Forrester - The Chief Digital Officer- Fad or Future-

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Forrester Research, Inc., 60 Acorn Park Drive, Cambridge, MA 02140 USA Tel: +1 617.613.6000 | Fax: +1 617.613.5000 | www.forrester.com The Chief Digital Officer: Fad Or Future? by Nigel Fenwick and Martin Gill, October 31, 2013 For: CMOs KEY TAKEAWAYS Functional Silos Will Impede Digital Transformation Traditional organizational boundaries slow the pace at which organizations can embrace digital transformation. Even within digital teams, conflicting targets and accountabilities between interactive marketing and eBusiness functions hinder a firm’s ability to deliver next-generation, digitally enhanced customer experiences. Every Organization Needs A Digital Champion -- Just Not Necessarily A CDO As business becomes fundamentally digital, some organizations will need a chief digital officer (CDO) to act as a catalyst. Others will simply need an existing digitally savvy senior executive to coordinate digital resources across the company. Digital Transformation Is The Responsibility Of The Entire Executive Team Adding a CDO is not a silver bullet -- CEOs need to be prepared for wholesale organizational disruption in every executive area. is is not something that the CMO or a new CDO can do alone. e entire C-suite must master digital skills in order to compete in the new reality.

Transcript of Forrester - The Chief Digital Officer- Fad or Future-

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Forrester Research, Inc., 60 Acorn Park Drive, Cambridge, MA 02140 USA

Tel: +1 617.613.6000 | Fax: +1 617.613.5000 | www.forrester.com

The Chief Digital Officer: Fad Or Future?by Nigel Fenwick and Martin Gill, October 31, 2013

For: CMOs

KEY TAKEAWAYS

Functional Silos Will Impede Digital TransformationTraditional organizational boundaries slow the pace at which organizations can embrace digital transformation. Even within digital teams, conflicting targets and accountabilities between interactive marketing and eBusiness functions hinder a firm’s ability to deliver next-generation, digitally enhanced customer experiences.

Every Organization Needs A Digital Champion -- Just Not Necessarily A CDOAs business becomes fundamentally digital, some organizations will need a chief digital officer (CDO) to act as a catalyst. Others will simply need an existing digitally savvy senior executive to coordinate digital resources across the company.

Digital Transformation Is The Responsibility Of The Entire Executive TeamAdding a CDO is not a silver bullet -- CEOs need to be prepared for wholesale organizational disruption in every executive area. This is not something that the CMO or a new CDO can do alone. The entire C-suite must master digital skills in order to compete in the new reality.

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© 2013, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. To purchase reprints of this document, please email [email protected]. For additional information, go to www.forrester.com.

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WHY READ THIS REPORT

In the age of the customer, the importance of supporting customer touchpoints has shifted to the center of strategic planning. Firms that are winning the customer experience race are aiming to provide their customers with consistent, personalized, and contextually relevant interactions across all touchpoints. These firms create digitally enhanced, data-driven customer experiences that unlock new sources of customer value. And because successfully leveraging digital technology requires deep understanding of the nuances of digital marketing, eCommerce, customer experience design, and technology, traditional organization structures inside and outside of marketing are ill-equipped to optimize the business to take full advantage of digital transformation. As a result, CEOs, CMOs, and CIOs must decide who among them will lead their organization on the path to digital success, or if a dedicated role is required. Should it be the chief marketing officer, the chief information officer, the chief customer officer, or perhaps a new chief digital officer? For CMOs, the answer to this question will have a material impact on their role in coming years.

Table Of Contents

Digital Opportunities Abound, But Few Firms Are Ready

Digital Business Requires Real Transformation

Who Should Lead Digital Transformation?

WHAT IT MEANS

The CDO Role Is A Transitory Step In The Digital Business Journey

RECOMMENDATIONS

Marketing And BT Are Critical Elements Of Digital Business Strategy

Supplemental Material

Notes & Resources

Forrester interviewed 17 vendor and user companies.

