The Implications of Digital Business Transformation for Corporate Leadership, the IT Function, and Business-IT Alignment

Mastering digital business transformation is a strategic imperative for senior executives but often constitutes a challenging task for firms across industries. With the growing importance of information technology (IT) over the recent decades, the role of the Chief Information Officer (CIO), the head of the IT function, has become increasingly important. However, both research and practice acknowledge that establishing alignment between business and IT is difficult due to significant social factors that often arise. Research has shown that Chief Executive Officers (CEOs) and Chief Information Officers need to develop mutual understanding of their environments, views, and goals in order to promote a successful business-IT partnership. In the context of digital business transformation, which is driven by digital innovation occurring at the interface of business and IT, alignment is imperative. The creation of new executive roles, such as that of the Chief Digital Officer (CDO), indicate that social alignment between CEOs and CIOs remains an issue. This dissertation investigates the implications of digital business transformation for business-IT alignment, the evolution of digital leadership roles (especially the CIO and the CDO role), and the IT function in general. The results presented in this dissertation are grounded in the results from two extensive studies, a quantitative study based on responses from 102 matched pairs of CEOs and CIOs and a qualitative study based on interviews with matched pairs of business and IT executives from 19 companies. The study results were published in three academic articles, which are part of this dissertation. Additional articles that build upon the already published findings are currently under review and due to be published in 2017. The quantitative study examines perceptual congruence between CEOs and CIOs in a social alignment context, utilizing a combination of two hitherto largely separately applied models from social and personal relationship research. One of the major findings of this quantitative study is the recognition of bidirectional effects of active and passive understanding on the CEO-CIO relationship, whereas the concept of mutual understanding has thus far mostly been treated unitarily without differentiation between the two directions. The interview-based qualitative study examines the role of the CDO and the CIO and investigates the bimodal IT phenomenon that has gained increased visibility in practice with digital business transformation putting enormous pressure on the IT function and its leadership. This second study finds four different CDO role types to exist and highlights the implications for the development of the CIO role, which finds itself at an inflection point, returning somewhat to its traditional technical orientation, hence losing its strategic focus to CDOs and others. Furthermore, the second study explains the role of bimodal IT as a transitional stage in a larger transformation of the IT function in order to foster IT agility and IT exploration. Implemented as one of three archetypes that the study describes, bimodal IT introduces organizational structures, methods of working, and a culture that are critical for effective business support of digitization initiatives. Ultimately, however, the study finds that companies, which have successfully operated under a bimodal IT design, revert their IT function structure and processes to a unimodal design in the long term. Overall, this dissertation sheds light on crucial topics for companies’ executive leadership, the IT function, and business-IT alignment today. The studies conducted provide valuable insights for both practitioners and academics by drawing a conceptual distinction between the two directions and CEO-CIO understanding, explaining the CDO role and its influence on the development of the CIO role, and calling attention to the transformative role of bimodal IT. Practitioners are advised to promote CIOs’ understanding of current business topics, carefully delimit the CDO role (should such be needed) from the CIO role, and harness the learnings from bimodal IT on their digital transformation journey. The two studies add to the academic body of knowledge by answering calls for a more fine-grained conceptualization of CEO-CIO mutual understanding, providing initial insights into the emerging Chief Digital Officer role and its creation, and preparing a research framework for bimodal IT and explaining its relevance for IT transformation. The articles contained in this dissertation encourage IS scholars to utilize the findings described and further advance our knowledge in these domains. Moreover, this research can assist business and IT executives with improving alignment and avoiding the pitfalls that digital business transformation brings about for corporate leadership.