CIOs can succeed if they focus on a blend of traditional and digital issues for their organizations.
The key focus at today’s opening keynote at the Gartner IT Symposium/Xpo was on how IT leaders need to face geopolitics, economics and the emergence of digital giants for their organizations to excel.
“It’s been 50 years since the first message was sent across what became the internet. In 50 years we’ve seen technology transform our enterprises, our relationships, and society itself. That said, the next five years may bring as much change as those last 50,” said Val Sribar, senior research vice president at Gartner, speaking to an audience of more than 9,000 CIOs and IT executives at the conference in Orlando, FL, which runs through Oct. 24.
Gartner has coined the phrase “TechQuilibrium” to describe how CIOs can navigate the ongoing changes of a digital society and learn to pivot and react to different business vectors.
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“TechQuilibrium is what Gartner defines as the ideal mix of traditional and digital for your enterprises. It’s the balance point that applies to many things in your world,” Sribar said.
There are three forces that are creating uncertainty and pressure for CIOs. They can throw CIOs off balance and cause them to shift both operational and business models. These three forces are:
- Digital giants
Sribar explained the details of each force and why it matters.
“Geopolitics and regulations will directly impact your cloud strategy and your data, particularly for those of you in bulky national enterprises. Based on political and regulatory turns, tax advisors and legal officers are leading conversations with you regarding where to put your people, your data, and your assets. We predict you’ll have clouds for different geographies, what Gartner calls distributed cloud. A cloud for greater China, a cloud for the US, perhaps one for Russia or the Middle East. But the clouds you use will change dramatically based on the shifting winds of politics, taxes, tariffs, and data sovereignty rules,” he said.
“Your infrastructure data architectures will need to be reconfigured to find TechQuilibrium. You as CIOs find yourself needing to design a balance with an emphasis on where people and assets are located, and where work is done. You’ll need to reconfigure these parts of the enterprise quickly as you hit a new geopolitical turn. Boards are shifting priorities based on their concerns about the impact of geopolitics on products, customer and citizen engagement, and privacy and security. Unmanaged, these turns challenge your stability,” he explained.
Economic currents are the next big turn affecting the enterprise.
“Globally, many economists and probably your CFOs believe we’re heading towards another set of economic downturns. And if they’re right, just if, how would you respond? Odds are, many of your staff and most of your peers, they weren’t in their current positions in the last downturn. Gartner research has uncovered an important lesson from the past decade. During the last global recession in 2008, which was a huge turn, those companies that were able to see opportunities, they broke away long term from the pack. They had strategies to prioritize where to cut deeper so that they [could] continue to fund growth and innovation,” Sribar said.
One such company that did well was Shell, he said. “During the last downturn, Shell did an ingenious thing. They pivoted. They slowed down with their Arctic exploration efforts, and then bought a power utility company and invested in electric charge points, becoming the top provider of the charge points in several countries. Shell cut and invested in growth and innovation. Through the turn, they braked and accelerated.”
The third major turn is the emergence of digital giants such as Amazon, Google, Apple, Alibaba, Facebook and Netflix.
“Digital giants are driving virtually every enterprise to determine their TechQuilibrium to make a mission critical bet on the balance between traditional and digital. Most enterprises are not going to be only one or the other. Traditional companies are scrambling to drive toward digital, but guess what? The digital giants are tipping their for traditional. Digital giants are acquiring or building their way into traditional industries like financial services, physical retail, and automotive. Alibaba has one of the world’s largest supply chains, biggest payment networks, and health services business. And on top of all that, they invested in major movie franchises like Mission Impossible. In the digital society, the distinction between traditional and technology company will eventually disappear. And the race is on. Every enterprise and industry is challenged by their TechQuilibrium,” Sribar said.
There are two ways that companies can become more digital to compete in this digital environment: Digitize your operations and digitize your value proposition, Sribar said.
“Your ultimate digital business strategy is about how quickly and how far you’ll digitize your internal operations and external value proposition. So how long does it take to reach TechQuilibrium? For most of you, over seven years. That’s what we at Gartner have observed,” he said. “But it’s not as easy as taking a single journey. Technilibrium points change in the turns. People become more accepting of digital approaches, regulations modernize. For example, the shift from connected vehicles to autonomous cars will set new market and societal expectations and change the TechQuilibrium point. If people become more accepting of autonomous vehicles and regulations modernize, the TechQuilibrium shifts. Basically, as we become a more digital society, the TechQuilibrium point changes.
Gartner analysts said the ultimate digital business strategy is about how quickly and how far organizations can digitalize their internal operations and their external value proposition. The 2020 Gartner CIO Agenda survey showed that, on average 20% of CIO respondents said their products, services and revenue value proposition are digital. And 39% of their workplace, processes and supply chains have been made more effective with digital technology. However top performing CIOs said over half their operations are digitalized and a third of their value propositions are digital.