Whats the Big Data

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By 2020, 80% of adults worldwide will have smartphones

Enterprise IT Economics in the Microprocessor Era, Wikibon 2014

IT Economics in the Cloud Era – Cloud Services Track Software Economics, Wikibon 2014

Wikibon:

Amazon has turned the data center into an API. This trend is having profound impacts on enterprise IT customers. In particular, the economics of infrastructure outsourcing (i.e. deployment, provisioning, management and orchestration), which formerly had negative economies of scale at volume, are beginning to track software marginal economics – i.e. incremental costs go to $0. To compete with these cost structures, IT organizations and competitive cloud vendors will have to either have massive scale or become highly vertically integrated… CIOs should plan to expend labor for managing IT infrastructure only in cases where it drives direct profit. Otherwise, technology organizations should focus resources on integration and adding differential value through analytics, new services and unlocking innovative digital business technology models.

Source: Both Buyers and Sellers Must Learn to Compete in the Amazon Economy

In a webinar last week, IDC discussed its CIO predictions for 2015 and beyond (Louis Columbus provides an excellent summary here). Of IDC’s 10 predictions, the one that intrigued me most, predicted that most of the audience, presumably CIOs and senior IT executives, will eventually relinquish their most interesting and important responsibilities to Chief Digital Officers (CDOs):

“By 2020, 60% of CIOs in global organizations will be supplanted by the Chief Digital Officer (CDO) for the delivery of IT-enabled products and digital services.”

In its presentation, IDC added that “some CIOS will find an opportunity to expand their role leveraging their experience in setting strategy, innovation, and relationships.” But why only 40% will be able to expand their role and the others “will be challenged to fill the growing gap for the CDO role”?

Chief Digital Officers (CDOs) are a new breed of senior executives and their ranks have doubled since 2013, Gartner recently estimated. With all the excitement about the promise of “digital” in general and “big data” in particular, there is an urgent need to harness and manage the multiple, sometime duplicate or even conflicting activities across the business. The Chief Digital Officer is expected to provide a unifying vision and develop a digital strategy, transforming existing processes and products and finding new digital-based profit and revenue opportunities.

In short, the Chief Digital Officer is in charge of digital governance.

Here we go again: The CIO is relegated to “keeping the trains running on time.” Shouldn’t CIOs take charge of digital governance? Why not entrust CIOs with finding new insights in the data or uncovering the new digital business opportunities? The answer seems to be that they are not considered to have the right experience and skills to lead the “digital transformation” of the business. As Dan Woods observed: “Most of the time CDOs are people who had marketing, PR, or communications backgrounds or other roles that were focused on the customer…. the CDO role, staffed by people who were technology outsiders, may become the most important… in defining the role of technology in many businesses. CIOs and CTOs who let this happen only have themselves to blame.”

Indeed, it all depends on what is expected of CIOs, but even more, on what CIOs themselves expect from their roles. Many of IDC’s other predictions illustrate why adding CDO-type responsibilities (or not relinquishing them) is so difficult in the current environment—there’s so much else to do.

Security is identified by IDC as the most important issue to consider, especially in the next 12 month: “By 2016, security will be a top 3 business priority for 70% of CEOs of global enterprises.” Note the “CEOs” in the prediction—as the IDC analysts noted, the Target security breach showed the potential personal consequences for CEOs and CIOs everywhere. “It’s not just high school kids anymore,” IDC noted, as nations, corporations, and organized crime “institutionalize cyber warfare.”

The same force that has given rise to the CDO—the digitization of all businesses and the increased use of information technology in all aspects of the business—is also responsible for the rise in importance of the CIO. As Garnter observed recently, based on its survey of 2,800 CIOs in 84 countries, 41% of CIOs are reporting to their CEO, a return to one of the highest levels ever.

As the IDC analysts said on the webinar, “the CIO is perfectly positioned to take a senior leadership role regarding security.” And possibly a few other new responsibilities, according to their predictions:

“By 2017, 80% of the CIO’s time will be focused on analytics, cybersecurity and creating new revenue streams through digital services.”

“By 2016, 80% of CIOs will deliver a new architectural framework that enables innovation and improved business decision-making.”

“By 2018, 30% of CIOs of global organizations will have rolled out a pan-enterprise data and analytics strategy.”

Looks like there are many new opportunities for CIOs “to take a leadership position.” Still, the IDC analysts said in response to a question that the majority of CIOs are “survivors,” adopting a wait and see attitude, waiting for the lines of business to introduce new technologies. This is in contrast to the “thrivers,” who make IT more strategic, are not afraid to experiment and fail, opt for the anti-fragile approach (see my take on the subject here) and go beyond their comfort zone.

The central IT organization and CIOs may become irrelevant in the digital economy. Or, CIOs could use this opportunity to demonstrate leadership that is based on deep experience with and understanding of what data, big or small, is all about—its management, its analysis, and its use in the service of innovation, the driving force of any enterprise.

[Originally published on Forbes.com]