Related Research Documents

Competitive Strategy In The Age Of The CustomerOctober 10, 2013

Technology Management In The Age Of The CustomerOctober 10, 2013

Winning The Customer Experience GameMay 8, 2013

The Chief Digital Officer: Fad Or Future?Why And When Do Firms Need A Chief Digital Officer?by Nigel Fenwick and Martin Gillwith Peter Burris, David Cooperstein, and Nancy Wang

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DIGITAL OPPORTUNITIES ABOUND, BUT FEW FIRMS ARE READY

Science fiction author William Gibson’s quote “The future is already here — it’s just not very evenly distributed” is an apt summation of the state of digital business.1 Executives in firms such as Burberry, Nike, and Rolls-Royce are leveraging digital technologies to fundamentally alter the way in which they bring value to their customers, yet this list of leaders is short. For most firms, digital is still a challenging subject. It’s poorly understood by the C-suite; it’s frequently underfunded; and it’s often siloed, ring fenced, or even worse, outsourced. Too many firms take the complacent stance that “hey, we’ve got an app, we’re digital!” when in reality digital technologies are poised to fundamentally transform the ways in which firms interact with their customers and suppliers.

Digital businesses embed digital technology to transform their business capabilities, and in the process, they create new sources of customer value and competitive differentiation. While digital business is most commonly associated with selling products online, the digitization of business now extends into product design, service delivery, and basic manufacturing. But functional biases perpetuate siloed thinking that fails to unearth the full potential of digital business (see Figure 1).

Figure 1 Siloed Thinking Fails To Tap The Full Potential Of Digital Business

Source: Forrester Research, Inc.97801

Marketing CX eBusiness IT

Brand and campaignfocus

Focus Customer experience(CX) journey focus

Revenue focus Integration focus

Use digital to drivebrand engagementand market share.

Primary use case Use digital to improveCX.

Use digital to driveonline sales.

Use digital to improvebusiness process andsupport BUs.

Electronic promotion(social, mobile, Web)

Digital Electronic touchpoints(mobile, Web, social)

Web-enabled saleschannel (mobile, Web,social)

All web-basedtechnologies

Con�icts abound about who owns digital, and lack of enterprise strategy limitsdigital impact.

Impact

Digital Disrupts Traditional Business Models

Empowered customers are disrupting every industry.2 Forrester first introduced the concept of the “age of the customer” in 2011, and the imperatives surrounding the age of the customer continue to be true today. Additionally, digital disruption is about to tear down and rebuild every product in every industry.3 The competitive context for corporate leadership teams has shifted. Competitive advantage no longer comes solely from being bigger and more optimized than the competition, and competition is no longer limited to a set of similar, big, optimized organizations. Your competition now features lean, dynamic, and adaptable networks of innovators who are disrupting every industry by delivering value-added services to digitally savvy consumers. In this new environment, C-level executives are finding that:

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■ Internal competition for digital ownership fails the customer. Globally, consumers are making a mobile mind shift.4 They expect any desired information or service to be available on any appropriate device, in context, at the moment of need. Some firms, such as Domino’s or Starbucks, engage customers across all stages of the customer journey with rich digital services, from geofencing to mobile payment and digital loyalty. But many firms take a piecemeal approach to delivering digital capabilities, with competing functional groups all vying for digital supremacy and each group seeking to optimize a specific aspect of digital business — sales, interactive marketing, social media, loyalty, CRM, etc. The result? Slower and diminished delivery of next-generation customer experiences.

■ Consumers are embracing sophisticated digital technology faster than silos can respond. By 2016, more than half of all US retail sales will be digital or digitally influenced.5 But historical organization structures perpetuate an inside-out view of business operations — creating confusion for customers who want to move seamlessly between phone, tablet, PC, and store to satisfy their needs. A few leading retailers, such as John Lewis in the UK, are breaking down these legacy barriers by changing sales reporting and incentive structures to reward store staff for driving online sales, but many firms still hinder change with artificial barriers intended to perpetuate dying practices.

■ Digitally enhanced products provide game-changing experiences. Canon CameraWindow, Mini Connected, and NikeFuel are all examples of consumer products that leverage digital connectivity to provide an enhanced customer experience. Yet digital technology isn’t changing just consumer products. Rolls-Royce and General Electric have dramatically transformed the aircraft engine business by adding digital sensors to their products. These sensors measure engine dynamics in real time while the aircraft is in flight and continuously transmit their data back to a ground-control station. Here analytics software combs the data in real time to predict when an engine part will need to be serviced, alerting the maintenance ground crew at the destination airport so it can turn around the plane in less time. The net result is that planes are in the air more, improving airline customer satisfaction and making more money.

