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Digital and IT are Not the Same

‘Digital’ has been one of the most popular technology industry buzzwords of the last few years. We increasingly talk about digital business, digital leadership, digital disruptions, digital divides, digital sales, digital marketing and customer service, digital product development, digital manufacturing, digital supply chain, digital finance and even digital HR. But what is Digital and what’s really new about it?

Digital and IT are Not the Same

The technology uses typically referred to as Digital tend to sit well outside the traditional scope of the CIO and Enterprise IT function.

Revealingly, CIOs and others in Enterprise IT often struggle the most with this question. They ask: “What’s the big deal? Surely Digital is just a new, more fashionable label for IT (Information Technology) which itself was just a more fashionable label for IS (Information Systems) and before that DP (Data Processing), and before that EDP (Electronic Data Processing)! So why all the fuss?”

Is Digital just a case of old wine in new bottles? We don’t think so. While linguistically, the differences between IT and Digital can seem semantic (after all, they both consist of hardware, software, networking and data), in the real world there is a crucial distinction:

‘Digital’ is mostly an adjective, but is increasingly also used as a noun. It includes much more than devices like PCs, smart phones, tablets and wearables. It encompasses residential systems such as smart TVs, thermostats and security systems, as well as the telematics, computing and intelligence built into wind turbines, jet engines, elevators, MRI scanners and, closer to home, the family car. Perhaps even more importantly, Digital spans all the apps, software and social media content that run on these devices and enable them to function in previously unimaginable ways. In short, Digital is the term we use to show how technology is becoming pervasive across society.

Information Technology, on the other hand, is a compound noun, primarily associated with clunky corporate PCs, fortress data centres and network firewall management, as well as internal email, ERP, CRM, financial consolidation and other business applications rooted in the past. Most Enterprise IT organizations and staff are not known for their digital marketing or embedded technology expertise, let alone re-inventing the customer experience or generating profitable new revenue streams. Increasingly, the term ‘IT’ can’t shake off its back office past, so maybe being called ‘the IT department’ is no longer such a good idea.

The CDO/CIO debate

This distinction between Digital and IT is at the heart of the whole debate regarding whether firms should have a Chief Digital Officer (CDO). As one of our CIO clients succinctly put it:

“My IT leadership team and I now have an outstanding reputation for globalization, rationalization and cost reduction. Services are efficient and effective. Costs are better than the industry benchmark. And by and large, projects deliver on their promises, on time, in full. For the most part, the business agrees. But here’s the crunch: while we are now known for efficiency and delivery, Enterprise IT is far from having a reputation for agility, business innovation or growth. Yet that is where all of today’s Digital action is. So … even in my case, I, as CIO, am not the obvious or even the leading candidate to drive our Group’s Digital agenda in the coming years.”

The differences between Digital and IT are a proxy for the ongoing uncertainty regarding who should lead the technology-enabled transformation of the firm

In this sense, the differences between Digital and IT are a proxy for the ongoing uncertainty regarding who should lead the technology-enabled transformation of the firm. As an adjective, Digital can attach itself to just about everything that the firm does. In contrast, a noun such as IT implies a particular place or thing, and thus a certain degree of isolation.

Our upcoming report Digital Leadership in the C-Suite (written by Richard) explores the digital leadership shortage faced by many firms, the potential need for a Chief Digital Officer, and the resulting challenges and opportunities for the CIO and Enterprise IT. The bottom line is that words matter, and the growing use of the term Digital marks a change in the industry zeitgeist that will be with us for the foreseeable future. Both traditional executives and traditional IT organizations face steep learning and behavioural curves. Businesses are going Digital, but they are not going IT.

COMMENTS

Bradley Coward 13.12PM 04 Jun 2015

Well said, but I'm afraid that the notion of simply creating another title such as the Chief Digital Officer has caused more confusion and debate amongst the C suites and relevant boards that I generally deal with. My opinion is that a new type of IT department is needed one that is as you say super agile, aggressively competitive and hugely revenue focused whilst being customer relevant. In my experience I've only seen one instance of a major bank group creating a totally separate digitally focused IT company external to it's traditional CIO's domain and this proved to be the "killer app" in the industry. In other words it's not just about a title but a whole culture change staffed by relevant digitally savvy business IT professionals who know how to deliver "stuff" in a customer pleasing way digitally.

