Further disconnects occur because tech leaders typically report to different leaders in the organization, which can create competing tech factions. For example, of the 57 percent of survey respondents who said their CIO owns technology, 47 percent said their CIO reports to the CEO, with 19 and 16 percent indicating their CIO reports to the COO and CFO, respectively. Of the 14 percent of companies with a CDO, 39 percent report to the CEO, with 10 percent and 11 percent reporting the COO and CIO, respectively. Asking CIOs and CDOs, who must often partner to deliver capabilities, to report to different C-suite leaders is another potential hazardous strategy.
Reach a consensus on an operating model
Salvation may lie in getting multiple tech stakeholders to rally around and align their departments to a single operating model, says Schrey. There is no definitive path to this. Rather, each department must understand the end-to-end processes unifying the parties and reach a consensus on responsibilities.
Another path to alignment includes elevating digital leaders to report directly to their CEOs. "In organizations where the CIO, CTO or any other digital leader has a direct reporting line to the CEO, IT/digital is perceived as more effective than in organizations where they do not," Schrey says. "This not only has an impact on the perceived performance of the organization, but also improves how much digital leaders participate in shaping the company's business strategy, a goal desired by both business and IT."
Some companies appear to be catching on. Among the organization changes Coca-Cola announced late last week, the beverage maker said CIO Barry Simpson would report directly to President and COO James Quincey, who has been promoted to CEO, effective May 1. The company said such a move would "boost visibility and focus on efforts to digitize all aspects of Coca-Cola's business."
Such alignment is essential if technology is going to work with the business to conduct a digital transformation. Industries remain less than 40 percent digitized on average, with 49 percent of leading companies investing in digital more than their counterparts do, McKinsey says.
The stakes are high and the potential corporate rewards are great. IDC estimates that the economic value of digital transformation is worth $20 trillion, or more than 20 percent of global GDP.