A new dawn for the technology officer

A new era of technological change is ushering the technology officer to the center stage, and expectations are high. Companies want their chief information officers (CIOs), chief technology officers (CTOs), and chief digital and information officers (CDIOs) to deliver on the often-elusive goal of turning the promise of tech into real value. To meet this goal, tech officers are adjusting to ensure that their organizations benefit from the trends that are reshaping businesses around the world.

This moment serves as a step-up. What’s needed now is clarity on where and how tech leaders should focus their energies and build up their capabilities. In-depth conversations with dozens of board members, CEOs, investors, and tech leaders over the past few months, as well as a comprehensive analysis of recent research, have revealed a set of shifts that tech leaders can make to meet the demands of business leaders. We’ve organized them into four types of roles:

• Orchestrator: leading digital and AI across IT and business, with accountability for value. Tech-driven growth requires much more than just tech. Tech officers need to move from supporting business leaders to shaping how their companies generate value, directing business and tech teams, and taking on real P&L accountability for business outcomes.
• Builder: creating new digital- and AI-first businesses that generate revenue. Producing tech-driven revenue requires a shift from enabling business partners to building new products and businesses that create new value. Tech officers need to develop capabilities—including in generative AI (gen AI)—to shape new markets, build customer-facing products, and scale digital go-to-market capabilities that build on a company’s unique advantages.
• Protector: owning revenue protection, from cybersecurity to business resiliency. The scale and complexity of tech has made cyberthreats and resilience threats greater challenges than ever. Tech officers need to move from securing software and reacting to regulatory requirements to actively combating the widening array of risks to business continuity.
• Operator: absorbing and integrating tech into core business functions. Automation and tech increasingly provide the primary opportunities to improve service operations and other corporate functions. As a result, tech leaders are expanding their mandate into areas outside IT, including customer experience, innovation, operations, procurement, and strategy. This combination aims to eliminate silos and accelerate the rewiring of functions.

Of course, whether—and when—tech leaders take on these expanded mandates will depend on how their organizations are positioned on a variety of factors, including available talent, CIO experience, industry dynamics, tech maturity, and value potential. Whatever the case, a strategy for the future direction of tech leadership is a pivotal piece of scaling the impact of AI and tech to create real value.

Orchestrator

Tech has become a critical driver for generating value. But in many cases, the pressure to move quickly leads to too much of a focus on the tech itself and not enough on everything else that’s required to make it work for an organization. This can lead to a host of problems, including a series of uncoordinated pilots that don’t add value (“death by a thousand pilots”). Creating significant gains from AI and tech means integrating multiple facets of the organization, such as adoption, business strategy, data, operating model, scaling, and talent. An orchestrator has a mandate across all of this. They look at tech from a cross-business point of view and spend much of their time helping business leaders orchestrate meaningful change across the organization.

From delivering tech to shaping business

Tech leaders have taken their organizations on a journey from managing hardware to translating business requirements to advising on tech. Many companies have already broadened the CIO role to encompass full digital and tech leadership, with roles such as CDIO and chief digital and tech officer. To move further as an enterprise orchestrator, tech officers must fundamentally shift how they operate.

For one, they will need to move from enabling capabilities to actively shaping the overall strategy and plan. They can do this by partnering with business leaders to understand the potential for tech and to prioritize opportunities. Tech officers are exceptionally positioned to do so because of their organizational end-to-end view—a result of managing all their companies’ systems and data. With a clear mandate from the CEO and the board, it’s only natural that they take on a broader assignment.

Given this shaping role, tech leaders are moving from managing only tech teams to managing tech and business teams. They are also shifting from monitoring cost and schedule to jointly delivering P&L outcomes. Their own incentives must be linked to the value that tech generates for the business. Tech companies offer a good model of accountability shared across product and engineering functions. This effectively pushes those functions to be more collaborative and can eliminate the silos and slow pace that bedevil many legacy businesses.

“We’re moving into being IT strategists and setting the direction for the organization, such as how to use gen AI or how to evolve a product,” says David Pedreira, the CTO of Banco Santander Argentina. “We define how product teams should work and where they should focus, speaking directly on the ‘go to market’ of products—not as an order taker, but as an equal.”

From tech leader to change leader

Taking accountability for value delivered at scale requires broader influence than in the past. To capture the full potential of tech, an orchestrator needs to lead the organization to success on several dimensions that help achieve impact at scale:

• Scale an integrated business-tech operating model. In practice, this means getting serious about product management, which is one of the top two drivers of a company’s business performance. Product management is the organizational mechanism that binds tech to the business by orchestrating the resources required to deliver value. While many companies say they have accepted the importance of product management, their follow-through often falls short. Product management teams still tend to be the exception rather than the rule, while existing teams too often focus on agile ceremonies rather than outcomes.

