By Dieter Halfar, Partner, Elixirr
While more advanced technology was once the exclusive domain of IT experts, the emergence of cloud platforms, SaaS solutions and tools such as ChatGPT have made technology more accessible across business departments.
The democratisation of technology has meant that in-depth technical knowledge has become less of a requirement for implementing these new platforms, and individual departments have greater direct access to vendors. However, despite this democratisation, business transformation and innovation has been stalled by the limitations of adopting technology in isolation. In fact, 71% of decision-makers believe their company has not yet delivered on the promise of digital transformation.
These shortcomings have fundamentally changed the role of the Chief Technology Officer (CTO), as well as the structure of the wider IT department. The democratisation of technology has meant that IT leaders are no longer required to act as centralised hubs for technology.
Moreover, this reorganisation of traditional IT structures presents an opportunity for CTOs to show their value in driving innovation forward. To enact more meaningful change, a three-pronged approach is required from CTOs.
Mindset shifts drive success
The breakdown of centralised systems is causing IT leaders to face an identity crisis. While CTOs remain the technical experts within an organisation, they are no longer required to manage a company’s complete IT real estate, overseeing the hardware, software, networks and data management.
CTOs and IT leaders must reinvent themselves into a more advisory role to remain relevant and business critical. However, to do so successfully, CTOs must adopt an open innovation mindset to recognise the demand for external innovation to bring about internal change. Embracing this mindset will enable them to build successful vendor relationships so they can manage the needs of start-ups looking to deploy their technology quickly in tandem with often slow-moving corporations.
This mindset shift will ultimately see CTOs evolve into Ecosystem Managers as they move away from making small day-to-day changes which can be passed onto department leads. Instead, they can begin to lead on driving sustainable change and growth internally by influencing innovation, building strategies and managing vendor relationships.
We’re currently seeing this across the banking sector. Changing consumer habits are creating a proliferation of payment rails, and as interchange fees – which were previously a significant revenue stream for banks – plummet, traditional business models are under attack. For banks to overcome this new challenge, we are seeing Ecosystem Managers play a fundamental role in responding and catering to changing consumer demands as they embrace and partner with external technology disruptors to modernise and keep pace.
The three-pronged approach to change
Adopting the role of Ecosystem Manager is crucial for CTOs in becoming technological advisors. As consumer habits change and new verticals emerge that require new technologies, as has been seen in banking, businesses are now investing more in tech. However, having the latest software, cloud platform or AI tool doesn’t automatically equal success.
- Invest
CTOs must be responsible for guiding this investment to seek out new revenue models. Throwing money at a problem won’t necessarily yield results and eking out small wins won’t deliver sufficient digital transformation. Currently, many IT leaders are only thinking short-term and are bringing in technology retrospectively to plaster over the cracks of existing problems.
It’s crucial that IT leaders become more ambitious. CTOs must look forward and begin to advise businesses to put money, time and effort towards investing in both organisational capability and innovative technology that will solve future business challenges.
- Evaluate
Knowing where to invest goes hand in hand with evaluating what yields real shareholder value. Larger corporations often lack the innovation to sell a forward-looking suite of tools as they’re too focussed on the here and now. CTOs therefore have the opportunity to become more ambitious and wider in their technological outlook to create fast moving, meaningful change internally. Buying into and driving this emerging tech ecosystem will be crucial for the most successful reinventions.
IT leaders need to get comfortable with the idea of looking externally to be better positioned to integrate more targeted innovation. This requires looking beyond legacy solutions, which typically take months and years to implement, towards smaller and more agile technology companies and start-ups. Nimble, third-party vendors, especially start-ups, are usually eager to deploy their technology quickly to showcase their product, which results in fast implementation and changes to the business almost immediately. Speed is important as it allows CTOs to evaluate the value and impact of new tech in helping the business towards its goals. It allows them the opportunity to pivot if needed to ensure the company stays on its course towards digital transformation.
- Incubate
CTOs need to incubate ideas from across the business. The accessibility of technology has blurred the lines between the IT department and other business functions as digital transformation initiatives span multiple teams.
For a successful digital transformation, CTOs need to drive buy-in on a company-wide approach rather than different departments experimenting with technology in silos. CTOs can have a more prominent role in advising the larger business strategy only if they understand the needs and challenges of other departments. This can be achieved through collaboration, coming together with the C-suite to define opportunities, map objectives and agree on an organisation-wide execution plan.
Collaboration, both internal and external through third party vendors, enables CTOs to develop tailored solutions that enhance efficiency and competitiveness across the business. Through interacting with different departments and external leaders, CTOs are able to lead on more targeted innovation as they become more informed and aware of industry trends and emerging technologies which can bring innovative solutions to market faster.
As technology continues to evolve, the role of the CTO will remain dynamic, reflecting an ever-changing technological landscape which adapts to evolving consumer demands. This shift in responsibilities for IT leaders opens up the door to new opportunities including becoming a key strategic advisor to a business. In this new role, CTOs will drive meaningful change internally, unlocking the innovation an organisation needs to succeed in its digital transformation.
