Only 6% of the top 1,500 global companies have CDOs

Chief digital officers are in scarce supply at large global companies, says consultant PwC. But it doesn’t matter, as the role is largely transitional in nature and the CIO continues to rule IT.

Despite some reports that chief digital officers would replace CIOs as innovators of corporate products, only 6 percent, or 86, of 1,500 largest global companies have installed a CDO, according to recent PwC research. While 31 of those CDOs were hired last year, suggesting that more companies are assigning importance to the notion of a dedicated digital leader figure, the CDO role will ultimately fade as companies complete their digital transformations, PwC reports.

PwC CTO Chris Curran says it’s irrelevant who leads the digital transformation as long as the companies complete the necessary work, which can include anything from delivering online services and mobile applications to consumers, to analyzing data generated from those services, to empowering internal workforces with emerging technologies.

"People get all bent of shape whether the CIOs own this [digital] stuff or not," Curran tells CIO.com. "There is a lot of work, particularly in consumer-facing businesses, and I don't have any problem splitting the load."

Chris Curran, CTO of PwC.

Chris Curran, CTO of PwC.

Some CEOs choose CDOs over CIOs to lead digital transformations

CDOs emerged as CEOs came to view their CIOs as primarily managers of back-office technology unlikely to fuel digital innovation. Pundits and researchers continue to fuel the CDO frenzy. IDC says that 60 percent of CIOs in global organizations will be supplanted by the CDO for the delivery of IT-enabled products and digital services by 2020. Forrester meanwhile tells companies not to hire a CDO, as it will create clashes between the CIO and CMO.

Yet some CEOs continue to contemplate hiring CDOs to lead digital transitions, which PwC says will require as much as 50 percent of capital spending over the next five years. Curran says that one business-to-business client is looking for a CDO after concluding that his CIO is unlikely to "push the envelope." The CEO wants someone who can think about reinventing user experiences, and seek out emerging technologies from universities and startups. When a CEO seeks a CDO, what they're really trying to do is jumpstart innovation and offer a fresh perspective to avoid losing market share, according to Curran.

"You need to either mix things up with a new leader to accelerate the transformation, or you need to be real aggressive in terms of getting everybody on the same page," Curran says. "The CDO model is a way to catalyst change and get the organization fired up."

Some CIOs – especially those who have already imitated their own digital strategy -- find that logic offensive and view the emergence of the CDO as an affront to their capabilities.

Those falling in to that category might agree with the perspective of SAIC CIO Bob Fecteau, who wrote in this recent blog post: "Appointment of people into positions like Chief Digital Officers (CDO), Chief Knowledge Officers (CKO) or other Chief Officers to support desired business needs are indicators that the CIO is not fully empowered, trusted, valued or cannot deliver the full breadth of support needed or is not the right person for the job. Efforts to separate job responsibilities of the CIO like these serve to dilute the authority, the budget and the scope of the CIO’s responsibility."

Fecteau further recommended that CEOs empower CIOs with the right authority, access and support for them to be effective. Let the CIO hire a digital director if necessary. It's incumbent on the CIO to demonstrate leadership and management skills that drives value for their companies/CEO. But don't hire a CDO to taunt him or her, Fecteau says.

The bull case for the CIO-CDO pairing

The relationship doesn’t have to end in a C-suite death match, however. Some CIOs-CDOs are comfortably sharing the responsibilities, providing a two-headed attack to the challenge of using business technology to spur growth.

Witness McGraw-Hill Education CIO Angelo DeGenaro and CDO Stephen Laster, who form a one-two punch for a company with a lean IT staff.

Laster's team builds teaching and learning software, using a DevOps process of continuous deployment and integration. DeGenaro provides the infrastructure, operational uptime and security to support the digital products. "[DeGenaro] keeps our customers happy and whole, freeing my team up to understand deeply how teaching and learning happens with technology and create software products that fulfill those needs," Laster says.

DeGenaro, meanwhile, says it's crucial that he and Laster present a unified front and cultivate a high level of respect between the teams. "There may be some points of disagreement, but it's always handled professionally and egos never come into play here."

McGraw-Hill's CIO-CDO dynamic is likely the envy of other organizations where a CDO is introduced. Curran says he has seen the alternative scenario, in which some clients' CDOs have come into organizations like tornados, adopting cloud software with reckless abandon before they realized that they don't have a single view of their customer, social, supply chain, and operational data. Then they had to grudgingly turn to the CIO to integrate and normalize the data before they could analyze the data.

CEOs need to avoid such nightmare scenarios by fostering collaboration from the start. Enterprises must come to an explicit agreement around who is in charge and unify the strategy, IT, analytics and marketing departments. "Someone has got to be on point to own the single view of the investments, the strategies, the third-party relationships," Curran says. Failure to do so will lead to distraction, disruption, organizational chaos and, ultimately, wasted spending on competing technologies.

Ultimately, Curran suspects the CDO role will slowly fade, much like ecommerce vice presidents were pulled out as standalone positions before being rolled back into IT 15 to 20 years ago, as it dawned on CEOs that ecommerce was simply a new sales channel. "We'll get more CDOs over the next couple of years and then it will start tapering off once the early adopters figure it out," he says.

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