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The pressure on IT leaders to make the right decisions on technology investments is significant and is only going to intensify in the years to come. Chief information officers are expected to deliver digital dividends, and CEOs and boards–anticipating that investments in digital assets, channels, and digital business capabilities will accelerate growth–want to see these digital-driven improvements reflected in company financials.
A report released last month by research firm Gartner underscored that CIOs and other IT leaders must figure out how to leverage top- and bottom-line growth from their many digital investments.
Gartner surveyed 2,203 CIOs in 81 countries and all major industries and found that CIOs expect IT budgets to increase 5% on average in 2023 — lower than the projected 6.5% global inflation rate.
A “triple squeeze” of economic pressure, scarce and expensive technology talent, and ongoing supply challenges is heightening the need for tech investments to pay off, said Daniel Sanchez-Reina, vice president and analyst at Gartner.
An analysis of the survey data revealed four ways in which CIOs can deliver digital dividends and demonstrate the financial impact of technology investments.
One is to prioritize the right digital initiatives. Survey respondents ranked their executives’ objectives for digital technology investment over the last two years, and the top two goals were to improve operational excellence and improve customer or citizen experience.
“Demonstrating the financial impact of technology investments across the organization is critical to enabling strategy,” said Kathy Kay, executive vice president and CIO at financial services and insurance firm Principal Financial Group. At Principal, she said the company has prioritized digital investments that will deliver the most value to customers and create growth opportunities and efficiencies.
A vision for digital change
Another way to deliver digital dividends is to create a metrics hierarchy. The survey found that 95% of organizations struggle with developing a vision for digital change, often due to competing expectations from different stakeholders. To drive financial outcomes, the report said, CIOs must use metrics that can easily apply to and be shared among various digital initiatives throughout the enterprise.
A third way is to contribute IT talent to a “business-led fusion team.” While strategic engagement with business unit leaders is needed to accelerate digital initiatives, Gartner said the survey exposed an IT mindset of “go it alone” regarding the delivery of solutions. Over-dependence on IT staff for digital delivery reflects a traditional mindset, which can get in the way of agility, Sanchez-Reina said.
Kay at Principal said the company has been focused on empowering its non-developer employees through training for both for automation and data analytics. “We’ve been focused on making training available to everyone to build capabilities where we had identified gaps,” she said.
The firm has a comprehensive cloud development and certification program it offers to employees. “This has helped us advance our digital capabilities as a company but has also helped our employees grow in their roles and even helped them take on new positions,” Kay said.
Finally, CIOs can reduce the talent gap with unconventional resources. Many CIOs continue to struggle to hire and retain IT talent to boost digital initiatives, the report said. But the survey also identified numerous sources of technology talent that are untapped, including students (through internships and relationships with schools), and gig workers.
“Reducing the tech talent gap continues to remain top of mind and is one area we’re keenly focused on in advancing our digital strategy,” Kay said.
With the rising dependence on digital services to keep businesses competitive, the pressure will remain high on technology leaders to optimize the value of IT investments, training, and other areas.
“The world in which we live today necessitates an almost constant reliance on technology,” said Brandon Jones, CIO at Worldwide Assurance for Employees of Public Agencies, a nonprofit provider of life insurance and financial services. “Decisions about technical tools, systems and strategies have a direct and visible impact on organizations, especially from a top- and bottom-line growth perspective. A CIO can produce great impact within an organization.”