Kathy Gibson reports – This year, spending on digital technology will grow eight-times faster than economic growth.

This means CIOs, in their leadership roles, have a massive task ahead to drive their organisations forward.

Jyoti Lalchandani, group vice-president and regional MD (META) at IDC, points out that there can be no doubt about the fact we are in the centre of the digital transformation journey now.

“The focus is on realising h value of digital transformation investments made over the last few years,” he says.

“Given the economic environment, organisations are also taking a shorter terms view of the payback they expect from their investments . they are looking now to payback period of 12 months or less.”
The industry is moving towards the third phase, to the digital business era where a digital-first strategy is what drives organisations.

“In this phase, we think about 40% of Global 2000 organisations will be driven by digital products, services and business models.. So the share of revenue derived from traditional business models will decline over time.”

This means organisations have to look at transforming organisations, and driving new revenue streams with digital.

“We will also change the way we value the organisation,” Lalchandani says. “In the future, value will be based upon digital assets.”

A new set of personas – what Lalchandani calls the “digital dream team” – will evolve to focus on the digital business.

These personas will include roles like head of digital workplace, head of innovation and more.

With the majority of technology budgets residing with lines of business by 2027, 30% of the expertise in the C-suite will shift from encouraging innovation to scaling innovation and operating digital businesses, according to IDC.

“We are also seeing a fundamental shift in the expectations of CEOs in the CIO organisations.

According to IDC, CEOs are now looking for five key metrics:

* Cost reduction;

* Risk management to drive digital resiliency – this is the key expectation;

* Modernising IT to align with business to achieve better business outcomes;

* Orchestrating digital transformation to deliver better business agility; and

* Leading our digital transformation with a major focus on delivering new revenue streams

“These are now fundamental expectations from the CEO,” Lalchandani says. And this means CIOs need to rethink their IT mission.

“We need to think about how to navigate control plane strategies and to think about what’s coming next.”

In terms of rethinking the mission, IDC has found that 97% of CIOs believe their current vision, strategy and organisation is inadequate.

Going forward, business will be the major funder of IT projects, rather than the IT organisation.

In addition, organisations have built a lot of technical debt – or connected islands. Indeed, IDC finds that only about 19% of IT and digital systems are now integrated, so there is a new challenge in managing systems.

Perhaps most concerning is the finding that an overwhelming majority of CIOs believe it is going to be difficult to maintain current levels of technology investment over time, which will impact their ability to meet their competitiveness challenges. IDC research indicates that the 69% of tech leaders are concerned about the growing investments that will be required.

CIOs find themselves having to navigate through three control planes – multiple clouds, multiple applications and multiple ecosystems – all underpinned by the need for unified security and trust.

Firstly, the reality today is that we are living in a muti cloud environment. “Cloud now represents a major share of enterprise IT spending globally,” says Lalchandani.

Two-thirds of CIOS globally believe they are spending more on the cloud than they had budgeted. So there will be an increased focus on rationalizing and managing costs.

ICOs are thus looking to manage cloud sourcing and vendor management, reducing cloud infrastructure spend, consolidating SaaS contracts, and setting up an finops function.

“While organisations are moving new workloads to the cloud, there is a focus on rationalising and managing cost better,” Lalchandani says. “We believe organisations are spending between 10% and 30% more than they should be on the cloud.”

The areas prioritised for IT cost reduction in 2022 are cloud infrastructure and PaaS costs (55%), professional services (43%) and software development costs (38%).

CIOs also need to look at the enterprise control plane. ‘We believe there will be a 50% growth in the traditional applications portfolio,” says Lalchandani. “And they are becoming more modular as well.”

This means the complexities of managing these multiple applications must be an area of focus.

Management issues will be exacerbated by the fact that interdependencies are set to grow too. “So there will be greater focus in the governance tools required.”

CIOs need to think about building more intelligent enterprises, using a confluence of data, analytics, AI and automation. These help to drive better management, and also build new revenue streams.

The IDC framework for managing this involves information synthesis, insight delivery, collective learning and the formation of a data culture.

“You need to think about deriving more intelligence to drive business outcomes,” Lalchandani says.

The last control plane is industry ecosystems, with digital innovation extending beyond the organisation.

“We think we will see a lot more innovation happening across organisations and industries.”

IDC thinks this will be an ecosystem built on platforms, sharing insights, applications and expertise across multiple organisations.

“We will see more integrated and interconnected environment,” Lalchandani says.

These interconnected ecosystems drive better revenue and profitability for organisations, he adds.

The future state will be more decentralised and permissionless, where organisations come together to drive new innovations. “We believe by 2028 we will see decentralised, consortium-based organisations,” Lalchandani concludes.