The rapid rise of cloud computing, data analytics, mobile and social media is leading to the digitization of the enterprise. Research firm Gartner has said that the rise of these trends is driving new business scenarios, inducing companies to digitize their revenue and services. This transformation will have its impact on the top decks of organizations, by creating the role of a chief digital officer (CDO).
Recent months have seen a spurt in demand for CDOs to oversee organizations' digital strategies. In Europe and the United States, search requests for the role have risen by almost a third. Gartner says that as many as 25 percent of all organizations will need a Chief Digital Officer on board by 2015.
People are using social networks, connecting to the Internet for shopping and a variety of other needs, and generating a torrent of data in the process. Their expectations have also changed. Cognizant of these trends, companies are striving to integrate the digital and physical elements to transform their business models and be future-ready, setting new directions for entire industries. They are using digital technologies to rejig operating models and reshape customer value propositions. This move from analog to a more collaborative digital model has made every budget in a corporation an IT budget.
Modern cars are excellent examples of how this trend is playing out. Carmakers now are focusing on packing cars with in-car entertainment systems, navigation gadgets and sensors. The car is becoming a platform for delivering value-added services to the consumer. It will help people connect to friends, and even make intelligent decisions to deliver a safe and comfortable driving experience, such as matching speed to road conditions, or finding out the next charging station. It is forcing carmakers to think more like consumer technology companies and incorporate digital technologies.
Companies require a CDO to drive this digital evolution and be responsible for business strategy. The CDO will be the executive who will spearhead operations in areas such as mobile applications, social media, and web-based information management and marketing. Essentially, s/he will need to possess not only digital acumen but also operating experience, management skills and a vision to drive the technological growth of a company.
"The chief digital officer will prove to be the most exciting strategic role in the decade ahead, and IT leaders have the opportunity to be the leaders who will define it," says David Willis, vice-president and analyst at Gartner.
So, is the CDO's role the same as that of a chief information officer (CIO) or a chief technology officer (CTO)? Not exactly. A CIO deals with enterprise systems while a CTO directs and manages the technological vision of a company. Unlike the two, the CDO is not confined to infrastructure and hardware; he would be required to drive innovation and people management for businesses.
If a company is segmented in terms of a back office, front office and head office, the CDO's role will fill the gap between the digital front office (customer experience) and digital head office (where strategic business decisions are made). However, it is possible for the CIO to become the CDO, though it largely depends on the CIO's capability and skills.