Digital initiatives may only be helping companies stay in the game, rather than giving a lift to their competitiveness. But this has been a problem that has been persisting for years. Where’s the next great frontier for information technology, and how can IT step up its game?
The ubiquity and widespread availability of technology is a double-edged sword: it makes it easier for enterprises to step up their digital games, and at the same time, it becomes more of a “utility” that everyone simply is expected to have. Nicholas Carr, in his work from a couple of decades back, “Does IT Matter,” cautioned about this phenomenon, stating that the affordability and availability of technology to all has leveled the playing field, and therefore no one gains any competitive advantage. By analogy, no company gains market share as a result of having an exceptionally well-wired electrical system. For most businesses, Carr wrote, “it has been a source more of frustration and disappointment than of glory.”
When Carr wrote this in 2003, he was talking about the commoditization of hardware, operating systems, networks, and storage. Today, we could be talking about digital technologies. CIOs understand this paradox all too clearly: in a recent survey from Adobe, only 25% of CIOs feel their work in security, cloud or modernization of platforms is differentiated from competitors.
The question becomes: how can IT and digital technologies be employed in ways that deliver competitive advantage, that help enterprises rise above the rest with unique and potential disruptive approaches? What is the role IT needs to play?
Tellingly, only 15% of CIOs in the Adobe survey give their organizations top marks for having advanced digital maturity. More telling is that when it comes to IT priorities, the challenge is dealing with the elephant in the room — and that is security. It’s not a competitive differentiator by any means, yet, without it, a business could collapse. CIOs in the Adobe survey put security on the top of their priority lists, well above business-building initiatives — 82% of respondents cited their top priority is security, ahead of movement to the cloud (68%) and modernization of platforms (66%), which arguably, could also be classified as commodity activities.
The initiatives that could help deliver competitive advantage, improving customer experience and employing analytics, come it fourth and fifth place at 65% and 61%. People and talent management, another cornerstone of competitive advantage, also weighs in at 61%. Notably, only one in 10 CIOs see their primary tasks centered around customer experience, as it tends to be an area relegated to chief marketing and operating officers. A majority of CIOs, 55%, see AI as paving the way to improving customer experiences and boosting the intelligence of their enterprises, but only about 20% have started in incorporate AI into their work.
The continuing firefighting in which CIOs and their organizations are engaged — security, keeping systems updated and upgraded, and so forth — are helping maintain status quo, but there’s a certain “It” factor that still needs to come onto the scene. That “It” includes all-caps IT, of course, but requires an openness in culture that encourages experimentation and ongoing, constant innovation.
Digital and analytical technologies, while not necessarily game-changers in themselves, can pave the way, as they allow for inexpensive, ongoing constant innovation with little risk or cost. Stefan Thomke, professor at Harvard Business School, explores this emerging capability in his upcoming book, Experimentation Works: The Surprising Power of Business Experiments. This is a way CIOs and IT departments can contribute in significant ways to their organizations’ competitiveness. The large Web companies — Google, Amazon, Apple, and so forth — apply experiments on a constant basis, testing and measuring everything from website messaging to product tweaks. “Breakthroughs in business performance aren’t always the result one or a few big changes,” Thomke writes. “They can also come from the continuous flow of many smaller successful changes that can accumulate quickly and can operate on customers over a long period of time.”
What if AI-based methods “could analyze your data — customer support information, market research and so on — and generate thousands of evidence-based hypotheses?” Thomke goes on to ask. “Now imagine these algorithms could also design, run and analyze experiments with no management involvement at all. Large-scale experimentation programs using a closed-loop system could also run in the background and make recommendations for action when you come to work in the morning. And you have a high degree of confidence that are your actions will produce results because they were scientifically tested for cause and effect.”
This is the next great frontier for IT to make a difference, and push competitiveness. Successful, forward-looking enterprises run on data as it enables innovation and new levels of management thinking. Importantly, it doesn’t push human decision-makers aside — it empowers them, Thomke believes. “Intuition, customer insights, and qualitative research are valuable sources for new hypotheses, which may or may not be refuted – but hypotheses can be improved through rigorous testing. The empirical evidence shows that even experts are poor at predicting customer behavior; in fact, they get it wrong most of the time. Wouldn’t it be preferable to know what does and does not work early and focus resources on the most promising ideas?”