The Hackett Group is a strategy, operations, and implementation firm that uses the knowledge gained from 13,000 benchmarking studies to help its clients reach their goals. Hackett scales its services to meet clients’ needs—on-demand consulting through its executive advisory membership, on-the-ground consulting through its business transformation and enterprise performance management groups, and its “gold standard” benchmarking practice that has benchmarked 93 percent of the Dow Jones Industrials, 87 percent of the Fortune 100, 87 percent of the DAX 30 and 58 percent of the FTSE 100. Mark Peacock, Principal, IT Transformation Practice Leader, sat down with Erin Hichman, ALM Intelligence’s Lead for IT Consulting Research to discuss digital transformation and the evolving role of the CIO, among other things.
ALM Intelligence: How do you define digital transformation?
Hackett: Digital transformation happens at the intersection of technology innovation and business innovation. Digital technologies allow companies to fundamentally change the way they deliver products and services—improving product and service capabilities, customer experiences, operational efficiency and agility. It’s about using new business capabilities — digital customer engagement, digitally connected and enhanced products, digitally optimized service delivery, and a digitally enabled workforce—to drive down costs, drive up customer value, and introduce new products and services at a pace unheard of 10 years ago.
ALM Intelligence: How is digital changing the role of the CIO?
Hackett: For CIOs who have built credibility with their peers leading business and other functional units, digital transformation significantly expands their role. The logical intersection point for end-to-end business processes, new technology and large amounts of data is the IT organization. However, to be successful requires the CIO to incubate a new set of capabilities—translating technology innovation into business innovation, designing modern digital architectures, accelerating service delivery, developing advanced data and analytical skills, and staying ahead of cyber threats. Building these new capabilities while keeping the current IT operations running smoothly—and all on a flat operating budget—is a tall order. In Hackett’s 2017 IT Key Issues study, 94 percent of CIOs believe that digital will change the way business services will be delivered over the next 3 to 5 years. However, only 32 percent of them believe they currently have the resources and competencies to execute.
ALM Intelligence: How do CIOs use benchmarking now vs. five years ago?
Hackett: CIOs are pivoting from asking “How are we doing today” to “What should we look like tomorrow” as they develop plans to build these new capabilities. Five years ago, the main question was “How do I compare to my peers?” Today, the questions focus on comparisons to world-class companies and digital transformation leaders, and how to use that comparative data to design and set realistic, fact-based targets for new IT organizations.
ALM Intelligence: What will the CIO look like in five years?
Hackett: The CIO will focus less on back-office operations and look more like a technology product management executive—shifting from being a “below the line”/cost-driven executive to an “above the line”/revenue-driven one. CIOs will spend less time on the operations of transactional systems and more time with business executives and technology vendors constructing new digital-based products and services. The migration of applications and infrastructure to the cloud will help, taking away much of the associated day-to-day transactional activity. Indeed, the new CIO career path could include a product management stint in a software company. This shift away from the traditional transactional focus could also move the CIO out from under the CFO and into a more operational reporting line.