive competitors, some pouring billions of dollars into it. Tech spending is still headed toward historic heights, Forrester says, potentially surpassing $3 trillion globally and $1.5 trillion in the United States next year.

Meanwhile, the CIO and IT department, with their months-long RFP process and penchant for vetoing technology requests, were left in the dust. The CMO tech budget is now bigger than the CIO tech budget.

But business executives drove tech purchasing in a haphazard, short-sighted way with dire consequences. It was an illusion of speed.

For example, business units didn’t orchestrate purchases and thus bought competing or redundant packages. Newly adopted technologies were patched together in a “Frankenstack” that hinders the ability to leverage data. One chief digital officer at a retailer didn’t really involve the CIO and CTO on a machine-learning kiosk project, and so the kiosk used the wrong products and images and didn’t connect to back-end systems.

Even worse, the dream of many digital transformation projects to remake the customer experience fell by the wayside. In 2018, 30 percent of companies will see further declines in customer experience performance, Forrester says, resulting in a net loss of a point of growth.

Related: Zero One: The Sorry State of Customer Experience

All of this points to a troubling sign: The rabbit’s digital transformation efforts have stalled.

More than 60 percent of executives believe they’re behind in their digital transformation journeys, Forrester says. An SAP study paints an even gloomier picture: Only 3 percent of companies have gone enterprise-wide with their digital transformation efforts.

Given high failure rates, some companies are losing their appetite. One out of five CEOs will fail to act on digital transformation and put their companies at risk, Forrester says.

“Many factors are combining to define the fate of companies,” Forrester says in its report, Predictions 2018: A Year of Reckoning. “Unmet customer expectations are resulting in churn; the lack of digital transformation gains is translating to loss of market share; industry lines that protected some are crumbling; and longstanding, durable business models are failing.”

If everyone was failing in digital transformation, then they could collectively shrug their shoulders. After all, misery loves company. But a handful of companies are doing it right, which means the gap between leaders and laggards is widening.

Related: Zero One: Digital Transformation Leaders vs. Laggards

How can companies change their fortunes? Look to the tortoise.

“CIOs have never had a better opportunity to bring balance into their operation, and I dare say, even shift to the best of times,” says Matthew Guarini, vice president and research director at Forrester, in a blog post.

Bringing balance doesn’t mean continuing with the slow processes that sent the CIO off in the first place. IT departments have had a few years now with agile and DevOps to become faster, Guarini says.

What’s been sorely missing is the CIO’s due diligence in vendor and service provider selection, expertise in technology integration, understanding of new architectures built on APIs and microservices, and strategic technology vision.

By being a calming voice in chaotic times and quickly yet deliberately moving toward digital transformation, the CIO can help companies improve their position in the race.

At the very least, a CIO doing things the right way will render the chief digital officer obsolete next year, Forrester predicts.

“With CEO and board eyes on speed-to-market, the CIO’s star will also ascend,” Guarini says.

Tom Kaneshige writes the Zero One blog covering digital transformation, AI, marketing tech and the Internet of Things for line-of-business executives. He is based in Silicon Valley. You can reach him at tom.kaneshige@penton.com.