CDO positions on the decline as digital transformation plays a bigger role in core business


Johannesburg, 16 Apr 2019
Read time 3min 10sec

Companies are recognising that digital transformation needs to part of their core strategy and are creating fewer chief digital officer (CDO) positions than they were two years ago.

In the latest study of CDOs conducted by Strategy&, PwC's strategy consulting group, the rate at which CDO positions have been created slowed sharply, compared with the last time the study was carried out in 2016. The study is the fifth edition of this research tapping into leading CDOs worldwide.

The study looked at the hiring patterns and the scope of the CDO role across the 2 500 largest publicly listed companies in 2018. Just 54 companies (2.2%) surveyed had created a distinct, new CDO position in 2018, compared with 124 that did so in 2017 and 160 in 2016. The high water mark for hiring CDOs was in 2016. On average globally, 21% of companies had a CDO, up only slightly on 2016, when it was 19%.

Chantal Maritz, PwC Strategy& Partner, says: "According to the study's findings, many companies now believe that putting a single person in charge of digital transformation may not be the best approach; this suggests that digital transformation has become a core strategic part of the business. CDOs are shaping the future of the businesses within which they operate through greater strategic input."

In this study, the CDO is defined as an executive whose responsibility is to develop and implement the company's digital strategy.

Within a three-year period, digital decision-making has been increasingly elevated to the board level. More than half of CDOs (54%) are C-suite members. This again illustrates the growing recognition that the digital transformation agenda now has strategic importance to most companies to remain relevant in the rapidly changing market environment.

Previously, CDO roles tended to be occupied by people with strong technology backgrounds. PwC's new study found that CDOs with a technology background had dropped from 42% four years ago to 28% in 2018. The CDO role is rather occupied by people with consulting, strategy and business development experience. This clearly illustrates that digital is not just a technology play; it is rather about organisational transformation to operate efficiently in the digital age.

Companies in the financial services and entertainment industries have the highest ratio of CDOs. In addition, European countries recorded the highest growth in the appointment of CDOs.

Although the role of the CDO may be declining, the digital transformation journey is far from over. Digital technologies are rapidly emerging as disruptive forces for businesses. They are changing the way in which companies interact with customers, as well as paving the way for new business models.

Where organisations have a CDO in place, the priority for organisations should be to ensure the CDO has the appropriate capabilities to move the digital transformation agenda forward. Those companies that do not have a CDO should consider creating one with the holistic overall strategy of the company in mind when choosing the right person for the role.

"We believe that the digital transformation journey provides an opportunity for businesses to create a competitive advantage, differentiating themselves from others in the same sector and industry. Those companies that have digitised the way they work across people, processes and technologies will not only be leaner organisations, but they will also be strategically aligned around the value they add to their customers and will be able to rapidly respond to these needs," Maritz concludes.

PwC

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Editorial contacts
Change the Conversation Bontle Mnisi (+27) 87 898 6318 bontle@changetc.co.za
PWC Sanchia Temkin (+27) 11 797 4470 sanchia.temkin@pwc.com
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