Business Needs A Digital Overhaul — But Most Firms Aren’t Ready

Fully embracing digital opportunity requires a full-scale overhaul of culture, people, processes, technology, and measurement — the capabilities of the business — including breaking down functional silos (see Figure 2). Yet most firms are woefully unequipped to deal with such a large-scale transformation because:

■ Digital is seen as a bolt-on. Because many early digital initiatives focused on delivering a mobile app, apps have become synonymous with digital. But a mobile app delivers only a small part of the transformation potential. And perceptions vary by industry — for instance, in media, digital is seen as a new distribution channel — but across industries, digital is all too often seen as

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something to bolt onto the core business, not as a means to transform the business entirely. For example, Blockbuster added digital distribution as an afterthought to supplement its stores — but instead of thinking about how to design a digital business around customer journeys, Blockbuster attempted to copy Netflix and offer movies by mail by bolting the service onto its physical store business. It failed to integrate digital capabilities (e.g., deep customer insight based on movie rental history) into its business model — and Blockbuster went bankrupt.

■ Even those firms that have a vision often lack the ability to execute. Just over half of eBusiness professionals believe their firm supports a vision for a consistent cross-channel experience and less than a quarter believe their firm can provide consumers with that experience.6 The ability to view the business from the outside-in — from a customer perspective — is a critical first step, yet few organizations have established customer experience teams to lead such efforts.7 And the ability to implement enterprisewide change is hampered by inadequate change management capabilities. While many firms may have a mature change management function within their IT teams, less than a third of firms have a formal business program management office (PMO), and only a fifth have a coordinated business and technology change management function.8

■ Legacy organization structures create barriers to change. Segregating responsibility for digital and nondigital touchpoints creates a barrier to change, but silos exist even within the digital domain — for example, marketing teams are often responsible for interactive/social media marketing, while eBusiness teams may be responsible for online sales. When social sites such as Facebook begin to enable sales, channel ownership issues rise to the surface. In many cases, teams that are collectively responsible for creating a seamless digital experience have different reporting lines and target different or even conflicting metrics.9 This naturally leads to wildly differing perspectives on what the role of digital is.

■ IT teams struggle to integrate digital technologies. With the downward pressure on technology budgets over the past 10 years, many CIOs have been unable or unwilling to hire new digitally savvy talent.10 At the same time, highly customized legacy technology architectures make integrating digital technologies challenging. But CIOs are making strides to fix the problem by creating digital teams within IT. These teams focus on developing digital capabilities in conjunction with marketing and customer experience teams.11

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Figure 2 A New Ecosystem Of Digital Capabilities Differentiates A Digital Business

Source: Forrester Research, Inc.97801

Digitalapps

Solutions

Engageanddelight

Marketing

Listeningfor ideas

Collaborate

Digital business capabilities

CollaborateListeningfor

problems

R&D

Digitalapps

Blogs

LinkedIn

Facebook

Twitter

Customeradvisorycouncil

Marketing

Productionoperations

Finance

IT

Discussiongroups

Customerservice

Sales

Suppliers

Customersupport

HR

Communicate

Productfeedback

New productsand services

Digitaltouchpoints

Digital CRM

Digitaltouchpoints

Digital design

Digital marketing

Website

Blogs

LinkedIn

Facebook

Twitter

Website

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DIGITAL BUSINESS REQUIRES REAL TRANSFORMATION

The vision of the CEO is central to how the firm enshrines digital strategy as part of the business’ differentiation in the market. Building a website or a mobile app is part of the journey, but don’t be fooled into thinking that because your firm has a road map for its website, you have a digital strategy. Digital transformation means embedding digital tools and competencies throughout your organization, not just in the customer-facing parts. This requires transformational leadership.

But while the CEO may have the vision to see the transformation into a new digital business, the ability to execute the transformation must rest in the hands of the executive leadership team. And unless the CEO can marshal functional leaders into a cohesive team unified around a core digital vision, she will need to find someone to help lead the development and implementation of digital strategy.

As part of the research for this report, Forrester interviewed a number of senior digital executives, including chief digital officers, heads of digital, and other similar roles. Although the digital team size and reporting line varied, we observed common approaches to digital strategy (see Figure 3).

