CIOs Reveal Many Are Unprepared for Digitalization: the Third Era of Enterprise IT

Digitalization, the third era of enterprise IT, is beginning, but most CIOs do not feel prepared for this next era, according to a global survey of CIOs by Gartner, Inc.'s Executive Programs. The survey showed that many CIOs feel overwhelmed by the prospect of building digital leadership while renovating the core of IT infrastructure and capability for the digital future. The survey found that 51 percent of CIOs are concerned that the digital torrent is coming faster than they can cope and 42 percent don't feel that they have the talent needed to face this future. 

The worldwide survey was conducted in the fourth quarter of 2013 and included 2,339 CIOs, representing more than $300 billion in CIO IT budgets in 77 countries.

During the first era of enterprise IT, the focus was on how IT could help do new and seemingly magical things — automating operations to create massive improvements in speed and scale, and providing business leaders with management information they never had before. The last decade has represented the second era of enterprise IT, an era of industrialization of enterprise IT, making it more reliable, predictable, open and transparent. However, while this second era has been necessary and powerful, tight budgets and little appetite for risk left scant room for innovation. 

Entering the third era of enterprise IT technological and societal trends, such as the Nexus of Forces and the Internet of Things, are changing everything; not only improving what businesses do with technology to make themselves faster, cheaper and more scalable, but fundamentally changing businesses with information and technology, changing the basis of competition and in some cases, creating new industries. 

Most businesses have established IT leadership, strategy and governance but have a vacuum in digital leadership. To exploit new digital opportunities and ensure that the core of IT services is ready, there must be clear digital leadership, strategy and governance, and all business executives must become digitally savvy. Indeed, the 2014 CIO Survey shows that the CEO's digital savvy is one of the best indicators of IT and business performance. 

CIOs report that a quarter of IT spending will happen outside the IT budget in 2014 — and that is the spending they know about; the reality may be significantly higher. This is a direct result of the new digital opportunities that are more entwined with customer and colleague experiences, and that may, in some cases, reflect concerns that the IT organization is not fast enough or otherwise ready for more digital opportunities. 

"There is an inherent tension between doing IT right and doing IT fast, doing IT safely and doing IT innovatively, working the plan and adapting," said Mr. Waller. "The second era of enterprise IT has been all about planning IT right, doing IT right, being predictable and creating value while maximizing control and minimizing risk. However, to capture digital opportunities created by the third era, CIOs need to deal with speed, innovation and uncertainty. This requires bimodal capability — operating two modes of enterprise IT — conventional, or "safe and steady" IT, and a faster, more agile nonlinear mode." 

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