With the digital transformation, power is redistributed in companies. There are three scenarios for the future roles of digital managers.
The digital transformation has significantly changed the management structures in the IT departments of companies. Until then, the CIO was solely responsible for the technology and IT strategy, but in many companies, a CDO was added to drive digitization forward. As the digitization process progresses, the question arises as to what the future roles of CIO and CDO in the company might look like: Will the importance of the CDO increase or will it end up leaving the company? Will the position of the CIO perhaps be strengthened again, or will the duality continue to exist?
The classic role of the CIO: IT administrator and technology expert
Until about 10 years ago, the management structure of the IT department was clearly defined with the Chief Information Officer (CIO) at the helm. At that time, his main focus was on the automation of production, business and administrative processes in order to make the existing processes in companies more efficient. With the digital transformation, new strategic tasks were added to IT, which are decisive for future business success. Since then, disruptive technologies such as artificial intelligence, machine learning and big data have raised the pace of innovation to a new level. They have the potential to fundamentally change the existing corporate strategy and business models as well as the entire organization and culture.
In order to master this process, companies must see IT as a holistic and essential component of their corporate strategy. More than ever, the CIO has a key role to play here. It must increasingly evolve from a pure IT specialist and administrator to a business enabler that drives the success of the entire company. But in some cases, this change to a digital leader and strategist does not work or the management wants to position this topic differently.
The CDO as a digital leader and strategist
For this reason, numerous companies have also brought on board a Chief Digital Officer (CDO) who, as a digital leader, brings a breath of fresh air into the company, is responsible for the transformation of the company and is pressing ahead with it. Its requirement profile differs greatly from that of the classic CIO. In addition to technical know-how in areas of the future such as artificial intelligence or big data, the CDO must above all have business skills and be able to design an overarching digital strategy and implement it as a change manager. This also requires classic leadership skills such as assertiveness, empathy and complexity management.
However, the distribution of power between CIO and CDO is regulated very differently. In some companies, the two stand side by side with equal rights, in other cases one is superior to the other. There is also the constellation in which both report to a Chief Technology Officer (CTO) at the board level.
Studies show that large industrial groups, in particular, have so far filled the position of Chief Digital Officer. Gartner market researchers predict that in 2020 four out of five large companies will have a CDO that has established its position between IT, operations, human resources and finance. This trend towards CDOs is also likely to increasingly reach medium-sized businesses and continue there.
But how long will the duality of CIO and CDO last? This question arises at the latest when the transformation process has progressed further, the organization has become more agile and innovation management is largely established. What new role will the CDO play in the company in the future? From today’s perspective, there are still no clear answers to these questions. However, some future scenarios are emerging that CEOs, CIOs and CDOs should be looking at:
Scenario 1: CDO as a transitional phenomenon
One option is that the CDO is only a transitional phenomenon, that it will lose power in the future and even leave the company if necessary. According to the HTW study, a good half of those surveyed assume that CDOs are more of a temporary function. The market researchers at Forrester and Gartner also consider this role to be obsolete in the future.
Once the digital transformation is complete, the CDO may disappear again. At the same time, the position of the CIO could be revalued. After all, once all digital innovations are well advanced and have returned to the normal operating state, these tasks are once again the responsibility of the latter. After all, the CIO is ultimately responsible for the entire IT operation, which he ensures with his employees. So the CIO could again become the strong technology man of the company, while the CDO loses importance.
Scenario 2: CDO wins, CIO loses
But the future power constellation can also go in a completely different direction: The CIO and the CDO are to blame. Experts generally assume that the role of the CDO will remain important in the long term. Companies will be busy mastering the digital transformation for years, rather decades. In addition to digitizing processes and building new business models, the internal transformation of organization and culture is a Herculean task that will continue for a long time to come. If digital innovations continue to have such an outstanding strategic relevance in the future as they do today, then it can certainly make sense to establish the CDO at board level and to subordinate all other classic IT topics to it.
This upgrading of the CDO could be accompanied by a weakening of the position of Chief Information Officer. After all, more and more of the CIO’s very own core tasks – such as traditional business topics – are likely to be shifted more and more to the cloud and external IT service providers in the coming years. The IT departments, which today have a large number of employees, could gradually shrink in size and develop into pure control and monitoring units that no longer carry out IT operations themselves but commission and monitor them. This would significantly reduce the CIO’s remit and the number of employees.
Scenario 3: Duality of CIO and CDO persists
A further possible future scenario is that the duality of CIO and CDO remains, both act equally side by side and have a common reporting line, for example to a CIDO or CTO.
The CDO is the digital leader and strategist responsible for IT innovations, while the CIO is responsible for implementation and the run responsibility for IT operations within the company. However, this constellation also harbors risks. On the one hand, many decision-makers might feel that their power and competence is being curtailed. On the other hand, problems such as goal and resource conflicts often occur at this interface.
Conclusion and outlook
CEOs are already challenged to look at these options today and to think about the path they will take in the future. And for CDOs and CIOs it is now particularly important to position themselves correctly in the company. They should become aware of which strategy is favored in their company in order to be able to set the course for their further career in good time: Either within the current company or with another employer that is more promising for personal advancement. Because one thing is certain: Good and experienced IT managers will continue to be in short supply and will continue to have the best cards on the job market in the future.