Fit Enterprises Will Win When Business Conditions Turn

Fit Enterprises Will Win When Business Conditions Turn
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The march to digitalization is so commonplace today that 40% of global CIOs have reached scale for their digital endeavors, more than doubling the proportion of enterprises from 2018, according to Gartner’s annual global survey of CIOs. The next challenge CIOs face in the coming two to three years is looming disruptions, such as an economic recession or data breach, which will force them to take action if they wish to emerge stronger on the other side of a turn.

In the past four years, 90% of enterprises have experienced a turn that upset normal operations, such as severe operating cost pressures, political upheavals, leadership turnover, adverse regulatory interventions and so on. Only a quarter of enterprises are fit enough to come out ahead of the turn, according to Gartner. As such, the survey showed that the CIO role will remain critical in leading their enterprises through crises and transformations.

The survey separated CIO respondents’ enterprises into two groups, “fit“ and “fragile,“ depending on how they fared in their last turns. Fit enterprises emerged from their turns stronger in capabilities such as funding business initiatives and attracting the right talent, while fragile enterprises emerged less capable in these areas. Fit enterprises, on average, also increased their revenue by 5% per annum over the past three years, faster than the 3.5% per annum revenue increase for their fragile peers.

Fit leaders actively search for emerging trends or situations that require a change, and then leverage the IT organization as an instrument to navigate that change accordingly. Enterprises that want to become fit should focus on aligning, anticipating and adapting to dynamic business scenarios. Nearly half of fit survey respondents rated their leaders as very effective on “accurately communicating business needs to IT,“ compared with only 30% of fragile survey respondents. Fit enterprises are also more likely to have disciplined IT investment, a clear vision, consistent overall strategy and a strong CIO/CEO relationship.

Fit leaders excel at making disciplined IT investment decisions, which is the third-biggest gap between fit and fragile survey respondents. Fit enterprises make trade-offs among competing priorities and spend more of their money on IT that makes a difference to business outcomes. By contrast, fragile enterprises devote their IT budget to increasing operational efficiency.

Fit enterprises that engage IT to gain competitive advantage have higher adoption rates of contemporary technologies, including cybersecurity capabilities, AI and robotic process automation (RPA). The same enterprises have CIOs who are dedicated to modernizing IT’s core and are shifting investments accordingly. Analytics, application modernization and various forms of cloud computing are among the areas where most CIOs are increasing their investments in 2020, according to Gartner.