Figure 3 CEOs Must Shape How Digital Strategy Is Developed And Implemented

Source: Forrester Research, Inc.97801

CEOs develop the digital vision

Digital strategy formulation Digital strategy implementation

Consolidate digitalstrategy under onecustomer-focused leader.

Organize around thecustomer, not thefunction.

Embed digital skills andcompetencies into thebusiness.

Embrace cross-functional,agile ways of working.

• Bring strategy andgovernance activities fordigital together to breakdown unhelpfulboundaries betweenteams.

• Position digitalleadership at asu�ciently senior level inthe organization to drivechange.

• Assign product orcustomer journeyownership to maintain afocus on the customer.

• Measure digital results atthe customer level, noton a touchpoint-by-touchpoint basis.

• Embrace iterativedevelopment toco-create digitalsolutions betweenbusiness, digital, andtechnology teams.

• Leverage shared targetsto drive tighteralignment betweencross-functional teams.

• Educate and train line-of-business teams tooperate digital processesalongside legacyactivities.

• Provide commonprocesses and platformsthat can be con�gured tolocal line-of-businessneeds.

Begin Strategy Development By Making Tough Leadership Decisions

For many firms, the scope of digital transformation is vast. This is particularly true for multibrand or international firms that may have existing digital operations scattered throughout various countries or operating units. Digital transformation most often starts with the digital leader bringing together the functions that are most affected by and have the most influence on the digital strategy. Because digital innovation like social often started with the marketing team, CMOs must lead the effort to

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decide what’s in the best interest of the enterprise. Yet they must also put aside any parochial desire to control all things digital. This involves:

■ Consolidating digital strategy under one customer-focused leader. The digital leader must then establish a strategy to embed digital capabilities across the enterprise. While establishing a new role of a senior digital executive is one of the most public ways CEOs signal their aim to transform their business, not every company needs a chief digital officer. A shiny new executive most clearly signals the CEO’s intent, but we also see many senior digital executives reporting into the CMO, the head of eBusiness, or the CIO. And sometimes the mantle of senior digital executive is thrust upon the CMO or even the CIO. But whatever path is chosen, it’s vital that enterprise digital strategy is focused under a single leader — even if that leader is a digitally savvy CEO. Failure to do this will result in suboptimal strategy development and execution.

Media companies are particularly susceptible to digital disruption. One large media company we examined understands this intimately and appointed a chief digital officer (CDO) to oversee all digital activities. The CDO consolidated digital subscriptions, product lead eCommerce, and digital P&L management across all the company’s brands, including their flagship online media platforms. The CDO has the clear goal of transforming the company’s subscription model toward digital-first engagement and is responsible for digital product development, marketing, and eCommerce. This requires close relationships with both the CMO and CIO to drive cross-functional work.

■ Organizing teams around the customer, not the function. In researching firms that deliver leading customer experiences, we often discovered cross-functional teams brought together to transform the customer experience relative to customer journeys.12 These teams are learning to break down functional silos by maintaining a focus on the customer. Digital transformation must support creating new sources of customer value, even if that’s done by using digital technology to remove cost from the core business operations, allowing the firm to lower the cost of products and services to the customer.

Brian Tilzer, chief digital officer at CVS Caremark, is using digital to “stitch all products and services across the CVS companies into an integrated customer solution.” CVS’s acquisition of Caremark and MinuteClinic resulted in digital accountability being fragmented across the organization. To consolidate these teams and bring in a focus on the customer, CVS’s digital team is centered on product owners who are responsible for defining the market opportunity and the customer experience, developing business requirements, and working with IT to engineer them. The product owners retain responsibility for ongoing operations.

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Break The Mold When Implementing Digital Strategy

Executing on digital strategy requires new ways of thinking across the organization. Each of the digital executives in our research shares a common approach to getting things done:

■ Embed digital skills and competencies into the business. While digital teams are often created to centralize new digital skills within the enterprise, these teams consistently see their role as one of business transformation — their challenge is to embed their skills across the enterprise, making digital thinking the normal way of doing business for every functional group.13

Patrick Hoffstetter is the chief digital officer for Renault. He is responsible for directing the global digital strategy, driving global digital initiatives, and embedding digital skills into the organization. He oversees the global “digital factory,” a team responsible for setting global B2C, B2B, and B2E digital strategy and for providing common global platforms. Platforms are implemented in conjunction with regional and line-of-business teams, allowing local teams to configure digital platforms to their local market needs.

