Chief Digital Officer or Chief IoT Officer?

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Everyone is talking about going ‘digital’ and capitalizing on the ‘Internet of Things’ (IoT). But most organizations have a hard time responding to both these trends because they lack an executive-level champion to guide their digital transformation process and determine how they take advantage of IoT opportunities.

As business-to-business (B2B) and business-to-consumer (B2C) interactions become more driven by online and other social media channels, a growing number of corporations are recognizing that they have to improve the quality of the digital experience they provide their customers. Creating a better digital experience can build a tighter bond with customers, reduce sales cycles and costs, reduce churn, and give corporations a competitive advantage.

Because becoming a ‘digital’ company entails a different approach to engaging with customers, partners and other stakeholders, it also requires a different set of skills, systems and applications to perform this function. This has raised the question – do we need a new Chief Digital Officer (CDO) to lead this effort?

There has been plenty of debate about whether organizations need a CDO, or if the responsibility for improving the quality of a corporation’s digital presence can and should be led by the traditional CIO or CTO.

Advocates of the CDO idea point out that the responsibility goes beyond adopting a new set of digital technologies. Wikipedia defines the CDO as “not only a digital expert, but may also be a seasoned general manager. As the role frequently is transformational, CDOs generally are responsible for the adoption of digital technologies across a business.”

And, McKinsey & Co. believe, “the CDO is now a ‘transformer in chief’, charged with coordinating and managing comprehensive changes that address everything from updating how a company works to building out entirely new businesses.”

As a consequence, Gartner predicted in 2012 that 25% of organizations would have a CDO by 2015. Although there has been a steady stream of companies adding CDOs to the executive teams, the overall trend to move in this direction seems to have fallen short of Gartner’s prediction…unless you add in the newest form of CDO – the Chief Data Officer.

Yet, even as many organizations grapple with the idea of creating a CDO position to address their changing customer engagement requirements, a new set of challenges are emerging as a result of the rapidly evolving world of IoT.

The ability to deploy a vast new strata of connected products and services is quickly becoming a reality. And, the primary purpose of connecting these ‘things’ is to better understand and serve customers, become more operationally efficient and identify new market opportunities. In other words, the IoT is taking the digital transformation process to a whole new level and adding more responsibilities to the management function.

Digital transformation sounds grandiose, but in most cases it focuses on changing the way a company interacts with its customers. The digital experience is defined on a human level and generally extends from the marketing and sales processes to the customer service and support function.

The IoT is redefining how products and services are designed so they can capture more information about how customer behaves and deliver benefits to the customer via the products and services it consumes without direct human interaction being necessary. This means that every business function within a corporation has to be involved in a successful IoT initiative, from product design to customer support.

CTOs can identify the latest technologies and services available to support these initiatives. And CIOs can help select, implement and manage these systems and services. But, neither of these positions was conceived to address the organizational challenges created by the digital transformation process and IoT.

So, if you’re a CTO or CIO, do you have the organizational skills to match your technical prowess to play the role of CDO or Chief IoT Officer?

Kaplan is Managing Director of THINKstrategies (www.thinkstrategies.com), an independent consulting firm focused on the business implications of the on-demand services movement. He is also the founder of the Cloud Computing Showplace (www.cloudshowplace.com), and the host of the Cloud Innovators Summits (www.cloudsummits.com). He can be reached at jkaplan@thinkstrategies.com.

Photo courtesy of Shutterstock.