Managing Total Digitization Single digital executive or digital islands? It's time to choose an approach that fits your corporate strategy, BY PETER WEILL AND STEPHANIE L

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Managing Total Digitization Single digital executive or digital islands? It's time to choose an approach that fits your corporate strategy, BY PETER WEILL AND STEPHANIE L. WOERNER r 22 ^ oday's ClOs need to figure out how to value and avoid the overhead that results from coordinat1 handle the total digitization of their entering the stacks. Here the enterprise is committed to local prises. We are already seeing companies in innovation, typically organized by products or standalone which digitization spending is over 25 perbusinesses. Capabilities are often duplicated, and accountcent ofthe operating budget, and we expect ability for profit and loss is held locally. that this will hecome common. At the MIT Center for InforOur survey found that 21 percent of the enterprises mation Systems Research, we have done 10 studied had adopted convergence as case studies and a survey to understand their primary approach, while 53 percent A key role of best practices. focused on coordination and 26 percent had So far, the landscape of enterprise digiseparate stacks. the CIO is to tization is diverse in both management Which approach or approaches should talk with other processes and spending. In a survey of your enterprise take? And who should C-level execs over 2,012 CIOs, we found that only 39 make the decision? That depends on and help the percent of enterprise-wide investment in your enterprise's strategic drivers. Conenterprise digitization shows up in the IT budget. vergence is for reducing cost, reducing The remaining expenditures are spread pick one or risk and achieving synergies. Coordinathroughout the enterprise—often creating tion is the right choice for achieving a few more of these six or seven islands of digitization. Typical enterprise-wide goals such as improving approaches. islands include production and operations, customer experience or asset utilization. engineering, R&D labs, knowledge work, The approach of having separate digital digital products, and customer interaction, including social innovation stacks is right for enterprises that believe local media, mobility and websites. autonomy boosts innovation and customer responsiveness. We've found that enterprises are often using one or A natural inclination is to use different approaches for more of three approaches to managing total digitization: different islands of digitization. Many companies adopt Convergence: This approach brings all digitization this approach successfully, but a word of caution: The more investments together under a single executive. It usually complex your approach to managing total digitization, the requires new organizational structures to create efficienmore mechanisms you will need, and the more difficult it cies and synergies and to increase reuse. Enterprises using will be to explain and implement. this approach tend to consolidate the key assets of people, A key role ofthe CIO is to have conversations with other data, infrastructure, skills and management processes. members of the senior executive team and help the enterCoordination: This approach doesn't change orgaprise pick one or more of these approaches. Once a strategy nizational structure, but instead adds mechanisms to is chosen, the IT unit can implement it, reusing lessons increase coordination ofthe big digital investments made learned from dealing with IT silos. by engineering, operations, product owners and other Whichever approach you take, we believe that managenterprise groups. Leaving the organization structure as is ing total digitization is one ofthe biggest opportunities and reduces disruption, while coordination mechanisms (such challenges facing the CIO and the IT unit today. as committees) help units work together and facilitate the delivery of enterprise goals. Peter Weill is chairman and senior research scientist at the MiT Separate stacks: This approach leaves each of the Center for Information Systems Research, where Stephanie L separate stacks (or digital islands) alone to maximize local Woerner is a research scientist. 1 JUNE 1.2014 ! www.cio.com Copyright of CIO is the property of CXO Media Inc. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use.