Digital Transformation Driving the Reinternalization of IT

CEOs are intent on bulking up their companies' internal IT capabilities to better compete in the digital economy.


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Gartner's latest CEO survey shows that top executives are still fixated on growth, but IT initiatives are factoring more heavily into how they run their businesses.

Fifty-eight percent of the 388 CEOs surveyed by the analyst firm said growth was their number one business priority, followed by technology. "IT-related priorities, cited by 31 percent of CEOs, have never been this high since the launch of the CEO survey," said Gartner vice president Mark Raskino in a statement.

With this intensifying focus on technology comes a profound shift in how businesses lay out their IT strategies.

"Almost twice as many CEOs are intent on building up in-house technology and digital capabilities as outsourcing it (57 percent vs. 29 percent)," Raskino continued. "We refer to this trend as the reinternalization of IT — the bringing of information technology capability back toward the core of the enterprise because of its renewed importance to competitive advantage. This is the building up of new-era technology skills and capabilities."

The findings reflect how digital transformation is reshaping the corporate world.

Forty-two percent of the chief executives polled by Gartner, most of them helming companies that earn at least $1 billion in annual revenue, said digital transformation had taken hold in their organizations. They described their businesses as "digital first" (20 percent) or "digital to the core" (22 percent).

Fifty-six percent of CEO said their digital improvement have already yielded increased profits. Nearly half (47 percent) are feeling some pressure to advance their digital business efforts by the board of directors.

Measuring the effects of those efforts remains elusive for many business leaders. Only a third of CEOs quantify their digital revenue. Nearly half of all CEOs lack a success metric for digital transformation, Gartner found.

There's no need to stay in the dark. For better clarity into how digital transformation is affecting their businesses – not to mention the bottom line -- Gartner suggests that CEOs enlist the expertise of their top technology executives.

"It is time for CEOs to scale up their digital business ambition and let CIOs help them set and track incisive success metrics and KPIs [key performance indicators] to better direct business transformation," Raskino said. "CIOs should also help them toward more abstract thinking about the nature of digital business change and how to lead it."

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.

Tags: IT management, digital transformation challenges

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