Digitization has transformed the business world. Digital tools are now ubiquitous in all aspects of commerce, from business processes to services and transactions, and one engine is driving the change: information technology.
Today's companies not only rely on information technology, they can't compete without it. IT is integrated into products, it pulls priceless information from customer data, and it is the force behind online shopping. As digital becomes even more prevalent, the demand for IT will continue to rise, which in turn will place a heavier burden on IT organizations. Driven by the further digitization of business and increasing market competition, IT is becoming even more indispensable.
What will IT 2020 look like? A new A.T. Kearney study reveals that over the next seven years, two-thirds of companies expect to invest more in IT in all areas along the value chain, but especially in sales and customer interactions. The moral of this story is that as IT gets a bigger slice of the corporate budget, expectations will rise, and even the smallest miscalculation about IT priorities will put the whole company at risk.
To cope with this pressure, top-notch IT organizations will focus more on business interactions—no easy task, given the shortage of business-savvy IT experts and the scarcity of other resources.
So tomorrow's IT challenges are basically a question of supply and demand. To meet these challenges, forward-thinking companies will capture long-term growth by striking a balance between the costs of IT and its value.
Let's look at IT's future from both a demand and a supply perspective.
Consider, for example, an international automaker that was feeling a revenue squeeze and wanted to mine untapped resources by tailoring interactions with potential customers. In particular, the firm wanted to capitalize on the waves of customer data coming from in-car information systems. IT was the obvious way for the business to reach its goals. An end-to-end social marketing suite was built to connect internal customer relationship management (CRM) data to external social network data so that sales and marketing can be tailored to the customer. This new marketing tool helps the automaker identify customer groups and then access them via ads on the most appropriate channels. The effects of the new IT approach are clear: more attention on the customer side and significantly higher response rates.
Such a scenario would work well for utilities, telecommunications firms, and financial institutions, where regulation and security are major IT areas.
We asked our study participants whether the CIO should be on the board of directors now that IT plays such a key corporate role. Nearly 45 percent said they expect to have a CIO as a board member by 2020 (see figure 2). But a seat at the table doesn't make sense unless IT plays a central role in the business model. According to our study, CIOs will more often (51 percent) be on the boards of telecommunication, media, and high-tech companies and financial institutions, where IT is a core business asset. In fact, Citigroup recently named former General Electric CIO Gary Reiner as an independent director and member of its board of directors. A smaller proportion of consumer and retail, process, and utility companies—where IT is mainly a support function—will have CIOs on their boards.
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