■ Embrace cross-functional, agile ways of working. The need to react at the speed of a digitally savvy consumer drives digital teams to embrace the notion that success depends upon the ability to harness skills from across the enterprise: in marketing, IT, customer experience, human resource, product design, eBusiness, and operations. Successful digital leaders consistently create cross-functional teams and use agile methodologies to create and shape new digital experiences for customers and employees alike.

Jeff Dennes is senior vice president, digital channel executive at SunTrust Banks with responsibility for digital touchpoints including suntrust.com and online, mobile, and tablet banking. Jeff is a firm believer in cross-functional working and has forged strong partnerships with executives in the business lines and technology. The digital team acts as the bridge between banking executives and technology teams, resulting in a close relationship between digital experts and business executives. The relationship with technology partners is also vital, as program management, technology development, and production support are managed by the IT teams. The digital and technology teams are colocated to encourage collaboration and share common goals on projects.

WHO SHOULD LEAD DIGITAL TRANSFORMATION?

Where your digital leader sits in your organization is a function of your firm’s existing digital and business technology (BT) maturity as well as the digital savvy of your incumbent leadership. Forrester believes firms must develop their BT capabilities in order to deliver value to customers in the future.14 But wherever your digital leader sits, she will need to be capable of delivering a common set of competencies. For many organizations, these competencies are either scarce or nonexistent, requiring them to look externally.

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In Designing The Organization, Play To Your Digital Strengths Or Lack Thereof

Firms don’t just organically transform; someone has to do some heavy lifting. Exactly who is capable of driving such a transformation and where they should sit within the organization depends on two critical factors:

1. The digital competency of key incumbent executives. Some firms are blessed with visionary and digitally savvy leaders. For instance, Burberry’s digital transformation has been led by a tight collaboration between its CEO and chief creative officer, while at Delta Air Lines, the vice president of marketing and digital commerce is filling that role.15 In organizations where the current leadership has a level of digital competence, the role of digital leadership is often best fulfilled by an existing executive or a pairing between the CMO and CIO (see Figure 4). This approach is least likely to cause further disruption by introducing a new executive role. Where both marketing and IT are digitally savvy, both the CMO and CIO hire a senior leader inside their teams with responsibility for digital.

2. The digital capabilities of the organization. The relative maturity and sophistication of key digital teams, such as eCommerce or marketing, combined with the firm’s IT and BT digital sophistication can help guide both the need for and the focus of a CDO (see Figure 5). The extent of existing digital capabilities within existing functions, along with the industry sector, also helps to define where the CDO is best placed within the organization. Initially placing the senior digital leader inside the organization where your digital capabilities are the strongest will allow your organization to maximize the business impact of digital.

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Figure 4 The Digital Savvy Of Incumbent Leaders Shapes The Need For A CDO

Source: Forrester Research, Inc.97801

How do traditional C-suite executives think of digital?

CEOI steer overall strategyand digital business

transformation.

Digital opens up newbusiness di�erentiation

opportunities.Eh? What’s digital?

Ideal relationship todigital strategy Best case Worst case

Digital savvy

COOI steer strategy

development andimplementation.

Digital allows us tocreate new customer

value.

We tried a Facebookpage — it didn’t work.

CMOI steer the digital

brand and customerstrategy.

Digital transformscustomer journeys.

An agency doesdigital for me.

CIO I steer the digitaltechnology strategy.

Digital transforms allbusiness capabilities.

That’s marketing;we’re focused oncutting IT costs.

CIOs andCMOs whohave a strongrelationshiphave theopportunityto jointly create a highlyimpactfuldigitalstrategy.

