For the transformational CIO, organization structure and digital transformation go hand-in-hand – as companies digitalize, their structures must also change.
Technology-driven organizations, after all, leverage digital tools to create new forms of value and gain an edge in the marketplace.
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One prerequisite to leveraging technology successfully, however, is the full integration of IT into the organizational structure, as we’ll see below.
Tips for the Strategic CIO: Organization Structure and Digital Change
To understand why modern organizational structures are changing, let’s look at how digital technology is affecting the CIO’s role.
Why the CIO’s Role Is Changing
There are several reasons why the modern CIO’s role is shifting:
Technology is fueling innovation and disruption. The digital revolution has driven change across the globe, in companies both large and small. Regardless of the industry, every organization is being disrupted by technology-driven innovation.
Digital drives business strategy. Digital technology has not only revolutionized business models and operating procedures, it has become the heart of business strategy for many organizations.
Today’s enterprises need digital strategists and transformational leaders. To exploit technology to its fullest extent, modern enterprises need visionary leaders who understand both technology and business.
CIOs bridge the gap between IT and business strategy. CIOs lead IT departments and they are in an excellent position to design and govern digital transformation initiatives. They are also the best choice for uniting IT with the rest of the organization.
The more central IT becomes to an organization, the more the organization must reimagine its structure and its operating model.
In many cases, in order fully leverage new tools and to drive innovation forward, businesses must adopt new IT-related specialties, as we’ll see below.
Emerging IT Specialties
Here are several emerging IT specialties that are gradually transforming the way organizations extract value from digital technology:
Digital adoption. Digital adoption means leveraging technology to its fullest extent and for its intended purpose. This is an essential process in digital transformation, which is built upon the implementation of new tools and technology. Simplifying software onboarding and training, for instance, allows organizations to more fully utilize their tools, in less time and at a lower cost.
Data science and analytics. Data science has become one of the most ubiquitous and valuable disciplines in the modern enterprise. Effective use of data can optimize business processes in nearly every area of the business. A few of the many applications of data and analytics include: competitive intelligence, customer experience optimization, predictive analytics, and business process improvement.
Artificial intelligence. Artificial intelligence (AI) takes data and analytics to the next level. For the most part, AI refers to machine learning or deep learning, techniques that, in essence, allow computers to “learn” from data and build models that emulate cognitive tasks. Image recognition, voice recognition, and speech recognition are a few common applications of AI, though we are seeing more emerge every day.
The Internet of Things. The Internet of Things (IoT) refers to the integration of physical sensors with software and the internet. The collection of data from the physical world opens up new possibilities in virtually every industry, from healthcare to supply chain management.
Blockchain. The blockchain, or distributed ledger technology, a database that is maintained and replicated across a number of machines, or a peer-to-peer network. By storing information cryptographically, it eliminates the need for a centralized authority to maintain the ledger. This can be used to enable secure transactions without the need for a third-party, such as financial payments or contract signing.
The specialties listed above are only a few of the many emerging specializations that are being introduced into the modern organization.
Since CIOs are the senior-most IT leaders in the modern enterprise, they are typically responsible for reshaping the organization to incorporate roles such as those covered above.
New IT specialties, however, reflect only one aspect of today’s changing business structure – another important way that organizational structures are changing is the adoption of new business practices.
The Changing Shape of the Digital-First Organization
Here are a few examples of more modern business practices and processes, many of which are being propelled by digital innovation:
Project- to product-management IT. In the past, many organizations have treated IT initiatives as projects. Yet since IT initiatives often deliver tangible business outcomes, many advocate shifting to a product management approach. One key difference between the two approaches is that product-centered IT evaluates outcomes and business impacts, rather than project-based metrics, such as meeting budgets and deadlines.
From waterfall to agile. In recent years, agile software development has become quite popular, and even the norm. This approach emphasizes incremental improvements, responsiveness, and collaboration. In contrast, the waterfall approach develops and releases entire products all at once, often with limited or no tester feedback.
From performance to innovation. When IT was viewed as a back-office function, the aim was operational excellence. And while that remains an essential goal of modern IT functions, as we saw above, technology-driven innovation is now a core goal of most IT departments. This means that the strategic emphasis of IT has expanded beyond efficiency and performance to include innovation and business value.
To sum up, today’s organization is evolving rapidly as a result of the digital revolution.
The CIO, as the foremost IT executive, is usually responsible for driving an organization’s digital transformation efforts – and, as a result, they are also responsible for helping to reshape the organization’s structure.