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Timely Lessons for CIOs

If you’re an investment chief, there’s a lot you can learn from chief information officers

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Backstop Solutions

Many chief investment officers today find themselves – perhaps uncomfortably so – as change agents for digital transformation, especially at firms that do not have an in-house chief information officer. Colossal volumes of data flow daily in the institutional investment world – between investors, custodians, fund administrators, consultants, and managers. These massive amounts of data must be organized and analyzed in order to meet rising expectations for transparency, responsiveness, and service. As the need for greater process efficiencies and enhanced business agility grows, many chief investment officers are in unfamiliar territory. Here are three lessons to aid a smooth and seamless digital transformation journey for chief investment officers who never anticipated they’d be the IT Person.

Focus on outcomes: If you do not have experience leading digital transformation efforts, the prospect can be daunting. It is easy to fall prey to the temptation to jump to vendor selection before doing the hard work of determining very specifically what you want to achieve through digital transformation. For example, is your goal to increase operational efficiency? Create a single source of truth for data? Free up resources for other tasks? Streamline existing processes?

If you fail to stay focused on your desired outcomes, you will in all likelihood drift off track and end up snarled in complex projects that do not deliver the hoped-for benefits. In contrast, studies from the Harvard Business School show that digital leaders boast a three-year average gross margin of 55 percent, compared to 37 percent for digital laggards. Earnings are also greater, with leaders earning 16 percent as a three-year average compared to the laggards’ 11 percent. The lesson is clear: Identify your destination first. Your destination will determine how you decide to get there.

Learn even more about being an effective change agent for digital transformation.

Remember that people matter: Digital transformation involves more than technology; it also involves each and every person within your firm. Digital transformation is accompanied by different ways of working, increased volumes of data, modified processes, and more. Failure to prepare people within the organization for these cultural changes is a recipe for disaster.

A successful digital transformation effort requires executive sponsorship (very likely from you as the chief investment officer). You need to set the vision for the digital transformation, think through the paradigm shift it will involve, delineate how it will impact the various groups of people in your firm, and then – perhaps the most challenging task of all – bring people on board.

Clear and ongoing communication is key to driving cultural change. That includes value discussions, training, education, open forums, presentations, and more. It is critical to keep in mind at all times that people matter. You are bringing in new technology, but it is your people who will be using it. Prepare them poorly, and you may find performance worse than it was before the digital transformation took place. Prepare them well, and the velocity of your entire organization will accelerate.

Crowd-source insights: Don’t fall into the trap of thinking that the success or failure of your firm’s digital transformation rests squarely on your shoulders alone. You are surrounded by people who can help you: take advantage of their knowledge, experience, and insights!

For example, vendors may know of approaches or best practices that would not occur to you as a chief investment officer. A cross-functional team – due diligence, portfolio management, research management, accounting, legal, compliance, and operations – can flesh out your understanding of how the organization works now and how it could work better.

Determine right from the outset not to go it alone. Shoulder tap people around you, inside and outside your firm, with whom you can work to make the overall digital transformation more effective. Doing so will not only relieve some of the pressure on you, it will also drive greater value from the transformation efforts and give your firm the edge you are looking for in the marketplace.

If you like these three lessons, here are six more insights from chief information officers.