The role of a Chief Digital Officer (CDO) became increasingly prominent in recent years as businesses sought to adapt to a digital-first strategy. The CDO was entrusted with driving business transformation, often overseeing the development and implementation of digital strategies and technologies.
However, there has been some debate over whether the CDO is still necessary for the modern enterprise, with the argument that the functions of a CDO can be performed by a Chief Information Officer (CIO) or a Chief Technology Officer (CTO), rendering the CDO role redundant. Let us look at three scenarios that fuel this discussion.
Greenfield Vs. Brownfield (Old IT and New IT)
This is one of the most common scenarios in enterprises. Because the CDO is focused on digital transformation, all digital applications and greenfield projects fall under the purview of the CDO. At the same time, the CIO is relegated to looking after and maintaining existing systems and data. This empowers the CDO to assemble a new team, and any superstars in the CIO’s organization are assigned to the digital application development team. This model works fine initially, but issues arise when the digital applications have to consume existing system capabilities and data. Integrating the new IT (greenfield apps) into old IT (brownfield apps) is unavoidable unless the organization is a startup. As one can imagine, differences in technology stacks, development speeds, and expectations cause considerable friction and animosity between the two camps. As a result, the CIO and CDO groups work in silos and duplicate architecture principles, security and governance standards, technology selection, and, most importantly, the IT strategy for feeding business value streams. This causes significant churn, technical debt, and waste within the enterprise. This model also has workforce and morale challenges; the CIO finds it hard to keep a motivated team with every new IT initiative launched by the CDO team.
Innovator vs. Operator (Creator vs. Maintainer)
In this scenario, teams led by the CDO become creators of digital applications and handover to the CIO to run and maintain. Innovation and application development (creativity) happens in the CDO organization, and the CIO team is consigned with delivery, site reliability engineering (SRE), and maintenance. The CDO team becomes an innovation lab that is not responsible for the production systems. This antipattern breaks Agile and DevOps tenets by operating as two autonomous teams – one focused on innovating, designing, and building, and a separate team for running, maintaining, and ensuring the upkeep of systems and applications.
The friction between the two teams will inevitably increase, and incidents such as “throwing things over the wall” without rigors of testing, brittle deployments, and blame games ensue. In severe cases, the CIO team introduces additional procedures and manual oversight before accepting the CDO team’s digital applications. Trust erodes, and the onus of proving a new application’s stability, security, and reliability falls on the CDO team. End-users get affected by this model because change requests and bug fixes take time by floating in between the two groups.
Oasis in the desert (Creating a cascading effect)
To kickstart or accelerate a digital transformation, several enterprises have resorted to creating innovation centers or incubation centers led by the CDO. This creates an oasis of innovation or greenfield applications within a desert of existing or brownfield technologies. These innovation centers resort to acquihiring to fill the oasis with the right creative teams. Unfortunately, in this pattern, it is easy for innovation to become restricted to the oasis, which can stifle creativity and lowers workforce morale within the enterprise. The CDO team becomes the “tip of the spear” or a shining beacon of hope for the organization, isolating them from the CIO teams. Though the enterprise adapts this pattern to create a cascading effect for innovation and digital transformation, this results in increased technical debt, bureaucracy, and processes within the company. Some organizations try to bridge this gap by making the CDO reports to CIO, but the overall result is not different. It only creates a sub-group inside the CIO team and operates like the first or second patterns described above.
Do we still need a CDO?
With enterprises embracing a digital-first strategy over the last twenty months, the CIO and CTO are already responsible for many tasks typically assigned to a CDO. These roles significantly overlap with the CDO, who is also involved in strategic planning and implementing digital technologies. Having multiple executives with overlapping responsibilities can create confusion about who is responsible for what, leading to a lack of transparent decision-making. By consolidating the responsibilities of the CDO into the roles of the CIO and CTO, organizations can streamline their management structure, improve communication and decision-making, and reduce unnecessary bureaucracy and confusion within the enterprise.
In addition, the CIO and CTO often have more technical expertise and experience than a CDO, making them well-suited to handle the complex tasks associated with digital transformation. Many CDOs have marketing or business development backgrounds and may have different levels of technical expertise than the CIO or CTO. Subsequently, the CIO and CTO may be better equipped to handle the day-to-day challenges of driving digital transformation within an organization. It might be more effective for enterprises to hire CIOs and CTO with marketing or business development skills or upskill existing leaders rather than create a CDO role. A career progression path from CTO to CIO would also benefit the organization.
There are also financial considerations to take into account when deciding whether or not to hire a CDO. The role of a CDO is often seen as being high-level and strategic; as such, they are typically paid a premium salary. In organizations where budgets are tight, it may be more cost-effective to rely on the expertise and experience of the CIO and CTO to drive digital transformation and innovation rather than hiring a separate CDO.
While a CDO can be a valuable asset for an organization looking to drive digital transformation and innovation, there are valid arguments for why a CDO may not be necessary for today’s business environment. In many cases, the functions of a CDO can be effectively carried out by a CIO and CTO, who already have a strong focus on digital technologies and are well-equipped to drive change within the organization. However, it is noteworthy that some industry verticals, such as retail or hospitality, require separate business and technological attention, warranting the need for a CDO. Ultimately, the decision to hire a CDO will depend on the organization’s specific digital transformation needs and strategic goals, as well as the expertise and experience of the CIO and CTO.