CXO of the Future Banner
Viewpoint / CXO of the Future

Driving Innovation with Shadow IT: How Tech Leadership Roles Have Changed

Digitization and digital transformation are core topics every organization needs to think about, with profound implications for the role of the CIO and other technology leaders. IT is no longer just about keeping back office systems up and running; managed correctly, IT can provide a strategic competitive advantage to the business. At the same time, IT leaders are exercising less control over how technology is used within the enterprise than ever before. How can they strike a balance between these two things?

For our latest CIO Insight Call we were joined by three experienced IT executives from Switzerland, India, and China: Patrick Naef, Managing Director at executive search firm Boyden and Former CIO Emirates Group; Neetan Chopra, Former Group CTO at Dubai Holding; and Gerd Niehage, Head of IT Region Asia/Pacific (Regional CIO) at ZF Group, a global auto parts supplier. What ensued was a lively and provocative discussion with our panel of technology leaders on the current and future role of CIOs.

Key Takeaways

  • Shadow IT is where innovation is born
  • Digital competence is how companies will differentiate
  • Corporate hierarchies are being replaced by employee networks
  • CIOs must enable the entire organization to become digital savants

Here are four important insights that will have an enormous impact on how CIOs and other technology leaders help to drive business success.

Shadow IT needs to be embraced, encouraged, and enabled.

From the earliest days of personal computing, technology adoption has been a bottom-up process. Employees brought their own solutions into the business and demonstrated their value; IT departments were then created to manage those solutions. But in their drive to standardize processes and create efficiencies, too many technology leaders saw it as part of their mandate to snuff out shadow IT.

This approach has been disastrous for many companies. Since the year 2000, more than half the companies that made up the Fortune 500 were acquired, went bankrupt, or simply ceased to exist. The reason? The Blackberries and Nokias of the world didn’t leverage their internal technology processes as a competitive advantage.

Smart business leaders no longer seek approval before using technology to solve real-world problems in real time. Agility and innovation demand rapid implementation and frequent experimentation. Shadow IT projects are typically more nimble, leaner, and cheaper than anything the CIO’s office can set up.

But while business leaders are great at quickly setting up pup tents, they’re usually not so good at creating multi-story buildings. As shadow IT proves its value and begins to scale, it ultimately needs to be guided and governed by the office of the CIO. This enabling role is what technology leaders must adopt moving forward.

Digital is at the core of every business, and it’s how companies will differentiate their products.

In the past, CIOs would look after the back-office processes that enabled the company to function, while others in the organization developed the products that generated revenue. Now these two functions are converging, as software-defined products impact nearly every industry.

Take travel, for one example. People no longer choose airlines based on which one has the best record for on-time arrivals. They base it on what the entire experience is like – from picking flights and buying tickets to how seamlessly the onboard entertainment system connects with your personal devices. Increasingly that experience is digital, enabled by back-office processes.

When Tesla began shipping to consumers, they realized they needed to develop a system that allowed each vehicle to stay connected to the back-end production system. So today, a new Tesla model can be a software upgrade you download to your car – even down to details such as how high the chassis rides relative to the wheels. Process IT and production IT are no longer separate.

Networks of people will replace corporate hierarchies for driving innovation.

Hierarchical organizations aren’t going away. IT staff will continue to report to the CIO, and the CIO will continue to report to the CFO or CEO. But passing information up and down the corporate pyramid is far too slow for companies that are hungry to innovate.

Decision making about what technologies to implement or solutions to pursue will increasingly be made by cross-functional teams within the organization. The reason is simple: When decisions are being made by networks of people, the ideas they generate are more innovative, and they happen more quickly. A network of smart people working together is always better than one smart person working alone.

Accepting this new paradigm may require some level of humility. CIOs and other technology leaders will need to accept that they don’t know more about technology than everyone else. Who owns a new idea must take a back seat to business results.

Every business leader is now a digital leader; every technology leader must help drive the business.

Over the last few years we’ve seen an explosion of new C-suite roles dealing with technology — Chief Digital Officer, Chief Software Officer, Chief IoT officer, and so on. At this rate, large organizations could end up with hundreds of chiefs with overlapping responsibilities. Ultimately, these roles will need to converge back into the CIO’s office. That’s where digital transformation needs to happen. Technology leaders must measure their success not by the size of their budget or the number of FTEs they oversee, but by the positive impact they can make on the business.

At the same time, however, digital expertise will become more widely distributed. Just as every executive has had to learn the basics of HR and accounting to manage personnel and budgets, they will also need to master the fundamentals of technology. The CIO role then morphs into more of an enabler, someone who helps coach business leaders on how to take charge over technology and become more digitally savvy.

You May Also Enjoy