C-Suite Transformation Challenges

Part
01
of two
Part
01

Fortune 500 C-Suite Challenges

Challenges faced by CIO/CTOs of Fortune 500 companies are cyber attacks and security breaches, new data privacy regulations, and app explosion. Challenges for CEOs are digital disruptors, underinvestment, and lack of specialized workers to handle new technologies.

Challenges faced by Fortune 500 CIO/CTO/CEOs today

CIO/CTO DIGITAL TRANSFORMATION CHALLENGES

1) Cyber Attacks, Security and Accessibility

  • According to Ray McKenzie from Red Beach Advisers, strategic protection of PII and data are the biggest challenges for CTOs and IT leaders.
  • As cyber attacks are beginning to become more and more sophisticated, increase security to prevent and avoid data vulnerability are becoming big challenges which IT departments are currently facing.
  • As an example, Equifax had its largest breach of data in 2017, and more than 143 million consumers were affected by it.

2) Changes in Data Privacy Regulations

  • The European Union Global Data Privacy Regulation started its effect on May 25th, 2018, which brought many changes in the data privacy regulations sector.
  • Even if a company is not located in the EU, once it does business in that area, it is expected to comply. Companies that do not adhere to the data regulation policy pay millions of dollars in fines.
  • What changes: as examples, cookies, and individual IP are now considered personal protected information and it means increasing the level of security in cookies and individual IP.

3) App and Vendor Explosion

  • The market for apps and software has grown by 3233% in the last seven years.
  • Netskope noted that an average company has in media about 800 cloud apps.
  • It brings real problems to the IT department’s protocols and business’ security because the number of threats also grows, becoming almost unmanageable.

CEO DIGITAL TRANSFORMATION CHALLENGES

1) Digital Disruptors

  • About 40% of Fortune 500 companies will probably perish because of digital disruption, according to 2/3 of executives interviewed by Forbes in 2018.
  • The always changing scenario of technology brings constant innovation in things like internet of Things, artificial intelligence, among others.
  • IT departments must help CEOs to increase their attention on "new or upcoming businesses that could cause their business to fall under attack."
  • According to a chief executive's article, being able to deal with digital disruptors has become a key determinant of success for these CEOs as leaders.
  • As an example of a successful strategy, the Coldwell Banker CEO, Charlie Young, was the first national real estate company CEO that put its listings on the internet.
  • Barbara Humpton, CEO of Siemens USA, is transitioning the company to a new era of distributed energy, and for this, she's using digital technologies as "big data for preventive maintenance, and blockchain."

2) Underinvestment and Underprioritizing:

  • Even if 75% of companies say they own a digital strategy, only 16% of these believe they own the tools to implement it.
  • A truly shocking statistic: among the companies that were in the Fortune 1000 ten years ago, 70% have already disappeared from the scene because they were unable to adapt to technology changes.
  • Some companies understood they had to invest in digital transformation to remain competitive, and in 2019, companies in the US will invest a total of $13.6 million in the area.
  • Ragu Gurumurthy also added that digital transformation requires more than investing in tech, but also reimagining entire business processes.

3) Lack of Skills/Training

  • It's hard for companies to find qualified people to handle new technologies such as cybersecurity, data science, machine learning, and artificial intelligence.
  • The cybersecurity talent gap is already an industry crisis.
  • By 2021, there will be around 3.5 million unfilled positions in the industry.
  • A way out: CEO's must partner with universities and other science/tech institutes to fill these skills gaps.
  • A way out 2: women make only 14% of the technology market in the US, so CEOs must encourage women applicants by creating specific training programs that focus on filling the job gaps.


Part
02
of two
Part
02

Fortune 500 C-Suite Barriers

Some of the barriers faced by Fortune 500 C-suite executives in implementing digital transformation include leadership and employees, skills and capabilities, inevitability, and silos.

Leadership and Employees

  • The C-suite as a whole may be a barrier to digital transformation. Likewise, employees may impede digital transformation both purposefully and accidentally.
  • C-suite executives need to understand how and why digital transformation must be undertaken.
  • Executives can impede digital transformation if they misunderstand what is required for it.
  • Digital transformation requires a lot of hardware and software purchases as well as retraining.
  • Workers need an incentive to change. Workers must adopt the right mindset to accept the digital transformation.
  • Employees who do not accept or learn how to use new technologies will impede digital transformation. For Fortune 500 C-suite executives who support digital transformation, employees can be a huge hurdle.

Skills and Capabilities

  • The Fortune 500 business at hand must be skilled in order to properly adopt digital transformation.
  • Employees, as well as C-suite executives, must-have "digital literacy". In other words, they must be able to adapt to new technologies quickly and learn how to use new tools.
  • Required skills are constantly changing for a digitally transformed business. Fortune 500 executives must future proof their organization, a huge and expensive barrier.
  • A World Economic Forum report noted that about 1/3 of skill sets that will be essential in the future workplace are actually entirely new skills.
  • John Allert of McLaren notes that simply spending money is not the answer. Fortune 500 businesses are expected to overhaul their entire business culture.

Inevitability

  • The fact that digital transformation is inevitable adds another barrier for Fortune 500 executives. The inevitability means that Fortune 500 executives must work towards retooling entire sections of businesses as well as keep up with competitors.
  • The amount of new technologies to implement and master is vast. Internet of Things (IoT), artificial intelligence (AI), machine learning (ML), data science, cloud computing, Software as a Service (SaaS) and others are some of the many innovations that must be properly implemented.
  • C-suite executives face a major barrier in implementing a digital transformation framework that adequately and quickly catches a Fortune 500 company up to the latest innovations. Retooling a Fortune 500 company is more difficult than an agile startup.
  • C-suite executives and the workers implementing digital transformation must decide on the type of technologies that must be used. For example, a company may not need blockchain or may need to develop custom ML and AI solutions beyond just learning the tech.
  • Even if the inevitability of digital transformation is understood by C-suite executives, investors must still be convinced to fund the massive undertaking.

Silos

  • Fortune 500 companies and other smaller businesses end up with 'silos'. Fortune 500 companies may be divided into verticals where different sections of the business operate autonomously rather than work with the rest of the company.
  • Silos are antithetical to digital transformation because information and systems must be shared throughout the different silos in order to operate well. For example, ML would require data from throughout the business rather than from one silo only.
  • Silos reduce digital security. Digital transformation would require more security and eventually fewer silos.
  • Silos are often resistant to digital transformation because they wish to do things their own way rather than accept innovations.
  • Digital transformation relies on "cross-functional teams" that work on problems together with new tech tools.
Sources
Sources

From Part 02
Quotes
  • "What’s needed is a digital transformation platform that connects intelligence, data, and devices, enabling them to increase engagement with partners and develop applications that foster innovation."
Quotes
  • ""We don't really talk about digital transformation, we do it," said John Allert, CMO at Formula 1 company McLaren, speaking at the launch of the Dell research late last year. "We talk about agility and we talk about security and we talk about outcomes. If you are focused on digital transformation as a noun rather than as a verb you are missing the point completely.""
Quotes
  • "Digital transformation is not a matter of if, it is clear that it has become essential. A 2017 Harvard Business Review article points out: “Since 2000, 52 percent of companies in the Fortune 500 have either gone bankrupt, been acquired, or ceased to exist as a result of digital disruption.” [i] It further points to research that estimates that three-quarters of 2017’s S&P 500 will fall off that list within a decade."