Phil Carter and Tony Olvet
IDC :US46996021
The study was designed to understand the changing priorities of the CEO in the rapidly evolving digital-first world. Respondents included 389 organizations with more than 100 employees from North America, Asia/Pacific, and Europe. The survey investigates how the current economic environment is affecting CEOs, and examines business and board priorities, spending plans, investment focus, skills requirement, the role of tech leadership, and vendor selection.
In-Field: December 2021–January 2022
Industries: Mix of industries, non-government. Top 3: retail, manufacturing, healthcare
Company size targets: >100 employees (Canada only), >250 (Western Europe), >500 (U.S. and Asia/Pacific)
North America: 163 | Europe: 103 | Asia/Pacific: 123
IDC believes that digital-first is the way forward and that every CEO will need to develop a strategy to thrive in the digital business era. The goal for most organizations is to create new sources of value through digital products, digital services, and digital experience. However, not all CEOs are ready for the transformation required, as nearly one in two CEOs need help building out their digital-first strategy. The top skill CEOs mentioned is “digital know-how.” This is not about technology bits and bytes, but about running the digital business: aligning teams, bringing in the best talent and insights, and executing on the digital strategy.
Digital is now a permanent yet dynamic fixture in our world. For CEOs, digital-first is an organizational aspiration. They are effectively asking: is there some digital-based capability that could deliver the desired outcomes for any given scenario?
The transition from the Digital Transformation Era (DX 1.0: Innovation & Experimentation, DX 2.0: Closing the Digital Value Gap) to the Digital Business Era (Digital-first, Sustainable Digital Business) is marked by a shift in revenue streams from traditional business models to digital business models, and a corresponding increase in digital spend.
Digital-First Resistors | Digital-First Laggards | Digital-First Responders | Digital-First Accelerators | Digital-First Pioneers
“We took a digital-first approach from the outset ... And I don’t think we’ll ever be done (or finished). We are finding new ways to connect with our customers and partners, for example in leveraging virtual reality in more engaging ways.”
— Angelique de Vries, CEO of Northern Europe, Salesforce
95% are pursuing or embracing a digital-first strategy. Nearly 1 in 2 need help in terms of building out a digital-first strategy.
IDC asked global CEOs: “Which of the following words most reflect what your organization needs to focus on to thrive in 2022?” The top mentioned word was “technology,” followed by “growth” and “efficiency.” 88% of CEOs surveyed plan to sustain or increase tech spending in 2022. With the growth of technology budgets will come greater scrutiny on measurable business outcomes. CEOs will need to manage expectations about near-term paybacks with long-term success.
Other key words: Speed, Automation, Transformation, Resiliency, Agility, Innovation
88% of CEOs plan to sustain or increase tech spend in 2022.
Environmental, social, and governance issues are top of mind for global CEOs. The importance of these issues continues to rise on the C-suite agenda and boardroom metrics. IDC believes that even with the attention of executives on sustainability, diversity, and inclusion, more needs to be done to build a culture of accountability across the organization. Increased scrutiny of technology’s impact on the environment as well as ethical use of tech, particularly AI applications, will continue to drive more CEO attention on ESG issues.
“Sustainability is something very deep, very profound for the business. The fast movers will have a competitive advantage. In a few years, it will be a must. And if you don’t have a strategy now, you will not be in the market.”
— Gema Reig, Member of the Board, ABANCA
“Let’s take the opportunities. We have this Green Deal in Europe. Climate will not disappear in Europe ... let’s develop intelligent solutions.”
— Sven Flore, CEO, SBB Cargo International
What keeps CEOs up at night? CEOs were asked what political, social, and economic risks are expected to have the greatest impact on their business in 2022 and 2024. Topping the list for today and in two years was cybersecurity threats and regulations. This comes as no surprise given the rising threat levels and frequency of attacks over the past couple of years, especially since the beginning of the Russia-Ukraine War.
“We’re moving from just-in-time to a just-in-case approach to running the business. And the complexity has increased. It’s like moving from playing checkers to a challenging game of chess.”
— Bill McDermott, CEO, ServiceNow
“I think all CEOs are reassessing how they deal with risk. Historically, most organizations dealt with risk in very formal ways — basically a ‘tick-the-box’ exercise. Well, based on the events of the past two years, I think that approach is fundamentally changing.”
— Bas Burger, CEO, BT Global Services
“The big focus for our board at the moment is building resilience. This is not about managing one crisis. It’s about being prepared for anything — and being able to adapt to any disruption to the business. And technology is critical to make this a reality.”
— Gonçalo Caseiro, Chair, INCM (Portuguese Mint and Official Printing Office)
“Every CEO should have a cybersecurity strategy. In the way that you deal with customers, your supply chains and your own employees — this needs to be top of mind.”
— Bas Burger, CEO, BT Global Services
The #1 business risk for North American CEOs is the talent skills gap. 43% of CEOs cite people leadership as the skill most critical for their success as a CEO over the next three years.
“The offices are no longer going to be offices. They will become collaboration hubs. The team members (especially the younger generation) are not going to bother with a multiple hour commute to ‘work’ — they will want to collaborate, to ideate, and to connect to the working social network.”
