ORLANDO, Fla. -- Gartner Symposium 2018 has made clear that modern, successful companies are no longer dabbling in digital business models; they have moved on to scaling their digital businesses.
And as digital business maturity reaches a tipping point, CIOs must secure a foundation for the next stage of digital evolution: educating the board about these business model changes, according to Andy Rowsell-Jones, vice president and research director at Gartner's CIO and executive leadership research team.
A business model is defined as the way an enterprise creates, delivers and captures value, including what they do for their consumers and how they do it, Rowsell-Jones told the audience at the Gartner Symposium 2018 conference.
Forty-nine percent of CIOs reported undergoing a business model change, according to Gartner's 2019 CIO Agenda report that surveyed 3,102 CIOs worldwide. These business model changes are being driven by digital maturity and evolving consumer demands that make customer engagement vital, Rowsell-Jones said.
"We are now into sustaining innovation, but it is much more difficult, because it's [about] continuous release, continuous integration and continuous productization of the things that we do," he said.
That's the story CIOs should be telling their board of directors, he added: Explain digital transformation to them in a way they will find relevant enough to take action.
Measuring ROI on digital and focusing on cybersecurity
With businesses scaling digital to reduce service costs, it is important to measure ROI on digital initiatives. Rowsell-Jones noted that the CIO Agenda report found 89% of "top performers" -- businesses that have a mature digital business model -- measure this type of ROI.
These top performers have better consumer feedback and consumer engagement than everyone else, he said. The metrics or key performance indicators their organizations use to measure ROI on their digital investments include details like the number of consumers that use their apps and Net Promoter Score.
Andy Rowsell-Jonesvice president and research director, Gartner's CIO and executive leadership research team
"It is now digital at scale; you have to measure this stuff, because it's not a bunch of experiments anymore," he said. "Businesses must combine back-office and front-office capabilities to deliver a superior outcome."
Top-performing CIOs are also making cybersecurity a priority, he said. They focus on building security into product design, while improving awareness and recovery practices.
They also prioritize digital infrastructure and operations when determining cybersecurity processes, including product and service delivery, Rowsell-Jones added.
"A lot of the security ... is about behavior; it's not about technology," he said. "It's not about putting in fixes to stop the bad guys; it's about education and behavioral change."
Initiating this type of business model change also means CIOs must widen their typical product-centric approach, he said. They should make sure the introduction of technologies, ideas and tools is done in a sequenced way, he told the audience at Gartner Symposium 2018.
"It really means that it is a delivery mechanism that is very comfortable delivering version 1, 1.1, 1.2, 1.3 and 1.4," he said. "When you're making the transition from project to product, it's about investing in DevOps, investing in culture change; it's about attracting talent and building the tools ... it's about educating stakeholders."
CIOs are also changing their investment patterns, adopting digital technologies like AI, data analytics and cloud to change the services they offer their customers, he said.
There has been a 270% increase in AI adoption since 2015, the CIO Agenda report found, while CIOs are reducing investments in legacy technologies, like on-premises infrastructure.
"[It's about] rebalancing your technology portfolio toward digital transformation," he said. "This is a CIO's serenity prayer: Please give me the resources necessary to make the investments that I need to make. Please give me the courage and influence I need to make the cuts in existing technology that I need to make, and give me the wisdom to tell the difference."