• Continually upskill talent on tech. Gen AI is already reshaping how leaders think about their business units and how technologists work. In a variety of experiments, gen AI has improved product management productivity by 40 percent while cutting the time it takes to document and code by half. Reusing code can increase the development speed of gen AI use cases by 30 to 50 percent.

  The entire organization needs to continually learn new tech to create products and processes. Technologists themselves need to repeatedly adapt to innovations that can change the ways that they contribute to outcomes. They will need to learn how to reshape the product development life cycle, expand capabilities on code review, navigate the evolving large-language-model (LLM) landscape, and systematically enable reuse of products and code.

• Free data for the enterprise. AI can open up all kinds of innovation, but data are imperative in turning potential into reality. This is a tech challenge, a business challenge, and a change management challenge. Data products are components that are reused for a wide range of use cases. They deliver data-intensive applications as much as 90 percent faster than others, at 30 percent lower cost. In our experience, five to 15 data products contribute the vast majority of potential value to a business, so tech leaders should focus their energies on building and improving those. One CDO at a telecommunications company leveraged data products to build a digital twin that digitized the entire network (for example, cell towers, antennae, equipment based on specs), the workforce (for example, skills and schedules), and other relevant data (for example, labor laws). In this way, the company was better able to match skills to maintenance needs, predict outages, and automate remote maintenance, generating more than $1 billion in impact as part of a broader AI transformation.
• Invest in scalable architecture with a midterm mindset. Architecture is strategy—for both business leaders and CIOs. A company’s tech stack can be either an albatross around its neck or a competitive advantage. An organization’s ability to build, deploy, and maintain innovative tech is only as good as the architecture to support it. Many have unwittingly discovered how critical their architecture is by developing use cases without looking at the future road map holistically (for example, relying on individual channel solutions as opposed to omnichannel services). This leads to slower change velocity and higher cost. Simplifying architecture and addressing technical debt (the tax a company pays in time and resources needed to redress tech issues) must be part of the overall business strategy. It requires ongoing decisions about the trade-offs between achieving quick product P&L wins and avoiding longer-term tech debt. Scaling gen AI to multiple use cases requires optimizing gen AI architecture (for example, using an LLM gateway layer to create a secure, efficient interface between users or applications and the underlying models). Getting this right will accelerate future builds and allow for rewiring the enterprise, but it slows down the first few use cases, with a quick but smaller P&L impact. Tech officers also need to earmark explicit investments toward scalability, such as reusability standards, data exchange, API design, and software development.

Builder

New growth will come from how well companies use software to build products that customers value. To do so, tech officers will need to reorient their function from managing tech to building (and improving) products. Gen AI and AI are exponentially driving down the unit costs of tech, especially for productivity and quality in software development, meaning that writing code will become table stakes. This places a high premium on having improved capabilities beyond tech to build customer-facing products and to scale digital go-to-market expertise.

From building software to building businesses

Tech leaders are sitting on a gold mine of value built on the data, digital products, and tech services that they oversee. Businesses expect them to do something with the riches. In fact, approximately 40 percent of senior managers and C-suite executives expect to propel revenue over the next five years by creating data-, analytic-, and AI-based businesses—more than any other new-business-building category.

Making the most of this requires a significant mindset shift for tech officers, from building tech that supports a business to building products and services for a marketplace. Tech officers can do so by taking advantage of their distinctive understanding of the potential of a range of tech. Some tech officers are already leading the way:

• Turning data and tech into a service. At a European materials company, the CEO and the board mandated that the CDO (who also had a leading role in the tech function) use the company’s exclusive data and digital capabilities to generate value outside of the core business. The company turned its expertise in managing plant operations into a software-as-a-service platform that allows other companies to run analyses of their own data across a range of cases, including logistics, profitability, and pricing.
• Developing new channels. A pharmaceutical company launched a direct-to-consumer business to provide consumers with a better end-to-end health experience, including direct delivery of medications. The company used advanced data analytics to understand consumer needs, personalize experiences, streamline dispensing, and deliver efficient support, all while adhering to regulatory standards. The CIO and their team partnered with teams from consumer experience and market access to build new capabilities and improve agility and speed of delivery.
• Building a platform on expertise. An industrial testing company used its proprietary expertise to develop a gen-AI-driven platform that companies can use to vet their products against existing compliance and regulatory statutes. A team of data scientists and engineers working with business experts ingested thousands of pages of regulatory data and created a way for companies to develop compliance plans to help get products to market more quickly.

Tech officers also need to beware the classic trap of creating a tech or data product before knowing that it addresses a meaningful market. Instead, they should use their data to understand trends and customers, map customer needs against existing assets to see which are distinctive, and ensure that they have the capabilities to deliver and maintain a new product.

