Ninety percent of EMEA organizations have faced a turn in the last four years, according to Gartner’s annual global survey of CIOs. With 2020 likely to be more volatile than 2019, CIOs must help their organizations acquire the capabilities needed to win when the next turn arrives.
“Simply being digital isn’t really going to cut it anymore. Forty-one percent of EMEA CIOs are already running mature digital businesses, up from 35 percent last year. It’s the coming turns that are the problem, not digitalization,” said Andy Rowsell-Jones, vice president and distinguished analyst at Gartner. “No one is immune from economic, geopolitical, technical or societal turns, which are likely to be more common in 2020 and beyond. These turns can take different forms and can disrupt an organization’s abilities in many ways.”
Turns weaken an organization’s fitness
The nature and severity of the turns reported by CIOs varied widely. In EMEA, they included adverse regulatory intervention, organizational disruption and severe operating cost pressure. “Those and other severe scenarios such as IT service failure or natural disaster have affected how organizations do business, and in most cases are making new things harder,” said Rowsell-Jones. “The real trick is how well organizations weathered these challenges.”
Rowsell-Jones added that the problem with a turn is that, once you’re in one, it disrupts your ability to respond. Thirty-six percent of EMEA CIOs reported that turns had handicapped them in bringing new business initiatives to market, pushing out time to value and ultimately reduced their success.
Turns also weaken an organization’s ability to build its “fitness” muscles. Thirty-four percent of EMEA CIOs said they were behind in the race to attract the right talent, 30 percent were suffering slowed or negative IT budget growth, and 32 percent said funding for new business initiatives had dried up. “No matter what it is, prepare for a turn before you attempt to go around it,” said Rowsell-Jones.
Fit organizations emerge stronger from turns
In the global survey, Gartner separated CIO respondents’ organizations that had suffered a severe turn into two groups – “fit” and “fragile” – based on business outcomes. Gartner looked at over 50 organizational performance attributes to determine what differentiated the two groups.
Results were bundled into three themes – alignment, anticipation and adaptability – which indicated simple shifts in leadership priorities. For example, in times of crisis, leaders of fit organizations ensure that the organization stays together while it shifts to a new direction. They actively search for emerging trends or situations that require change. They take calculated risks but trust the core business capabilities. Leaders in fragile businesses are measurably worse at these things.
The differences between fit and fragile organizations do not end with leadership attitudes. Internal institutions and process matter too. For example, disciplined IT investment decisions and having a clear strategy were cited as key areas of alignment by fit organizations, but much less so by fragile organizations. The survey found that 53 percent of global fit organizations are likely to have a flexible IT funding model to respond to changes, compared to 43 percent in EMEA. In addition, having a clear and consistent overall business strategy ranks as one of the most distinctive traits of fit organizations.
A robust relationship with the CEO is also a strong differentiator. A strong CEO relationship helps CIOs learn about a change in business strategy as it occurs. In EMEA, 43 percent of CIOs are reporting directly to their CEOs. This demonstrates that EMEA CIOs are aligning their purpose and direction with business executives.
Gartner predicts CIO priorities
Fit IT leaders use IT to gain competitive advantage and help organizations anticipate changes ahead of time. Similar to the global fit CIOs, a large percentage of EMEA CIOs have already deployed or will deploy cybersecurity, robotic process automation (RPA) and artificial intelligence (AI) in the next 12 months.
Adaptability is the IT organization’s chief responsibility. “In a fit organization, IT leaders turn the IT organization into an instrument of change,” said Rowsell-Jones. “Sixty percent of global fit organizations rate the clarity and effectiveness of IT governance very highly. Similarly, 51 percent of EMEA CIOs rank their organization’s IT governance as effective or highly effective. IT governance can coordinate resource allocation in times of disruption, which offers survival benefits to an IT organization.”
“Digital is no longer the road to competitive advantage,” added Rowsell-Jones. “How organizations flex as the environment changes and how CIOs organize to deal with turns will dictate their success in the future, especially in 2020.”