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A high-tech paradox for CIOs as expectations mount
Is technology the key to success? Business executives certainly seem to think so. In our latest PwC Pulse Survey, 59% of executives say they’re investing in new technologies such as cloud or artificial intelligence (AI) over the next 12 to 18 months, and 46% say they’re putting money into generative AI (GenAI) specifically.
CIOs say the same: 60% are investing in new tech, and 58% are investing in GenAI. But for all its promise to drive transformation, technology isn’t exactly delivering — yet. Eighty-two percent of CIOs say achieving value from adopting new technologies is a challenge to transforming.
While advances like GenAI offer incredible transformation potential, CIOs understand that taking full advantage means adapting the strategic operating model at the enterprise level. That means addressing issues such as talent and skills shortages as well as change management. Despite the significant effort required, CIOs remain optimistic that they will be successful in their critical role as technology stewards. And they have a good idea of where to start.
A serious focus on a strong data foundation
47%
of CIOs are prioritizing the transformation of their data platforms to drive business growth
More than ever, data is the lifeblood of the business world. As organizations redouble efforts to reinvent their business models, CIOs clearly view data as the most essential piece of the puzzle — and they recognize that little progress can be made without a strong, modern data platform upon which to build. Nearly half of them (47%) stress that data transformation is their main focus area, outpacing various front-office categories, including customer relationship management, marketing and customer support systems. While important, back-office systems such as enterprise resource planning and finance don’t appear to be as central to driving new products, services and revenue.
A strong, cloud-based data platform isn’t just a requirement for managing a modern customer relationship management or finance function. Having your data house in order is essential to leveraging emerging technologies such as GenAI or even robotic process automation. Beyond using data and technology to drive productivity and reduce costs — often to reinvest in growth initiatives — tech leaders are looking to discover patterns that humans may not uncover on their own. This might include unearthing insights that help drive new business strategies, revenue sources and product enhancements. But first, the underlying data should be rock solid.
For CIOs focused on data modernization, it’s about much more than the technology they implement. Foundational issues around governance, privacy and cybersecurity are critical to bridge organizational silos and give the business an enterprise-wide view of data.
What you can do
- Eliminate data silos while modernizing, standardizing and consolidating data systems — before addressing functional needs.
- Prioritize data-driven initiatives that have a measurable impact on the customer, as those initiatives have a greater potential business impact.
- Think beyond individual use cases as you begin exploring GenAI. Focus on repeatable patterns so you can quickly scale across your organization through an AI factory.
Get more on this topic
- Executives are increasingly optimistic about the business environment and their companies’ ability to mitigate risk. Find out more.
- What are the top strategic priorities for sector executives?
- What else is important to CIOs right now?
CIOs see the hard work in transformation
79%
of CIOs cite challenges to successfully delivering on business model transformation
With technology playing such a pivotal role in reinvention efforts, CIOs are in the hot seat. Most acknowledge that there’s a wide range of obstacles delivering on business model transformation. (An optimistic and possibly overconfident 21% of tech leaders say they see no issues in delivering on their part of business model initiatives.)
What’s topping the list of challenges? Again, it’s data, with 32% of CIOs citing it as a top-3 challenge. Tied for the top at 32% is the state of current systems and processes. This includes integrating new technologies with legacy tech and the associated technical debt they may be carrying.
This wide range of concerns with no overwhelming consensus as to which is the most pressing shows that large-scale strategic change is complex. In some cases, the initial vision for a new business model may have been incomplete or the full tech requirements needed to drive the new business model weren’t clear. This underscores the need for CIOs to work closely with their peers and other stakeholders before the implementation begins.
What you can do
Concentrate on the fundamentals. Make sure your cloud foundations and engineering capabilities are up for the task of supporting new operating models that can adapt quickly to deliver new digital products and services.
Proactively team with your peers, including risk and finance executives, to assess and mitigate business, program, technology, security and control risks from the start. This can help your organization more fully realize the value of tech-driven transformation.
CIO confidence to deliver value is lacking
Only 48%
of CIOs say they’re completely prepared as tech leaders to support business model reinvention efforts
The vast majority of executives (88%) tell us that achieving measurable value from their tech adoption is a challenge to transformation. Less than half (48%) of technology executives say they’re completely prepared as tech leaders to support new business models. In addition, only 60% say their broader IT function is completely prepared. On the other hand, virtually none profess to being completely unprepared, either personally, as an IT function or as a company.
That leaves a broad middle ground of CIOs who may lack clarity on what exactly is expected and what their role is. This may indicate that CIOs are largely prepared to begin a project but are unsure whether they can successfully complete it.
The struggle to capture value from tech investments isn’t new. And, with the complexity and cost of tech transformations continuing to grow, showing tangible results is becoming more difficult. For CIOs, one potential path is to be in sync with the rest of the C-suite and the board. While this isn’t always possible, CIOs have an opportunity to better connect with the board to share insights. For example, only 40% of board members cite a lack of consumer trust in new tech-enabled products and services as a moderate or serious risk (compared to 61% of CIOs and 49% of executives overall). Other significant disconnects center around employee fears of new technology, company culture and planning cycle time horizons.
What you can do
Consider whether your company’s tech systems and processes are prepared, not just to adopt a new business model, but to acquire one.
Think beyond the tech. Prioritize change management and help people adapt to new ways of working to get the most out of new systems and processes.
Engage regularly with the board to keep them abreast of tech initiatives and transformation progress.
About the survey
Our latest PwC Pulse Survey, fielded August 1 to August 8, 2023, surveyed 609 executives and board members from Fortune 1000 and private companies about the current business environment, the risks executives are facing and their company’s strategic plans and priorities. Of the respondent pool, 92 were CIOs, CTOs and technology leaders.
Focused on reinvention
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