— Simon Paris, CEO, Finastra
“We’ve always been a company that is grounded in purpose and values, and our purpose is to help people thrive in the brave pursuit of next. The idea was founded both externally with our clients, but also internally, because unless our people are thriving in this new world, in what’s coming next, we’re never going to be able to help our clients or our business thrive. The opportunity had never been greater in the last two years to both think about the next and to think about the thriving in the next. For me, a big part of this was developing an even greater sense of empathy for both our people and our clients. Those are some of the ideas that I consciously try to be thoughtful about.
“What you’re trying to do is remind everybody that we are all part of a bigger whole and create the connection to what they do everyday to this bigger idea. I think those are some of the ideas that I consciously try to be thoughtful about. Communication is a critical component of this — amplifying and increasing the level of communication. I always joke that I’ve never met more people than when I’ve been at home over the past year — because it’s a conscious feature of how I try to lead.”
— Nigel Vaz, CEO, Publicis Sapient
“What we have seen is that as digital accelerates, the physical environments need to be reconfigured. That means office spaces, stores, bank branches, factories, supply chains — literally every physical element needs to be reconfigured. New technologies will play a significant role in this reconfiguration.”
— Simon Paris, CEO, Finastra
“We’re investing millions of euros in new campus this year. There will be tech everywhere! We are rethinking the entire design to support a new way of learning. We are basically redefining the student experience.”
— Dr. Dorothée Hofer, Managing Director, EBS University
“We are equipping 600 office locations worldwide with our new connected technologies, Comfy and Enlighted, to create intelligent building infrastructure so that we can manage the space safely and create flexible workspaces for our employees.”
— Matthias Rebellius, CEO, Smart Infrastructure, Siemens
Physical environments such as office spaces, stores, bank branches, factories, or supply chains need to be reconfigured. Connected technologies will be used to create intelligent building infrastructure and to link physical goods to digital assets — in retail, gaming, and entertainment.
IDC Prediction: By 2023, 90% of worldwide organizations will prioritize investments in digital tools to augment physical spaces and assets with digital experiences.
Most pressing challenge for CEOs as it relates to DX initiatives: “Lack of digital skills capabilities/know-how within the C-suite.”
IDC research shows that more than 50% of technology budgets sit outside of IT. But these budgets are no longer what were called “shadow IT” a decade ago — this is digital transformation in action. C-suite executives and their teams have ramped up their focus on technology to deliver digital at scale across multiple business units.
C-suite buyers approach tech adoption differently than IT organizations. They lead with use cases, are driven by line-of-business KPIs, and prioritize business outcomes over technology features. They also demand quicker time to value based on more flexible and open technology architectures.
Engagement models should not focus on IT versus the business — running a digital business is a team sport — and the C-suite (both IT and the business) need strategic partnerships with technology vendors to become the digital dream team and accelerate the journey for their organizations to the future enterprise.
It is the time for technology leadership, and more specifically the CIO, to shine. CEOs are increasingly seeing the importance of having the right technology leadership to succeed in a digital-first world. The CEO needs to develop a more direct relationship with the technology leader. IDC believes this role should have a seat at the leadership table.
Although there is a current leaning toward having the CIO focus on risk management to deliver digital resilience, over the next two years CEOs expect CIOs to focus more on business outcomes, agility, and delivering new revenue streams. With that change, technology architectures need to evolve from focusing on managing IT, to building tech capabilities with a more external focus that drives new value for the enterprise. IDC’s view is that CIO metrics should be updated accordingly.
“We’ve created software factories to drive ‘bite-size transformation’ ... we’re focused on assembling software products with 75 factories reflecting the 75 areas of the business, such as lending origination, payments, accounting.”
— CIO, Automotive financial services organization
As organizations emerge from the pandemic, CEOs recognize that IT and business go hand-in-hand — technology architecture is becoming business architecture. CEOs are thus not only focusing on driving more revenue-generating activities, but are also accelerating the shift to the cloud and improving tech staff competencies across the board.
The technology architecture becomes the business architecture.
Past (pre-2010): Transaction centric, one-to-one. Vendor motto: “Push product.” Customer motto: “Run IT.”
Present (2011–2023): As a service, one-to-many. Vendor motto: “Drive consumption.” Customer motto: “IT to innovate.”
Future (>2023): Ecosystem digital services, many-to-many. Vendor motto: “Deliver outcomes.” Customer motto: “Tech to compete.”
For CEOs mapping out their new digital business strategies in a post-pandemic world, new ideas and insights are likely to be welcome today. Business outcomes and value will be the differentiators as technology vendors look to drive visibility and relevance with the CEO as they aim to set up a technology architecture to compete in the digital-first world.
Our survey showed that cloud platform providers are meeting more frequently with CEOs across the segments; this isn’t a surprise in 2022 as many organizations are signing multiyear, multibillion-dollar cloud transformation projects. These platforms are increasingly underpinning the digital business models of the future.
IDC sees a close correlation with technology vendor visibility and strategic partner status — and cloud platforms are winning in terms of CEO mindshare.
“Cloud is like the fuel for your digital engine. You need it. You cannot go anywhere without gasoline or diesel or anything. But it needs to be a trusted cloud.”
— Francesco Bonfiglio, CEO, Gaia-X Association
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world’s leading technology media, research, and events company.
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