Figure 5 Existing Digital Capabilities Determine The Senior Digital Leader’s Focus

Source: Forrester Research, Inc.97801

Marketing CDOBuilding new digital

touchpoints and customervalue

Strategic CDOCreating digital businessstrategy and embedding

digital capabilitiesor CMO/CIO

digital partnership

Startup CDOBetween IT and marketingbuilding new centralized

digital capabilities

IT CDOExtending digital to

employees and partnersDig

ital c

apab

ilitie

s in

mar

ketin

g/eC

omm

erce

Digital capabilities in IT High

High

Low

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Successful Digital Leadership Demands Three Core Competencies

The exact responsibilities of a firm’s digital leader will depend upon the relative maturity of the marketing and technology management groups’ digital capabilities. This is also likely to determine reporting lines — whether digital leadership sits within marketing, IT, or outside under a C-level CDO. Wherever the role sits, senior digital leaders agree that there are three core components to their roles (see Figure 6). In practice, digital leaders dial aspects of their accountabilities up or down depending on their organizational circumstances, and in each case, the digital leader must understand the operational realities of the firm as the leader works to determine the scope and focus of the role. These competencies are:

1. Strategic: Rally support around a digital vision and strategy execution. Digital teams must set a clear strategy in terms of how digital will transform the organization’s relationship with its customers and must develop associated road maps and plans. This means activities such as selecting core technologies, setting global user experience (UX) standards, and defining high-level customer journeys. For instance, Nissan’s digital team, reporting to the CDO, is responsible for setting consumer technology strategy and in some cases delivering proof of concept implementations across digital content, mobile, social, and other digital touchpoints.

2. Transformational: Embed digital skills and competencies across the business. A key requirement of embedding digital skills into line-of-business teams is training and education. Nestlé’s digital acceleration team is responsible for internal education. Nestlé has built a global center of excellence in Switzerland, which is equipped to bring in executives from Nestlé brands around the world, train and educate them in digital skills, and embed them back into their business units. In many cases, such centers of excellence remain as lean global or corporate functions with responsibility for ongoing specialist support of country or brand teams in deeply specialized digital activities such as search engine optimization or UX design.

3. Operational: Optimize digital touchpoints to drive revenue growth. Some CDOs have no operational accountability and see themselves as purely strategic, though in many cases operational accountability for digital touchpoints sits with the digital leader. For B2C firms, this often means ownership of the eCommerce P&L. Equally, this can also mean managing suppliers or software-as-a-service vendors that provide key shared service digital platforms such as analytics or eCommerce platforms.

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Figure 6 Digital Business Requires The Trifecta Of Leadership Skills

Source: Forrester Research, Inc.97801

Strategic Set vision and communicatedigital strategy and direction.

Transformational Embed digital skills and competenciesinto the business.

Operational Optimize digital touchpointsaround customer experience.

W H AT I T M E A N S

THE CDO ROLE IS A TRANSITORY STEP IN THE DIGITAL BUSINESS JOURNEY

While firms still need to transform, there is a clear need for a change agent. But many of the CDOs we spoke to see themselves as being in a temporary role. In fact, Patrick Hoffstetter of Renault went as far as saying, “It will be personal success if ‘digital factory’ is killed by 2016.” Digital strategy will always need leadership, and even once digital accountability is devolved throughout an organization, specialist digital support teams and centers of excellence must report somewhere. However, many CDOs don’t see this as a permanent seat at the C-level table. CDOs must be prepared to reassess their role on a periodic basis because success most likely means that they aren’t needed any more.

R E C O M M E N D AT I O N S

MARKETING AND BT ARE CRITICAL ELEMENTS OF DIGITAL BUSINESS STRATEGY

In every leading example we examined, we found evidence of technology management and marketing working cooperatively. Some firms are already so far down the digital business path that the CMO and CIO are already digital partners. For CMOs, this means working around technology management is no longer an option. Depending on how far along the digital business path you’ve come, Forrester recommends:

■ Assessing your team’s digital maturity. CMOs must assess their own team’s digital maturity as well as the digital capabilities in other parts of the enterprise (working with the CIO to assess the IT org’s digital capabilities). Perhaps a particular business unit or geography has already made significant progress in tapping into digital capabilities. Look to promote such digital leaders to help the rest of the enterprise achieve digital transformation.

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■ Integrating technology management. If your technology management org lacks digital capabilities, don’t write it off. Your business must integrate legacy technology into your digital future — failing to integrate tech management will greatly limit your options. Instead, work with your CIO to build a shared vision of digital possibilities and work on updating business technology capabilities.

