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Cloud 2022 DIGITAL IQ United, not divided

How CIOs and business leaders can raise their Digital IQ and reap the payoff

Transformation. Innovation. Modernization. 

Whatever you call it, digital technology like cloud, artificial intelligence and analytics — along with new ways of working — are the engine for enterprise change. And as the pace has intensified, two things have become clear: Every C-suite executive has an ownership stake and it’s harder than ever to reap the payoff.

With digital now a shared responsibility among chief information officers (CIOs), chief technology officers (CTOs), chief data officers (CDOs) and their peers in finance, operations and other functions and business lines, things aren’t always straightforward. What’s the right approach to maximizing value and realizing the outcomes you’re after? As a tech leader, when do you charge ahead and when do you build consensus?

To understand how companies are faring in the new reality, we look to our latest Digital IQ Survey, which for more than a decade has examined the strategies, attitudes and relationships of business and technology leaders. In the second quarter of 2021, we surveyed more than 1,250 global executives and found that CIOs and their business partners don’t always see eye to eye. But at the companies where they are in sync — what we refer to as Digital IQ leaders — there’s a greater payoff.

No surprise, here: digital transformation has ramped up…
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...but executives aren’t always on the same page

Business and IT executives often prioritize different things. This disconnect can make it challenging to realize value. A disjointed strategy can put leaders at cross-purposes, effectively keeping the business stuck in place. When asked about desired outcomes from digital investments over the last 12 months, both IT and business leaders say they have been focused on survival and efficiency. But beyond that, business leaders are looking to change their core business model while tech leaders prioritize modernization.

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Better together: Two digital goals IT and business agree on

We identified a small group of IT executives (representing about one-fifth of all tech execs in our survey) who see eye to eye with their business peers. Dominating their digital agenda — both today and two years from now — is modernizing the brand or pursuing initiatives that increase speed and efficiency.

Bar chart showing two digital goals IT and business agrees on
Digital IQ leader
All others
To do what we have always done, just faster and more efficiently
%
%
To modernize our brand with new capabilities
%
%
Source: PwC Digital IQ Survey. Q: Which of the following best describes your organization’s primary aspiration for digital outcomes? Bases: 46; 1250

Moves that positioned Digital IQ leaders to thrive

These leaders didn’t let the events of 2020 derail transformation. Instead, they pushed forward and, at times, with an increasing velocity. That has meant technology is more important than ever, as a foundational catalyst in mobilizing that change and transformation.

Bar chart showing moves that positioned Digital IQ Leaders to thrive
Digital IQ leaders
Other executives
Expanded training on remote working and collaboration tools, new processes, or other COVID‑related factors
%
%
Aligned digital investments to organization’s purpose
%
%
Standardized operations across functions for the last year
%
%
Hired and upskilled employees around new technologies
%
%
Source: PwC Digital IQ Survey. Q: Which of the following changes did you make over the last 12 months? Bases: 46; 1250

Cloud computing and automation help employees work in new ways

Digital IQ leaders were also more likely to invest in cloud technologies, including enterprise applications, infrastructure and development platforms. They also invested significantly in process automation, putting tools in the hands of employees in order to accomplish tasks faster, leaving more time to dedicate to value-driven and insights-based work.

Bar chart showing investments in cloud computing and automation tech to help employees work in new ways
Digital IQ leaders
Other executives
Cloud investments
%
%
Adopt new technologies for internal use
%
%
Back-office processes
%
%
Front-office processes
%
%
Source: PwC Digital IQ Survey. Q: Has your organization changed the following to support digital transformation investments and efforts? Bases: 46, 1,250

The performance payoff

By aligning strategy and technology, Digital IQ leaders saw financial performance improve during the earliest days of the 2020 health crisis. They were also more likely than others to say their company’s use of digital technologies, processes and behaviors has transformed their workforce’s ability and provided opportunity to innovate over the past two years.

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Business payoffs from digital investments  

The ROI doesn’t stop there. Digital IQ leaders are also more likely to realize key business outcomes they’re after, compared with others.

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3 ways to become a digital leader

Here’s how tech and business leaders can align on strategy choices and value:

 

1. Develop the value story

Align on the promise of cloud with your business stakeholders reflective of the industry you’re in and where you are on your journey.This requires making specific choices about how cloud will help differentiate the business — what digital and technology capabilities you’ll develop, the customer problems you will solve and the role your company plays in the industry or other ecosystems. Make it a priority to revisit this promise as your organization evolves and progresses through your cloud transformation.

2. Embrace new mental models

Applying digital and cloud to existing processes and structures will yield only limited gains. It requires a fundamental shift in both how your organization works and how quickly it can deliver new products, services and experiences. Executives should commit to rethinking how work is done. An unconventional approach also applies to talent. Be open to exploring novel ways to upskill, acquire and incentivize cloud talent. Understand that value realization takes time and it requires competency upskilling on both the business and technology side.

3. Team strategically

Technology leaders should proactively engage their peers, especially CFOs, operations, risk and tax leaders. Initiate dialogue with security and risk leaders at the earliest stages so that security, compliance and governance are embedded into the fabric of your cloud transformation, enhancing trust with your customers. While collaborating with tax and finance peers around using R&D tax credits to offset the cost of innovation funding can make a significant difference in ROI.

About the survey

We surveyed 1,250 senior executives across Canada, Mexico and the United States in a wide range of industry sectors. Respondent companies represent a range of sizes, from less than $250 million in revenue to over $50 billion. The survey was fielded by Oxford Economics in April 2021.

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Jenny Koehler

Partner, US Cloud & Digital Leader, PwC US

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