From tech skills to product skills

To build new digital businesses, tech leaders need to build new teams with new skills. Each gets treated as a miniature tech company inside the organization. These teams need to pivot to a broader external orientation with a deepened understanding of the customer that informs how they shape scalable go-to-market approaches. And their focus on customer products must come with a commitment to a culture of rapid iteration, scaling, and solution ownership. Tech leaders have several areas of opportunity in the shift toward product skills:

• Strategy and insights. To deliver on this more proactive posture, tech officers won’t wait for a business leader to come argue for a new product or feature based on their insights about customers. Gen AI opens the door to vast amounts of unstructured data (which account for about 90 percent of available data) and increasingly sophisticated analytical capabilities. So tech officers are in a position to create new levels of insight into customers that inform and shape new businesses.
• Product leadership. Builders need to hold a much more expansive view of the responsibilities of product leaders. This must go far beyond managing a team, setting a cadence, and grooming a backlog. It requires deep market understanding, measured customer insights, and rapid adaptation to meet demand. Along with owning choices about solution development, tech leaders should be accountable and offered incentives for the success of the mission.
• Go to market. The largest gap in a tech organization’s effort to truly own a new business end to end is often the go-to-market capability. The team needs to move from building tech products for which others propel adoption to owning end-to-end success in the market. A solid go-to-market capability helps teams understand customer segments, reach audiences, set pricing strategies, and ensure quality. A closed feedback loop ensures that market signals are integrated into product development.

Protector

While cybersecurity and resilience aren’t new areas of concern, a much higher density of tech and AI across businesses has created a notably higher surface area that can increase vulnerabilities throughout an enterprise. Gen AI and automation tools exacerbate the issue. They allow developers to generate much more code than before, which adds complexity that invites more room for error and more routes for attack. In addition, gen AI is making it cheaper for bad actors to create more sophisticated, hyperpersonalized attacks that target the weakest link in a company’s defenses: its people. Given these developments, tech officers must move from being compliance-driven, reactive defenders of the IT estate to proactive protectors of the entire enterprise.

From cybersecurity to digital trust

Cybersecurity has been a central focus for tech companies, but new uncertainties and vectors of risk are forcing a deep rethink. Cybercrime is expected to cost organizations an estimated $10.5 trillion by 2025. Well-funded nation-state actors, new kinds of cyberattacks (such as model hijacking, in which actors take control of an existing model to perform unauthorized tasks), model bias, and new privacy and trust issues on data use are a few examples of the scope of the threat. Insurance markets and investors have started to punish poorly protected enterprises, and regulators are releasing a range of new global rules.

Only about 30 percent of respondents to a McKinsey survey reported that they had either fully scaled or were scaling digital trust and cybersecurity. But today’s security systems and company readiness often aren’t sufficient to meet today’s threats. This growing complexity is forcing tech officers to think much more broadly about risk:

• Be clear about what’s critical to the business. A few years ago, most organizations were approaching their cybersecurity programs and strategies by benchmarking the maturity of their capabilities and budgets to their peers and industry. That approach persists in many companies. But tech officers can’t afford to take a meet-the-minimum approach anymore. Instead, they need to take initiative. “It’s not enough to just meet industry standards,” says Javier Polit, chief information and digital officer of Costco Wholesale. “Many people obsess about elevating NIST [National Institute of Standards and Technology] scores, for example. But the goal isn’t to just get a good score. The goal is to protect the business. That requires a proactive business approach and a different mindset.” This starts with a commitment to protecting a company’s most critical business processes. It’s better to have the most important 30 percent of the business 100 percent protected than to have 100 percent of the business 80 percent protected.

  Tech leaders should map critical business processes to underlying tech assets and prioritize cyber defenses accordingly. Security should be integrated into the development of any new product, process, or service from the beginning via measures such as embedding security-stage-gate reviews and developing policy-as-code practices in which safety is automatically checked before code is submitted.

• Build digital trust. Concerns about data use and privacy are pushing tech officers to think about more than simply protecting systems. Almost 50 percent of surveyed consumers, for example, have said they would consider switching brands if a company’s data practices were unclear. Tech officers need to review and update their cyberpolicies to confirm due diligence on third parties who access data. They also need to ensure that their policies cover explicit procedures for handling data privacy breaches. Tech leaders have to work hand in hand with marketing teams to communicate how the company protects customer privacy and with global legal teams to continually respond to evolving local regulations.

From securing tech to safeguarding enterprise resiliency

Digital downtime costs Global 2000 companies $400 billion annually. With high-profile incidents and reports of an increasing rate of outages, companies are increasingly paying considerable economic costs, including decreased ROE. Some CEOs are seeing their compensation docked as a result. Downtime is becoming even more worrying as companies scramble to become ready for gen AI by using new and unstable tech. Regulators are taking note and asking increasingly tough questions about how end-to-end processes and services are resilient.

