The global business model is changing fundamentally and radically. Most companies, in most industry sectors, are moving from conducting one-to-one relationships with their suppliers, distributors, and customers to a new model – the digital ecosystem – in which their products and services are provided on multiple platforms in collaboration with new ecosystem partners, some of whom may once have been competitors.
The goal of this shift is to grow revenue and improve a company’s customer focus. Indeed, in the TCS 2020 Chief Information Officer Study, 75% of CIOs say focusing on current customers and gaining more knowledge about their purchasing habits, needs and desires will be the main driver of future enterprise growth. Seventy-two percent of CIOs say improving the customer experience is right behind that in importance.
Participating in a digital ecosystem broadens and deepens a company’s pool of potential customers and strategic partners while exponentially increasing the volume of actionable data an organization can retrieve from both (with their permission). This is the way companies will grow in the coming years.
The critical role of the CIO
CIOs can help their organizations participate successfully in these new ecosystems not only by leading the digital transformations that allow them to reduce costs, collect data, communicate with customers, and partner seamlessly with other ecosystem players, but also by helping their leadership understand the greater value that can be retrieved through collaboration — as opposed to competing for limited resources, talent, and customer segments. In our CIO Study, the 22% of respondents deemed “digital leaders” were also more likely, on average, to have greater alignment among senior leadership on digital strategy for future growth: more than 85% noted agreement between the CIOs and the board directors, CEOs, line-of-business heads and fellow C-suite executives. (This group of digital leaders in our study comprises companies where digitization was enterprise-wide and efforts to increase revenue from digital products or services have been “highly” or “hugely” successful.)
By contrast, among the “digital followers” — another 22% of companies where digitization efforts are still in pilot phase or limited to a few business units and results in growing digital revenue have been lackluster — CIOs have struggled to reach consensus on digital strategy across the executive ranks, ranging from only 65% in agreement with their CEOs to 75% in alignment with their boards.
CIOs also play a role in introducing agile work methodologies to the enterprise. Agile processes, which leverage teams with diverse skillsets to develop, test, refine, and roll-out new products and services rapidly in an iterative fashion based on customer feedback and inputs, is the way ecosystem players can respond most efficiently to changing customer needs and desires.
Of course, the foundation of the digital ecosystem is technology and that’s where CIOs are the linchpin of success. CIOs must improve the technology-based platforms necessary for interacting digitally with ecosystem partners and customers, beginning with leading cloud migrations. (In the TCS CIO Study, 75% of respondents said cloud computing had had the greatest impact on their industry in the past decade.) And, along with building robust cloud architectures, CIOs must lead in introducing and implementing new technologies such as advanced analytics to turn data into insights, the Internet of Things to digitize products and services, and artificial intelligence (AI) to enable future business. In fact, four-fifths of study respondents identified AI as tomorrow’s single most important “game-changer.”
It is impossible to overstate the importance of CIOs when it comes to playing in today’s and tomorrow’s digital ecosystems, but the evidence is compelling. For example, at one UK telecom provider, the CIO worked with his C-suite to help them think strategically about ecosystems, leading the organization’s efforts to:
Redesign the enterprise’s cloud-based architecture to support open standards to harmonize communications with key suppliers;
Define ecosystem parameters for cybersecurity, which is of critical importance to seamless and transparent partnerships;
Increased the automation of software development via agile ways of working and a DevOps approach to support new capabilities and future growth.
For such wholesale transformations, only CIOs have the deep digital knowledge and experience to help align an organization’s digital strategy with an ecosystem business strategy. In other words, the CIO role today has become more of a business success factor than ever before.
About the author(s)
As Vice President & Global Head of Enterprise Application Services, Akhilesh ensures TCS’ global customers achieve rapid value from their business applications investments. He oversees the strategy and growth of the organization’s global application portfolio—ranging from long-standing enterprise application vendors, such as SAP, Oracle and Salesforce, to best of breed applications focused on specific business needs and/or industries.
Akhilesh and his team of business and technology consultants focus on designing and delivering technology solutions that harness the optimal digital capabilities to create new business models and to fuel opportunities with customer experience, finance and HR transformations and strategic IT initiatives.
With over 25 years of international and multi-faceted leadership experience, Akhilesh focuses on identifying strategic opportunities to truly build and grow businesses. Under his leadership, the practice has received a number of partner awards and leadership rankings from leading industry analysts.