As dealing with technology grows and permeates every business activity – from sales to marketing, and procurement to finance – the remit of the chief information officer has become too big to handle.
Enter the chief digital officer (CDO). While the CIO labours to keep leading companies abreast of cumbersome, enterprise-wide technology upgrades and efficiencies – virtual servers, enterprise resource planning (ERP) and IT infrastructure of all kinds – and working behind the scenes, the CDO’s remit is customer-focused (front end) technologies, investigating the social web, online marketing, data analytics and the impact of the digital revolution on the essence of a company’s business strategy.
Hard-hit sectors such as media companies and retailers are among the first to deploy the CDO, says Jason Juma-Ross, head of Accenture Interactive Australia, who is helping clients define and introduce CDOs.
“This role reflects the changes that a lot of people are seeing in digital landscape,” Juma-Ross says. “The evolution of digital is outside the technology remit of the CIO – I don’t mean entirely outside – but digital touches the business model and customers and supply chain. It is a broader set of issues that requires a new champion.”
The role has not yet stabilised. In media companies, the job is about the shift from paper to digital. “There is one at News Corp, to help that shift from paper to digital,” Juma-Ross says. “Media companies are trying to determine the right things to do, and are not clear what the future business model is, so there is a concerted effort to figure that out.”
The CDO, therefore, has to speak the language of the board, and answer the question of return on investment – one that has proved extremely difficult to pin down. The CDO is also bridging the gap between individual business departments and the CIO – discussing how digital changes marketing, recruitment, sales and finance, all area deeply affected by digital change.
CDOs come to the role will different skills from CIOs: experience with digital technologies, e-commerce and transactional expertise, online marketing and social media expertise. But in some cases, the CIO makes a shift, Juma-Ross says.
The CIO stays on top, for now
As the role gains currency, some companies are struggling to differentiate between the CIO and CDO roles. Juma-Ross says CIOs are happy to welcome the CDO on board – they need all the help they can get with their expanding portfolio of responsibilities – but just who answers to whom?
Early signs are that the CIO reigns supreme – so far. The CDO reports to the CIO as the ultimate overseer of technology.
However, because of their customer-facing, revenue-generating role, some are predicting a bright future for the CDO, that they will become a regular in the boardroom, and wielding influence and power across leading companies as they tackle the most difficult strategic issues.
So far, the trend to appoint CDOs is industry-specific, but Juma-Ross says: “Over the next five years, it is hard for me to see an organisation that won’t need those sorts of skills.”
Entrepreneurial
The approach to decision making is perhaps a defining differentiator of the two roles.
The CIO’s large scale technology transformations are big decisions and enormous project management tasks. The CDO, on the other hand, is more entrepreneurial, says Juma-Ross.
“The approach is to deploy, test, learn, iterate,” he says. “In digital you can get a proposition out there into and environment where you can test it. You do that and iterate faster than your competitors, forcing your competition to follow.”
The cost of digital innovation has fallen substantially over the past decade with the advent of the cloud and software as a service. Customers expect service to evolve rapidly and shift their attention to the latest iteration.
The CDO is also watching what is coming “down the pipeline”, ensuring the business model can adapt to the next big thing. Platforms are evolving quickly and big data and data analytics provide instant feedback on whether customers are exciting by ideas and changes.
Juma-Ross says: “Companies have got to design for flexibility.”