CIO as Strategic B2C Revenue Generator versus Cost Center
Can the CIO serve as a strategic B2C revenue generator for the organization? That’s a tall order. However the trajectory is turbo-charged by the relentless pace and cadence of the globally competitive Internet of Things business ecosystem.
For starters, there is greater recognition that the CIO sits at the intersection of IT/OT convergence. Then, the light bulb is beginning to go on, regarding the critical role of the CIO in creating line of business value regardless of whether the organization provides coffee or capital equipment.
Something new: The greatest strides in the role of CIO as B2C revenue generator are seen in consumer-oriented, B2C business models.
First, enlightened business-to-consumer (B2C) organizations, whether small to midsize businesses or larger organizations, are most directly connected to their customers’ collective voices and requirements. In addition, these B2C business models are tailor-made to embrace the power of big data and predictive analytics. The volume, velocity, variety and veracity of these data models allow the CIO to drive the organization beyond spreadsheet forecasting.
As more B2C organizations target to provide products and services that transition with client needs, big data generation and internal consumption, as well as predictive analytics utilization, focuses the enterprise proactively on value creation for customers. In continuously targeting “what’s next?” rather than reacting to “what just happened?”, B2C organizations are able to innovate. As a result, they provide better and better customer experiences, which factor not only into customer loyalty, but also customer retention.
The IDG 2017 State of the CIO survey showcases differences in perception of CIO as proactive B2C revenue generator versus overseer of an IT cost center.
The IDG Enterprise 2017 State of the CIO report surveyed 646 US-based CIOs and IT leaders. Among the industries represented are: government & non-profit (17%), manufacturing (15%), financial services (12%), high-tech (11%), retail, wholesale and distribution (9%), business services (9%) and healthcare (6%).
Insights emerging from this survey tell a story of something new as well as something old. Although the role of CIO is evolving, their potential for revenue generation still is being fully realized, let alone integrated throughout the enterprise.
The majority of respondents (41%) from line of business units (LOB) view CIOs as strategic advisors. Yet 22% of LOBs still are translating the implications of the CIO, and perceive the CIO as a business consultant. Consider that strategic advisors are continuously embedded in LOB value creation, while business consultants are used on an as-needed basis. Therefore, it is not surprising that only 27% of LOB view IT as actively (and I interpret as proactively) recommending tech solutions, compared to 64% of CIOs.
Something old: When the role of CIO evolves into B2C revenue generator, ambiguity is created between whether the CIO serves in a strategic or a functional capacity.
Regardless of how sophisticated the enterprise has become, a perceptual disconnect remains between how LOB perceives the role of digital enterprise CIO and the actual role in real-time. The answer to the question: “so just what do you do?” is not clearly understood across the enterprise.
For starters, LOB still view CIOs as functional rather than strategic. The CIO not only is an innovator but an implementer. Through the LOB lens, the CIO serves the LOB not only by researching various technology platforms and applications but also creating and managing projects to facilitate digital transformation. However, strategic CIOs (41%) view themselves more as visionary researchers suggesting high level opportunities resulting in from digital transformation. The “doing” is left to others.
Consequently, that LOB ambiguity may be a function of how well CIOs communicate “what they do” to LOB. When CIOs communicate more frequently with the Board, reported by 61% of B2C CIOs, they are more closely aligned with enterprise CEO mindset. As a result, they are asked to focus on global expansion, merger and acquisition, corporate revenue growth (36% compared to 23% of functional CIOs), product innovation (reported by 37% of strategic CIOs vs 18% of functional CIOs) and acquire and retain customers.
The role of transformational CIO impacts strategic B2C revenue generation.
Overall, the survey found that 78% of CIOs are more involved in strategic activities in retail/wholesale/distribution industries than those working in finance, government/non-profit and manufacturing. Not surprisingly, 76% of these strategic CIOs met frequently with customers, up from 62% in 2016. While this trend is not ideal, it does make sense for customer-facing businesses. If your organizational model is built serving customers, then it makes good sense for everyone in the organization to speak with them. After all, how B2C organizations leverage Voice of the Customer insights is key to competitive value creation, driving customer loyalty.
Consequently, the strategic B2C CIO directly experiences voice of the customer requirements. Subsequently, their perspective becomes more strategic (69%) due to customer interaction, versus 52% of respondents that seldom interface with customers. As a result, they connect the innovation dots between how well internal processes involved in IT and OT convergence result in developing new products that meet customer requirements.
Leading by example helps the CIO showcase their role as B2C revenue generator rather than functional order-taker and cost center director.
To drive digital transformation of the enterprise, CIOs from B2C giants like Sears Holdings, CUNA Mutual Groups and Trek created startup-like projects. As a result, they were able to showcase how IT can execute C-Suite strategy with LOB-specific innovation. These innovations provide business cases for how the role of strategic CIO evolves beyond focus on operational efficiency and security. Rather, these project outcomes demonstrate how the role of strategic CIO influences revenue generation by connecting all enterprise-level processes, not just isolated ones.
Consider how more and more enterprises accept that data-driven innovation is central to their growth, expansion and sustainability. Consequently the role of CIO evolves from that of order-taker and IT as a cost center to one of innovator catalyzing revenue generation. Regardless of the size of business, data consumption and utilization become the common denominator across the digital enterprise.
What role does your current CIO take at your business table? Isn’t it time to make their role more strategic and less functional?