New Zealand companies have a chance to better what firms around the globe are struggling with - promoting technology leaders like CIOs into strategic roles.

University of Auckland Adjunct Associate Professor Daniel Vidal says companies around the world risk becoming "digital casualties" if they do not employ their best IT brains - like chief information officers - at a strategic level, helping to shape their company's direction instead of just providing IT infrastructure and service.

The CIO should be seen as a designer or a strategiser, feeding technology into the overall strategy and creating "true business transformation", he says.

"Look how Domino's Pizza has woven digital through its business model, and Netflix and Spotify have transformed the model of how people engage with music, film and television. That's where CIOs can play a big role."


CIOs as strategic partners are particularly important for New Zealand because: "Real threats come from small businesses that can do the job differently - like Uber and Airbnb, which have disrupted the taxi and hotel industries respectively.

"New Zealand has a lot of small-to-medium enterprises which could do the same sort of thing but they are just not set up for it," says Vidal.

The need for New Zealand companies to integrate technology into business strategy is particularly acute as most not only operate without a technology strategy, they don't even have a viable business strategy.

"A significant amount of skills are needed to align technology to the business strategy and much of the SME sector doesn't even know how to formulate a general business strategy. SMEs often still use the business strategy template - mission, vision, strategy and action - rather than looking at how to create or shape the market."

New Zealand is not alone. Most organisations round the world, he says, follow traditional models where IT leaders execute a company's business strategy instead of helping to shape that strategy, using new technology.

Vidal, himself a former chief information officer, says the role of technology has dramatically changed in the last 30 years and needs to be reflected at executive level.
"When companies started to invest in technology, the largest investment was to increase efficiencies and enable business strategy. A lot of New Zealand companies still see this as the primary role of technology."

According to global management consulting firm McKinsey & Company's latest survey of business and IT executives Why CIOs should be business-strategy partners: "Many companies are focused on developing a digital strategy when they should instead focus on integrating digital into all aspects of the business, from channels and processes and data to the operating model, incentives and culture."

According to McKinsey & Company, when CIOs have a seat at the strategy table they have a better understanding of their organisation's technology needs and are more effective at driving partnerships and shared accountability with the business side.

However few of the executives they interviewed said information technology leaders were closely involved in helping shape the strategic agenda, and confidence in IT's ability to support growth and other business goals was waning.

Vidal also says many CIOs will need new skills to be effective at a strategic level, pointing to Deloitte's 2015 Global CIO Survey: Creating Legacy, which stated only nine per cent of CIOs globally say they have all the skills they need to succeed.

That should worry business leaders because, according to the PWC 2015 Global Digital IQ Study, digital IQ leaders were twice as likely to achieve rapid revenue and profit growth as IT "laggards".

Businesses need to look at new revenue models and change how products and services are priced, for instance changing from purchase to subscription models.

Vidal advises big companies to create alliances and partnerships with new companies that can provide "disruptive technologies and market-making businesses".

Daniel Vidal is an Adjunct Associate Professor with the University of Auckland Graduate School of Management and teaches on The Strategic CIO Programme.