How CIOs Avoid Extinction with AI, ML & New Governance for Digital Transformation -- Anything Else?

How CIOs Avoid Extinction with AI, ML & New Governance for Digital Transformation — Anything Else?

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The International Data Corporation (IDC) sees it this way: “CIOs must reinvent IT top to bottom, create new digital platforms with agile connectivity, and modernize legacy systems or risk professional extinction.” Provocative and accurate. Let's dig into IDC’s predictions. How many are obvious, solid, provocative, impossible or just more-of-the-same? One thing’s for sure: CIOs can never even mutter: “make CIOs great again!" Anything that even remotely smacks of the past is exactly the wrong survival strategy. CIOs can never again become just fixits. They’re now all about partnerships and profitable growth.

Here are the predictions and some reactions.

Prediction #1: “By 2021, driven by LOB needs, 70% of CIOs will deliver ‘agile connectivity’ via APIs and architectures that interconnect digital solutions from cloud vendors, system developers, start-ups, and others.”

Yes – especially if the vendors who control operational technology already have anything to say about it. Interconnection is profitable to vendors who will drive interconnection strategies and tactics toward digital solutions from cloud vendors, system developers, start-ups, among others.

Prediction #2: “Compelled to curtail IT spending, improve enterprise IT agility, and accelerate innovation, 70% of CIOs will aggressively apply data and AI to IT operations, tools, and processes by 2021.

Yes (again) – especially if the vendors who control operational technology already have anything to say about it. But remember that many digital transformation programs are very well-funded with new money – until they fail to deliver the outcomes in the transformation business plan. This is especially the case regarding innovation and the piloting/adoption of emerging technologies, like RPA, AI, ML, IOT, etc. As digital technology and business models and process converge, “technology budgets” will easily become fungible with operational and (especially) strategic budgets. The astute CIO will understand that calls to “curtail IT spending” can be reframed as calls to fund strategic initiatives.

Predictions #1 and #2 also speak directly to vendor relationship management and vendor leadership, begging the question: “who really runs ‘IT’”? Is it the CIOs or the vendors that make the trains run on time with their products, services and technologies they sell to corporate technology teams? Note also that the number of vendors that provide infrastructure services is shrinking, which means that “control” is consolidating. The vendors will bring AI, ML, APIs, connectivity, cloud and even microservice-based architecture to their clients who – if they want to compete – will adopt all of these technologies (and then some) as quickly as they can.

Prediction #3: “By 2022, 65% of enterprises will task CIOs to transform and modernize governance policies to seize the opportunities and confront new risks posed by AI, ML, and data privacy and ethics.”

Some CIOs will embrace new, distributed (with the lines of business) governance, and many will resist. Some CIOs will adopt AI, ML, data privacy and ethics, but many will not. “Risks” defined as loss of control will inevitably yield to risks defined as competitive threats: CIOs will get on board with the new technologies – and new, shared governance – or exit the stage. Data privacy and ethics are different matters. Companies who exploit customer data to feed their business models will be under increasing pressure to further monetize their customer data which will further compromise customer privacy. The ethics around all this are especially complicated and may yield to what some call “situational ethics.” I have no idea how this will play out over time. No one does. But challenges like the now-famous trolley problem will increase in number and complexity. Brace yourself for lots of confusion and ambiguity.

Prediction #4: “Through 2022, 75% of successful digital strategies will be built by a transformed IT organization, with modernized and rationalized infrastructure, applications, and data architectures.”

Lots of assumptions here about the pace of change and the probability of “modernized and rationalized infrastructure, applications, and data architectures.” The transformation of IT organizations is a slower process than many analysts, CEOs, COOs, CIOs and CTOs believe. Or, maybe they all believe it can happen quickly, with the right leadership, of course. The truth is that transformation is situational and contextual, as stochastic as it is linear. Plus, definitions of “modernized and rationalized infrastructure, applications, and data architectures” will change dramatically over time, even over short periods of time. Prediction #4 is just a prediction.

Prediction #5: “By 2020, 80% of IT executive leadership will be compensated based on business KPIs and metrics that measure IT's effectiveness in driving business performance and growth, not IT operational measures.”

Performance-based compensation? As the Wall Street Journal already and Korn/Ferry already reported, however, that: … 68 percent of these CIOs' compensation is at-risk, meaning it’s directly tied to their ability to achieve corporate and technology goals. With increasing demand for digital change coming from the CEO, simply having a vision is not enough: CIOs must achieve meaningful results – or miss out on financial reward.” This report was filed in 2017 and the referenced compensation structures were from 2015.

Prediction #6: “By 2020, 60% of CIOs will initiate a digital trust framework that goes beyond preventing cyberattacks and enables organizations to resiliently rebound from adverse situations, events, and effects.”

Many CIOs are confused and threatened – even intimidated – by the digital threats they face. The rise of Chief Information Security Officer (CISO) and Chief Security Officer (CSO) positions reflects this intimidation – and the political savvy to distribute responsibility across the Office of the CIO (or, more accurately, away from the Office of the CIO). Cybersecurity funding is available for business cases anchored in fear and political survival. But the total prevention of cyberattacks is a bridge way too far – and everyone knows it. The IDC prediction acknowledges this and focuses on resiliency from attacks. It’s a clever pivot from prevention to recovery – and it may work!

Prediction #7: “By 2022, 75% of CIOs who do not shift their organizations to empowered IT product teams to enable digital innovation, disruption, and scale will fail in their roles.”

Absolutely. This is both a governance and innovation issue. Failure in either is not an option.

Prediction #8: “Through 2022, the talent pool for emerging technologies will be inadequate to fill at least 30% of global demand and effective skills development and retention will become differentiating strategies.”

An excellent observation. The growing shortage of skills and competencies in the emerging technologies will reach critical proportions and will absolutely, positively impact a company’s ability to compete. The acquisition and retention of talent should be supplemented by a company’s deep commitment to growing new talent internally.

Prediction #9: “By 2021, 65% of CIOs will expand agile/DevOps practices into the wider business to achieve the velocity necessary for innovation, execution, and change.”

Again, vendors will drive much of this change. “Agile-for-all” will be a tougher sell, especially in decentralized or federated governance environment where the content and pace of transformation is largely controlled by the LOBs. But the goal is the right one. I’m not sure if CIOs should be the drivers of agile-for-all. CIOs should be evangelists not bricklayers.

Prediction #10: “By 2023, 70% of CIOs who cannot manage the IT governance, strategy, and operations divides between LOB-dominated edge computing, operational technology, and IT will fail professionally.”

CIOs that fail will of course be fired (or asked to resign with a public "thank you"). But let’s remember that the skills and competencies necessary to manage and share transformation are different than they were when governance was centralized. This change will challenge many tenured CIOs. It may be that new CIOs, or new Digital technology Officers (DTOs), seize the baton. It may be easier for new CIOs/CDOs to “manage the IT governance, strategy, and operations divides between LOB-dominated edge computing, operational technology, and IT” than CIOs who have been at the helm for years.

Change is inevitable and is driven by opportunities for cost savings and increased profits through innovation. It’s also driven by crises. Many of the above predictions are solid, if not dependent upon a series of other events and conditions that are themselves unpredictable. As the importance of digital technology increases in every industry, CIOs will be expected to deliver operational and strategic solutions with powerful ROIs. But as the IDC predictions suggest, major changes must occur for CIOs to be successful in their new, expanded roles, which they will be expected to share across the enterprise.

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