■ Building digital business capabilities in your firm. If your marketing org has been so focused on brand management that digital business has not been on the radar up to this point, or if you have relied upon your agency relationships to build digital capabilities, now is the time to reassess your strategy. You need to begin building digital business capabilities inside your firm.

■ Sponsoring a CDO position. If both marketing and technology management lack digital experience and expertise, sponsoring a CDO position for your enterprise will help you jump-start your digital journey.

■ Focusing on creating a seamless customer experience. If your eBusiness team has already made strides to create new digital capabilities, steer the focus of the digital business strategy team in marketing onto improving the customer experience and supporting the expansion of the digital revenue stream by creating a seamless customer experience, no matter the touchpoint.

SUPPLEMENTAL MATERIAL

Companies Interviewed For This Report

(Some additional companies that we interviewed elected to remain anonymous.)

CVS Caremark

Nissan

Renault

SunTrust Banks

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ENDNOTES1 Digital business includes the application of digital technologies to the transformation of any business

capability.

2 Empowered customers are disrupting every industry; competitive barriers like manufacturing strength, distribution power, and information mastery can’t save you. In this age of the customer, the only sustainable competitive advantage is knowledge of and engagement with customers. The successful companies will be customer-obsessed, like Best Buy, IBM, and Amazon.com. Executives in customer-obsessed companies must pull budget dollars from areas that traditionally created dominance — brand advertising, distribution lockup, mergers for scale, and supplier relationships — and invest in four priority areas: 1) real-time customer intelligence; 2) customer experience and customer service; 3) sales channels that deliver customer intelligence; and 4) useful content and interactive marketing. Those that master the customer data flow and improve frontline customer staff will have the edge. See the October 10, 2013, “Competitive Strategy In The Age Of The Customer” report.

3 Digital disruption is about to tear down and rebuild every product in every industry. Thanks to digital platforms, your customers live in a world of heightened expectations and abundant options; they can get more of what they want, in more places, at more times, than ever before. Seizing this opportunity, digital disruptors threaten to make you irrelevant by delivering a more compelling product and service experience than you can and at a lower cost, often without even knowing that they’re upending you. To beat them, you must join them. Digital disruption is now set to turn its destructive force on even nondigital products and services, inserting new competitors, revamping old economics, and establishing new customer relationships along the way. We reveal the secrets to digital disruption and show how all product strategists need to steal more than a few pages from the disruptor’s handbook in order to survive through the rest of this decade. See the October 27, 2011, “The Disruptor’s Handbook” report.

4 We are witnessing a global mobile mind shift — the expectation that any desired information or service is available on any device, in context, at a consumer’s moment of need. The Mobile Mind Shift Index (MMSI) measures how far along a group of consumers are in this change in attitude and behavior. While online adults around the world are on their way to making the mobile mind shift, consumers in some countries are farther along than others. Companies wishing to target global audiences should use the MMSI as a tool to determine how fast they have to act to offer mobile content and experiences. See the October 3, 2013, “The Mobile Mind Shift Index: Global” report.

5 As consumers are more likely to own mobile devices and spend more of their time online than ever before, they are also more likely now than ever to use the Web to support their purchases. By 2016, Forrester predicts that more than half of the dollars spent in US retail will be influenced by the Web. While there are a variety of activities that constitute web shopping research (e.g., using a store locator, reading customer reviews), the biggest threat to eBusiness professionals in retail is that disparate pricing for many stores and products is now exposed. This demands retailers proactively and constructively address these differences if they want to survive. See the June 12, 2012, “US Cross-Channel Retail Forecast, 2011 To 2016” report.

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6 Source: December 2012 Global eBusiness And Channel Strategy Professional Online Survey.

7 In a recent survey of customer experience professionals, 86% said that their executives hope to differentiate in the marketplace on the basis of their customer experience. Unfortunately, most companies are ill-equipped to reach that goal because they lack the skills and processes needed to manage customer experience in a disciplined way. See the November 30, 2012, “Don’t Fix Customer Experience Problems, Prevent Them” report.

8 Source: December 2012 Global eBusiness And Channel Strategy Professional Online Survey.

9 More than half of eBusiness and interactive marketing executives surveyed reported that their teams were “two standalone groups.” Source: Q1 2012 Global Interactive Marketing And eBusiness Digital Organization Online Survey.

