In the digital age, strong technological leadership is increasingly closely correlated with the growth of corporate revenues. Technology strategy, and the ability of technology leaders to deliver it, is the key to business success, not only in managing the performance and cost-efficiency of enterprise technology, but in creating the architecture and agility for new business models, taking advantage of emerging opportunities, and reaching out to customers in innovative ways.
The overall technological architecture of a company is increasingly delivered as a platform that enables digital transformation across the enterprise. This includes the implementation of new software and digitization processes, the creation of analytical and machine learning capabilities, integration with customers and third parties, and the delivery of tools and connectivity that allow employees to work. productively from everywhere.
This article is written by Insights, the custom content arm of MIT Technology Review. It was not produced by the editors.
Coronavirus and the digital imperative
The ability of a company to compete in the digital age (or not) has been highlighted by the coronavirus pandemic. Companies that have been slow to digitize customer channels, supply chains, and ways of working employees have struggled to adapt and have been left struggling to upgrade their infrastructure. The most advanced companies in technology have been able to adapt much faster.
Retail provides a clear example. While global retail sales contracted 5.6% this year, E-commerce will grow 16.5%, to $ 3.9 trillion by 2020, accounting for 16% (up from 13% last year) of global sales. Retailers with more robust digital channels are better placed to maintain growth.
In many ways, the pandemic has sharpened minds around the need for transformation and has allowed companies to develop and distribute systems at a rate that would never happen in normal times. Without business trips and other distractions, management teams have been able to keep an eye on new initiatives. McKinsey he interviewed an executive at a large bank who said they have finally launched a new customer relationship management program that there had been no time to do before. Necessity, so the saying goes, is the mother of invention.
Technology is a CEO priority
While CTOs are at the forefront of executing digital transformation, strategy and roadmap are being formed at the board level, to guide the company through the changing market and regulatory forces. The key to this is unlocking a more agile business model, one of the main drivers for this year’s rapid shift towards the cloud.
In the past, cloud computing was considered as tactical strategy of cost reduction. But its most important advantages are in the ability of companies to increase revenues, through faster product development, process innovation, and more dynamic relationships with customers. Cloud allows companies to identify more customers and increase sales conversion, while at the same time improving customer experiences with higher degrees of service and customization.
Cloud technology also creates more agile operating environments for businesses, translating decisions into real-time technology action, and as a “sandbox” environment for collaboration, both internally and externally, with an ecosystem of participants. The cloud also facilitates faster approaches to software development such as “DevOps” practices, which technology leaders are increasingly using to manage teams in rapid production cycles.
A recent MIT Technology Review survey found that 61% of the 300 business leaders surveyed said they had increased their investment in cloud technologies as a direct result of the pandemic. Innovation priorities, they said, will focus primarily on finding new partnerships and collaborations, and adopting AI and automation technologies.
“Cloud-based infrastructure is a digital business platform of choice,” said Jeff Zhang, president of Alibaba Cloud Intelligence at the last Apsara Conference, the annual flagship technology event by Alibaba. “CTOs that exploit cloud capabilities will continue to be a pivotal business leader, leading the transformation of business into parts of the organization that will benefit from digitalization — or rather, even more digitization.” Zhang added.
An example of cloud-enabled rapid digitization is the partnership between world automaker Ford and Alibaba Cloud, which led to the development of Ford Mall, an online customer channel that has been built in less than six months and allowed Ford to share information, improve interaction, and increase revenue. Ford Mall has become a vital channel to reach customers in what can traditionally be considered a more “physical” business. However, surveys show that 92% of car buyers do their research online and spend up to 60% of their overall time shopping on the Internet.
CTO as next CEO?
Helping the company navigate through covid-19 will no doubt continue to elevate the strategic importance of CTOs in their organizations. In fact, there are a growing number of examples of CTOs who are going to become CEOs. Many of them are in technology companies, such as the current heads of US and UK telecom carriers Verizon and BT Openreach, but there are also examples from organization which would traditionally not be considered “technology companies,” including GE Transportation, the UK’s National Health Service, and Indonesia’s Garuda airline.
This trend highlights the extent to which these organizations put technology at the heart of their strategy for future business growth and shows how much the world has changed since technology leaders referred to CFOs, since the his department represented an operating cost.
CTOs are also increasingly seeing the role of CEO as a natural progression. A CTO survey by consulting company HR Korn Ferry found that 51% would like it going to become CEO– but only 12% would like it to be their next immediate move. With more than two-thirds saying leading a company through a transformation had been their most important career opportunity, for many CTOs, post-pandemic recovery is likely to be a career-defining period. Success will be based on the speed with which they can drive the agility of the business and enable revenue growth.