Why the CIO and CPO Must Collaborate to Optimize Digital Transformation

Cloud & Services CxO Governance Home IT Contract Management

by | March 1, 2018

Digital transformation is a top priority across organizations of varying sizes and industries as they strive to remain competitive in a market that values speed to market and accessibility of information. As a result, leadership is now – more than ever – looking to the CIO to build a team to effectively usher in digitalization. However, this is easier said than done.

Considerations Before Starting Down the Proverbial Digital Transformation Path

Each step of digitalization, especially at large organizations, must be approached with a strategy in mind and careful planning. Organizations that rush into this transition, lacking a whole-company approach and a set of established processes to guide leadership, business units, and the organization in its entirety, will likely not realize the full technical and business benefits of the cloud — the benefits will be fragmented at best, in many cases cloud utilization is not optimized and cloud spend will be out of control

Before beginning this process, the necessary teams must understand the current technology landscape within the organization, and work together to establish a realistic strategy, roadmap and budget for each line of business. Additionally, they must ensure the existing software estate (be it on-premises or the cloud) is fully optimized in terms of use and spend. This is especially important for organizations seeking to move workloads into the cloud – a simple “lift and shift” of resources will not provide the best utilization of cloud and costs are more than expected.

Many organizations are adopting a cloud first approach for the scalability and agility offered, with studies showing 80 percent of all IT budgets will be committed to cloud solutions in the next year. Moreover, because cloud solutions are so accessible and easy to deploy due to the lack of owned infrastructure required, individual business units are purchasing cloud instances without going through the necessary procurement channels, ultimately leading to over spend. Estimations show that 30-45 percent of cloud spend is wasted. Cloud spend management is one of the biggest challenges organizations face on the road to digitalization.

In addition to spend, organizations must be cognizant of which workloads they choose to move to the cloud, verses which workloads should remain on-premises. As organizations consider cloud adoption as a phase of digital transformation, they must ensure the transition maintains effective use, regular maintenance, and meets budgetary requirements.

The Role of the CIO

The CIO is the main point of contact to which the C-suite and business units are increasingly relying on to oversee these decisions, embracing digitalization in an effective, efficient way while avoiding the common pitfalls of overspend and virtual sprawl.

As a result, the job of the CIO is changing to meet these needs, moving away from the day-to-day of enterprise technology to play a more strategic, transformative role within the organization, guiding innovation across lines of business. According to the 2017 State of the CIO report, those in the role are increasingly tasked with aligning IT initiatives with business goals and cultivating partnerships between business and IT.

The CIO must wear many hats, between having an understanding of the IT needs of the entire organization, establishing and maintaining a budget, all the while embracing new innovations. Core functions of the CIO in digital transformation are:

– Knowing the individual needs and strategies of each business unit
– Having an understanding of the organization’s long-term business and technology goals
– Leveraging this information to decide which applications / workloads should be prioritized to move to the cloud

However, effective digital transformation will require more than just the attention of the CIO and IT. Such a vast initiative will need to bring together many roles to maximize the return on investment the organization expects from the cloud, as well as on-premises. Among the most necessary team members the CIO will need to enlist in this effort is the Chief Procurement Officer (CPO).

The Role of the CPO

The CPO will play a major role in assisting the CIO to bring new capabilities to the organization, while remaining within budget, and avoiding the overspend that can be so common with cloud transformations. This role in digitalization is attested to by the 75 percent of CPOs that believe procurement’s role in delivering digital strategy will increase in the future, recorded by Deloitte’s Global Chief Procurement Officer Survey.

The CPO is tasked with the effective procurement of software, and its management throughout the entire software lifecycle. This gives the procurement team the visibility into software entitlements, inventory, and consumption necessary to plan for and execute digital transformation.

The CPO will demonstrate value before the transition by assessing the current software landscape and ensuring there is money in the budget for the innovations being proposed. As new technology is adopted, the CPO will provide valuable input on how to approach digital transformation to make sure software and cloud procurement is effective taking into account the licensing options both on-premises versus the cloud and evaluating license mobility.  With this level of insight, the CPO can prescribe recommended options across the company so every organization realizes the business benefits of managing cloud spend and drive higher cloud utilization.

Finally, using analytics, the CPO can then build out procurement strategies for the digital organization, monitor contracts, and ensure the software and cloud budget is maintained moving forward.

Working Together: The CIO & CPO

When combined, these individual skillsets make the ideal digital transformation partnership. While the CIO can set the broader objectives for where the organization needs to go, as well as the day-to-day needs of various business units, the CPO can assess these needs alongside current on-premises software portfolios.

With the company’s ultimate goals in mind, the CPO makes sure there is room within the budget, and that workloads that the CIO determines should be moved to the cloud are moved effectively to avoid overspend and maximize use.


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