10 While some CIOs are simply unable to hire new staff because they have a hiring freeze in place, other CIOs feel that hiring freshly minted “digital” developers would cause existing application development professionals to feel stuck. Instead they attempt to retrain existing developers in new skills in the hope of gradually building “digital” capabilities. An approach taken by some CIOs is to hire new staff on contract or through vendor partnerships with the aim of transferring skills to existing staff.

11 Improving customer experience (CX) is about to become the top priority for CIOs. CEOs are turning to CIOs and IT leaders to help transform customer experiences through digital technologies. And strategic CX transformations will require changes in IT and deep into the technology stack. But understanding how to change IT to support CX will be critical if CIOs want to ensure that IT is not a barrier to great customer experience. This report highlights two examples of companies that have built customer experience into the DNA of the enterprise and transformed IT to think customer-first. See the August 5, 2013, “IT’s Role In Winning Customer Experience” report.

12 Customer experience (CX) is too often thought of in terms of the IT help desk. But CIOs and their IT teams are increasingly being challenged with improving the customer experience for the organization’s real customers. With more and more digital touchpoints, IT now plays a pivotal role in customer experience. Today, customers can easily switch their loyalty to a competitor while also letting everyone know about how unhappy they are — getting customer experience right is rapidly becoming a means to differentiation in the market. This is an enormous challenge for CIOs already overwhelmed with an endless list of projects and diminishing resources. Yet some companies remain consistently ahead of their competitors in the customer experience stakes. We looked at the top companies in Forrester’s Customer Experience Index and identified what the CIOs at these companies are doing differently. See the May 8, 2013, “Winning The Customer Experience Game” report.

13 eBusiness leaders face an increasing number of organizational challenges. Delivering compelling cross-touchpoint customer experiences demands cross-functional collaboration and fundamentally new ways of operating and organizing. eBusiness leaders see a new approach: They are moving toward a digitally savvy organization where digital skills are embedded into the lines of business. This is a fundamental shift that challenges the skills, competencies, and culture of the traditional eBusiness organization. In this report, we examine some of the strategies that leading eBusiness executives are employing as they transform their

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teams into agile organizations and we look at some of the emerging ways in which businesses are organizing for agile commerce. See the October 25, 2012, “Building The Agile Organization” report.

14 Empowered customers are disrupting every industry — and CIOs need to understand how technology management must adapt in this rapidly evolving world. This report outlines how the age of the customer will place harsh and unfamiliar demands on institutions, necessitating changes in how they develop, market, sell, and deliver products and services. CIOs and their teams will be called on to support these changes, widening their agendas beyond IT (infrastructure) to include business technology (BT) — technology, systems, and processes to win, serve, and retain customers. This report serves as a clarion call to CIOs. Specifically, it explains: 1) how to achieve the right mix of IT and BT; 2) which methods will help you build a highly effective BT portfolio; and 3) how to improve collaboration with other executives in your company who are also meeting the customer challenge — in particular, chief marketing officers (CMOs) and customer experience professionals. See the October 10, 2013, “Technology Management In The Age Of The Customer” report.

15 Source: Nat Ives, “You Can Only Really Love Five Brands — and They’re Usually Not Airlines,” Ad Age, May 7, 2013 (http://adage.com/article/special-report-digital-conference/delta-s-bob-kupbens-a-love-brand/241325/) and Imran Amed, “Angela Ahrendts on Burberry’s Connected Culture,” The Business of Fashion, September 3, 2013 (http://www.businessoffashion.com/2013/09/burberry-angela-ahrendts.html).

On October 14, 2013, Apple announced that the CEO of Burberry will be joining Apple as senior vice president of retail and online stores in Spring 2014. Source: “Angela Ahrendts to Join Apple as Senior Vice President of Retail and Online Stores,” Apple press release, October 14, 2013 (http://www.apple.com/pr/library/2013/10/15Angela-Ahrendts-to-Join-Apple-as-Senior-Vice-President-of-Retail-and-Online-Stores.html).

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Forrester Research, Inc. (Nasdaq: FORR) is an independent research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. Forrester works with professionals in 13 key roles at major companies providing proprietary research, customer insight, consulting, events, and peer-to-peer executive programs. For more than 29 years, Forrester has been making IT, marketing, and technology industry leaders successful every day. For more information, visit www.forrester.com. 97801

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