The key strategic challenges facing CIOs and their teams over 2023

What are the key strategic challenges facing CIOs and their teams over the next 12 months? We asked Cecilia Edwards (Partner at Wavestone US) and John Gorrell (Associate Director at Coeus Consulting, a Wavestone company) to cross their points of view and identify four items they would place at the top of every CIO’s ‘to do’ list this January.

Cloud optimization – time to finish the job

Over the last two or three years, there has been a significant increase in the number of companies that have rushed to the cloud. Their strategies broadly fell into two categories: either they took the time to optimize their apps for the cloud before they moved, or they did what we call a ‘lift and shift’, getting apps into the cloud first, and then thinking about modernizing and optimizing everything afterwards.

Companies which chose the latter route are now finding themselves unable to take full advantage of everything the cloud has to offer. Given that everyone is concerned about preparing for the recession, 2023 is a good time to focus on how to optimize your cloud capability. It helps you cut costs in difficult times, but it also gives you the scalability you’ll need to be in the perfect position when recovery starts. And as we’ve seen time and time again it’s not the companies who are best protected against the downturn which thrive: it’s the ones who are ready to own the upswing.

Take a fresh look at all those apps you lifted and shifted. Rethink the legacy of your infrastructure components in order to minimize duplication, and re-evaluate any capability you still have sitting on mainframes and other legacy infrastructure to see if there’s anything else you can move to the cloud.

This is about a lot more than just cost and efficiency: it’s about unlocking potential. Trends which have become mainstream over the last couple of years, including IOT strategies and omnichannel are all much more enabled with cloud capabilities, and if you haven’t already refreshed your data strategies to take advantage, now is a great time to start.

Many enterprises have yet to see the financial benefits of the cloud. One crucial factor they really need to come to grips with – and all too often haven’t – is that while operating in the cloud gives you a lot of burst capability which can help you cope with demand surges, it’s also important to be able to control – and sometimes even contract – demand. If your FinOps capability – the ability to link demand decision to financial implications – isn’t mature, it’s easy to stay in the old ways of thinking about capacity, always having as much available as you think you’ll ever need. But that leads to consuming too much space. I think this year the focus should be about managing down to current need, which is a whole new way of thinking.

Web 3.0 – a shift is coming

Another key trend that we are all going to have to think about this coming year is Web 3.0. As things stand now, the technologies associated with it are not mature enough for wide adoption, but 2023 is the year to start searching for answers to three key questions.

The first is to identify the business use cases for Web 3.0. Some are clearer than others: for example, blockchain is clearly going to become an important tool for robust identification and fraud prevention, especially for financial institutions. But in many respects what will drive the future is still up for grabs.

Web 3.0 will empower consumers like never before as they will own their own encrypted data. Companies need to think through what that means for them, especially when transactions are completed using smart contracts. Will companies need to compensate customers for the use of their data? Will brands need to do more to prove they are using data ethically?

Web 3.0 marks a huge shift towards decentralization, and this extends to the governance of companies. This could have a profound effect on employee models, especially when people are still struggling to trying to collaborate across organizational siloes. Organizations and projects will be run on a much more democratic, peer-to-peer model, with individuals sharing information and data with no intermediary. Companies need to begin to think about how to make that work while still achieving their goals.

Think about how much things changed, first with the internet and then with web 2.0 – and how those changes have revolutionized almost everything everyone does at work and in their leisure time. Web 3.0 will be at least a big a shift as that, and companies need to start thinking now about how they will implement new relationships with customers, suppliers, employees, teams and everyone else.

Supply Chain resilience. Is IT the victim of its own success?

The last couple of years have seen CIOs and other senior IT decision makers confronted with a seemingly endless range of disruptions, from geopolitical and social instability to cost increases, plus a shortfall in available talent and skills.

All of these are going to continue to be factors in 2023, and an increasing number of IT leaders are concerned their organisations lack the resilience to withstand further disruption.

In a way, IT has been the victim of its own success: as technologies and applications have become more stable, people outside the IT function often take that stability for granted. It’s vital that CIOs guard against complacency both within their own teams, at board level and among users in general. While IT systems have become increasingly invisible as they just work, they’ve also become more important. In almost every modern organisation an IT supply chain failure in one area has the potential to escalate into an existential threat for the whole entity.

As we face the strong likelihood of an economic downturn around the world, 2023 will undoubtedly see pressure on IT budgets. But I believe cutting back on IT investment would be a mistake on two fronts. Firstly, as I mentioned above it seems likely that disruptions will continue and IT leaders must not deviate from their obligation to protect business operations.

Investing in digitalisation is vital to mitigating potential disruptions, but a happy by-product is that companies are emerging both better able to compete, and with a leaner, more resilient supply chain.

Another thing I think people should focus on this year is managing the increasing fragmentation of their IT supply chain. The innovation and choice we have benefited from over the last decade or so with many IT and business services being contracted out across myriad partners is obscuring who delivers what and potentially dormant vulnerabilities.

This fragmentation is both a risk IT leaders need to address and an opportunity they should grasp. The risk is that dark, forgotten corners of the IT supply chain leave the organisation exposed. The opportunity is that by taking an holistic look at the IT supply chain, businesses can assure or build resilience and will almost always realise significant cost savings in the process.

Sustainability – a chance for CIOs to lead

One of the basic business mantras is not to let the urgent get in the way of the important. But the upheavals of the last couple of years have, for many businesses, meant that sustainability has not been given the priority – or the resources – such a vital topic deserves.

That has to change in 2023 – and there is vast, untapped potential for IT to lead the way in helping organisations meet their sustainability goals and commitments. This stretches from taking a lead in recycling, transitioning to the cloud or re-orienting operating models for longer-term embedded sustainability.

But to achieve this, IT functions must align their sustainability goals with that of the wider business as well as being proactive in providing solutions which drive digitalisation and efficiency for everyone. That means focusing on measurable benefits which show real opportunities right along the supply chain.

CIOs and IT leaders have an opportunity to take a leading role in clarifying the measures that can be used to monitor and manage the drive to sustainability, and in developing solutions and ideas which deliver. We should resist being reactive system builders and become true leaders.

In 2023 we could also see the affirmation of the CIO agenda as the true heart of any organisation’s success. I’ve often thought that while, traditionally, CEOs have been numbers people – it’s a well-trodden path from the CFO office to become CEOs, digitalisation could well shift thinking that now makes CIOs the obvious choice for the top job. That would be a fundamental shift, but I think it’s one we’ll see more and more.