Eighty-nine per cent of board directors say that digital business is now embedded in all business growth strategies, according to a new survey from Gartner. However, just 35% of board directors report that they have achieved or are on track to achieving digital transformation goals.
“Boards of directors (BoDs) have reached a point where digital business strategy and overall business strategy are one and the same,” said Jorge Lopez, Distinguished VP Analyst at Gartner. “While CIOs have made significant progress leveraging technology for operational excellence, this is not enough to realise the strategic business benefits that BoDs are looking for from digital investments.
“As businesses increasingly operate in a world of constant disruption, the most future-savvy boards are considering how upheavals and risks can serve as a source of opportunity. CEOs and CIOs will need to adopt this mindset as technology plays an ever-expanding role in driving business success.”
The 2023 Gartner Board of Directors Survey was conducted via an online survey from June through July 2022 among 281 respondents in North America, Latin America, Europe and Asia/Pacific, who are in a board of director role or a member of the corporate board of directors.
CEOs Seen as Responsible for Driving Digital Business
BoDs cited CEOs as the primary leader responsible for driving digital business initiatives within the organisation, selected by 28% of survey respondents. This is ahead of the CTO and CIO, cited as the primary digital leader by 19% and 14% of board directors, respectively.
“Historically, boards have looked to IT to lead digital business,” said Partha Iyengar, Distinguished VP Analyst at Gartner. “Yet given the macro and strategic benefits boards are now expecting from digital business, they now rightly expect to hold the CEO directly accountable for its success, similar to the accountability that CEOs have for enterprise revenue or growth.”
Boards Look to ‘Breakthrough’ Technologies for Innovation
Boards are looking to invest in ‘breakthrough’ technologies that will drive digital business and business success. Forty per cent of board directors consider artificial intelligence (AI) and machine learning (ML) technologies to be imperative to digital business success in their organisation, the most-cited response.
Board directors cited software enhancement as their second-highest priority among breakthrough technologies, selected as an area for investment by 30% of respondents.
“Boards are seeking to modernize and enhance bedrock such as enterprise resource planning and customer relationship management tools,” said Lopez. “In practice they are often complex and rigid, when enterprises need agility and change.”
Board Directors Increase Risk Appetites
Risk-taking is a key component of digital acceleration. The survey found that 64% of board directors are planning to increase their risk appetite through 2024, climbing seven percentage points from the previous year’s survey findings.
“Boards recognise that decision making in a turbulent business environment requires a higher level of risk,” said Lopez. “This risk-taking ability is critical to competing at the speed of innovation.”
Many BoDs are also expanding their vision for digital business success to focus on a ‘digital economic architecture,’ with 71% of board directors reporting that they are pursuing or plan to pursue such an economic structure this year. A digital economic architecture is the approach that non-digital organisations can use to achieve similar economic benefits – including growth, profitability, market cap and brand value – as digital giants have achieved via their ‘born digital’ business models.
“The evolution from the traditional focus on quarterly returns to a longer-term focus requires a significant change in mindset,” added Iyengar. “Boards must recognise and leverage new sources of production and value, which requires a greater ability to accept, and even embrace, risk.”