One reason for the surge in outages is the increasingly complex and interconnected nature of tech. An issue in one part of an organization can ripple across its business and affect its entire user base. And the increasing reliance on third-party suppliers and a broad ecosystem of partnerships with hyperscalers, LLM providers, and vendors creates its own problems. Many of these providers deliver business-critical capabilities, but together they create a web of risks that may lead to downtime.

Typically, 50 to 60 percent of incidents are the result of poor process definition or execution. They can be eliminated with disciplined change management, automation of repetitive tasks, and monitoring. Tech officers must develop an end-to-end view of processes that expand far beyond IT and the ability to estimate the costs when those processes fail. They must also understand the end-to-end system dependencies, including the risks associated with third parties. While most tech officers have taken steps in this direction, few have done enough. With this in mind, tech officers can invest in meaningful fixes, including georesilient application architectures with tiered disaster recovery, live testing, more extensive scenario planning, phased deployment models, and self-healing cloud-based systems that can be reinitiated with one touch.

Operator

Many discrete business functions are already using tech to steer the next wave of value. Our analysis shows, for example, that gen AI could lead to 40 percent more productivity in G&A functions, better data can increase the pipeline of value-creation initiatives by up to 200 percent, automation can raise supply chain productivity by 55 to 60 percent, and R&D can accelerate innovation by 45 percent. This is why CEOs and boards are bringing tech and business functions closer together under the purview of tech executives. In fact, 23 of the Fortune 100 tech leaders have added responsibilities beyond digital and tech.

Having tech officers absorb functional roles provides noteworthy advantages, such as bringing more direct expertise and ownership to tech implementation, reducing silo issues affecting team and talent allocations, and streamlining investments. For a tech officer, this extension also becomes a stepping stone to building additional functional expertise and moving toward broader leadership. The following are some examples of the ways tech executives serve in additional leadership roles:

• Strategy and innovation. AI has become a core theme in the strategy room for everything from rewiring the business to enhancing products in the market to understanding how competitors are shifting their strategies. In most cases, tech leaders are already core to shaping the internal company strategy on tech. Some companies are taking this further by bringing functions closer together. For example, one global life sciences company decided to focus on how AI could be a competitive differentiator. To guide this, leadership combined the information organization, which had been a unit under the CFO, with the strategy organization. The CIO and chief strategy officer then codeveloped and launched the company’s overall AI strategy. This combination led to close alignment with enterprise strategy, support from the board and CEO, and deeper accountability for business leaders.
• Procurement. Tech is core to the next leap in procurement productivity. It can improve automating supplier processes, incorporating gen AI implications into sourcing strategy, using analytics in negotiation and vendor management, and more. In consumer companies, for example, automation (driven by gen AI, robotic process automation, and applied AI) can increase productivity in procurement by up to 60 percent. One national insurance company seeking productivity gains put its procurement function and significant sourcing spend under the management of the CIO. This eliminated barriers among functions, created clear executive accountability for impact, and established goals for accelerating the value of tech in procurement practices and in managing the company’s vast tech spend.
• Customer experience. An increasing number of corporate interactions with customers are mediated through tech via websites, social media, personalized offers, or sales alerts. The tech infrastructures to support those interactions are often incompatible, resulting in channel conflicts and poor customer experience. If tech officers absorb customer experience, they can overcome silo issues (such as one-off solutions that worsen a customer’s journey) by delivering integrated tech solutions that focus on the entire customer experience. For example, they could direct a move from call center operations to a full omnichannel experience, including end-to-end design and measurement across mobile, web, and call center journeys. For instance, one bank had customer experience silos in multiple divisions, resulting in a fragmented experience. With an expanded role covering all customer experience, the CIO integrated tech infrastructure for broad improvement.

• Operations. Tech grounds company-wide operations, including customer support, help for colleagues, and product development. AI can enable more personalization, shorter times to market, and better self-service. In fact, gen AI in customer operations could result in more than $400 billion in value globally, according to McKinsey research.

  While a partnership between the CIO and COO is critical to scale and capture that opportunity, misaligned incentives and challenges in adopting tech change can undermine the effort. Some organizations have brought together tech and operations, either in part (for example, with global business services units) or in whole (with an integrated CIO and COO role). The tech officer directs tech investments, aligns incentives, and is responsible for the end-to-end rewiring of company operations. At a leading healthcare company, for example, the CIO shaped a plan for the next generation of tech-enabling operations (including AI and gen AI) and now drives the combined operations-and-tech organization to own and deliver impact through AI, automation, and self-service.

The shape of tech leadership has evolved from core tech to digital and AI, and now it’s moving into business and functional leadership. The potential value from rewiring enterprises is growing, as are advances in tech. The link between creating tech and creating business value is stronger than ever. To meet the moment, company leaders and tech leaders must capture the rewards of this shift in mindset. This is a vital opportunity—one in which tech officers can lead the way.

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