David Moschella 14.10PM 04 Jun 2015

Couldn't agree more. The whole CDO debate is really a symptom of the challenge firms have in coming to grips with Digital. How much of the digital agenda goes through Enterprise IT and how much doesn't varies very widely by industry sector. It's an important are of our research.

Anselm Magel 15.01PM 11 Jun 2015

Gentlemen, haven't seen your presentation but here are some good reasons why Digital Transformation should be lead by a new leadership capacity (at least until the digital natives have taken over): The envisaged change is so fundamental and pervasive that it requires leaders with o-shaped skills. And the company-wide initiatives look quite different too. In Digital Transformation: 1. IT isn't the solution. It's the problem! 2. Context is worth 80 IQ Points. A dynamic digital strategy requires constant input from accelerated change of the business environment. 3. Efficiency gain > cost of coordination. Break-up of vertical integrated value chains expected! 4. Everything is affected, even market structures. It's Business Model Innovation not IT change!

Richard Bhanap 16.14PM 11 Jun 2015

@Anselm I think that there are some organisations and situations in which your prescription is spot on. At the same time, there are leadership teams out there who have proved remarkably successful in navigating quite fundamental business disruptions, not always technology-driven but typically requiring the adoption of new mental models of how to compete and win, without wholesale change in the top team. Either way, we’re absolutely with you on your final point – the way we express it in the report is that Digital Leadership and IT Leadership are NOT the same!

Pierre Bessemoulin 09.35AM 12 Jun 2015

I'm agreed with the fact that Business is going Digital but not IT, that's what we see on market from some top companies which succeed their Digital transformation. When the Digital transformation plan ended CDO disappeared because business lines mindset is digital. In this way there is a reverse point for IT. IT drawn near business, shifting during company Digital Transformation journey from a Cost center view to Profit center one. At this time business processes are mixed with IT, and the company is ready for Continuous Innovation Delivery Agile Hype Circle. To reach this target the best way is to integrate the Digital transformation Plan in the Strategic Plan with a strong CxO Sponsorship to provide trust and risk management to manage the needed company change management organizatoin.

Richard Bhanap 13.47PM 12 Jun 2015

Pierre - we too found that there is a very real question as to whether the CDO role is here to stay or whether it is a passing fad that will disappear in a few years' time. We veer towards the latter; in our view, almost every successful 21st-century executive will need to be digital-savvy regardless of which function they are most closely associated with. Abdicating digital to the CDO will soon be fastest route to executive obsolescence and accelerated retirement. In the meantime, however, having a C-level digital champion will be important to many firms' ability to formulate the right strategies, successfully drive the required transformations and increase Digital-IQ up, down and across the organisation.

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AUTHORS

David Moschella
Research Fellow
David Moschella, based in the United States, is a Research Fellow for Leading Edge Forum.  David's focus is on industry disruptions, machine intelligence and related business model strategies.  David was previously Global Research Director of the programme. David’s key areas of expertise include globalization, industry restructuring, disruptive technologies, and the co-evolution of business and IT.  He is the author of multiple research reports, including Disrupting the Professions through Machine Learning and Digital Trust, 2016 Study Tour Report: Applying Machine Intelligence, There is Now a Formula for Machine Intelligence Innovation,  Embracing 'the Matrix' and the Machine Intelligence Era and The Myths and Realities of Digital Disruption. An author and columnist, David’s second book, Customer-Driven IT, How Users Are Shaping Technology Industry Growth, was published in 2003 by Harvard Business School Press.  The book predicted the shift from a supplier-driven to today’s customer-led IT environment.  His 1997 book, Waves of Power, assessed global competition within the IT supplier community.  He has written some 200 columns for Computerworld, the IT Industry’s leading publication on Enterprise IT, and has presented at countless industry events all around the world. David previously spent 15 years with International Data Corporation, where he was IDC’s main spokesperson on global IT industry trends and was responsible for its worldwide technology, industry and market forecasts.    

CATEGORIES

21st Century
Adaptive Execution
Assets/Capabilities
Identity/Strategy
Proactive, Haptic Sensing
Reimagining the Portfolio
Value Centric Leadership

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