CDO SCORECARD

Authors
Philip Carter
Jan van Vonno
April 2017 Sureshpal Singh
INTRODUCTION CDO Scorecard

Introduction
This document provides a CDO framework to execute on existing, emerging,
or potentially new objectives relevant to the digital transformation of the
organization. Executives can use the scorecard to evaluate which KPIs deserve
to be prioritized and assessed in order to help realize organizational or digital
goals. This document is part of an IDC Report Series which also includes a CIO
Scorecard, Digital Recipes for Success InfoBrief, Leading in digital InfoBrief, and
an Information Transformation Workbook sponsored by SAP.

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INTRODUCTION
SCORECARD CDO Scorecard

The CDO Scorecard for Digital

Transformation
The chief digital officer (CDO) is a role that has emerged to accelerate digital transformation
initiatives across all industries. However, it has been a challenge for organizations to clearly
define the role of the CDO — especially in terms of its relationship with the CIO. One area that
can help to reduce this tension is the alignment of incentives and targets for these roles. IDC has
therefore developed a framework to guide the CDO’s digital ambitions in a scorecard across five
different dimensions to help assess which new types of KPIs might be relevant for their respective
organizations. The scorecard should ultimately form the basis for the review of the CDO’s ongoing
performance.

The CDO Dashboard for Digital Transformation – What Type of CDO Are You?
If you do not know which CDO you are, please refer to the three CDO architypes defined below.

Digital Digital Digital

Vision Evangelist Champion GM

Focus on creating new capabilities at individual

product or service level
Creating a digital agenda linked to the broader company
mission Focus on a full-
Focus on blown business
“awareness” running as a
and evangelism separate P&L

The target here should be 8%-20%

% of revenue derived from digitally enhanced products,

services, and experiences* The target here The target here
should be should be more
3%-8% than 20%

Digital innovation creates and uses new business

models to influence customers and markets for
competitive advantage.
Isolated functional Digital innovation
Delivering a digital innovation structure attempts to innovate is aggressively
business models. disruptive through
Resistance and lack new digital tech. and
of ability. business models to
affect markets.

* Responsibilities shared between CDO and CIO 3

SCORECARD CDO Scorecard

Digital Digital Digital

Ecosystem Centricity Evangelist Champion GM

Focus on NPS >50

Net promotor score (NPS)*

No link to NPS Measured on
NPS >50

Regular — 20%–50%

New customer touchpoints driven by the CDO*

Ad hoc — High — more than
0%–20% 50%

Active use of external APIs as well as the development

of an API library for internal digital services

Delivering the API strategy Raising awareness Active contribution

of API benefits and of APIs to the API
identifying external economy with
APIs to extend ecosystem impact
current digital in terms of business
capabilities outcomes

Digital champions understand and exploit synergies

between the CMO and CIO office to drive their digital
ambitions and continuously identify new opportunities
to create business value from the ecosystem.

Driving ecosystem experience Raising awareness Active contribution

of API benefits and of APIs to the API
identifying external economy with
APIs to extend ecosystem impact
current digital in terms of business
capabilities outcomes

Digital Digital Digital

Data-Driven Business Evangelist Champion GM

Limited revenue-generating capabilities from

information-based services

New revenue-generating information-based services Growing revenue-

launched in the last quarter* No focus on generating
monetizing data capabilities
from info-based
services

Enterprisewide

% of revenue derived from digitally enhanced products,

services, and experiences* Limited Advanced

Integrated

Data privacy and security approach* Embedded

Add-on (data privacy
by design)

* Responsibilities shared between CDO and CIO 4

SCORECARD CDO Scorecard

Digital Digital Digital

Profitable Digital Capabilities Evangelist Champion GM

Daily

Frequency of releases of digital capabilities

Weekly or less Continuous

Average payback period for digital projects between

12–24 months

Time to ROI for new digital capabilities

Average payback Average payback
period for digital period for digital
projects >24 projects <12
months months

Integrated

IT-business-digital structure
Silo Optimized

Digital Digital Digital

Talent Recruitment Evangelist Champion GM

Top 100 industry

segment

Best place to work ranking*

Top 500 within Top 100 across
industry segment all industries

Regular

Running of digital bootcamps*

Ad hoc Recurring
program

Joint HR strategy
in place

Recruiting “A+” digital talent *

High priority but Strategic pillar for
no program in organization
place

Read on to get a comprehensive description of each CDO type

For more information on how the new digital KPIs are defined, please see the
description of metrics below.

* Responsibilities shared between CDO and CIO 5

SCORECARD CDO Scorecard

The CDO Scorecard for Digital

Transformation

The chief digital officer (CDO) is the key “new” role that

68% organizations have appointed (often driven by the CEO) to raise

awareness of digital initiatives (both internally and externally).
of European And a recent survey of more than a 1,000 IT, digital, and business
organizations have executives in Europe, the Middle East, and Africa shows that
appointed a CDO (or 68% of organizations have appointed a CDO (or head of digital)
plan to do so over or plan to do so in the next 12 months. However, in only 25% of
these organizations is the CDO leading enterprisewide digital
the next 12 months),
transformation initiatives. This points to the fact that the CDO is a
but they are leading “change agent” in many organizations — and therefore creates a
enterprisewide digital lot of internal friction (particularly where organizations’ readiness
transformation for DX is not very mature). So, many CDOs move from one
initiatives in only 25% organization to another in a transient manner. This is becoming
increasingly difficult to manage as we move into the next phase of
of organizations.
digital transformation initiatives — which is all about “execution.”
Source: IDC EMEA, DX Survey, SAP, May 2016; Organizations therefore need to put in place key performance
n = 1,008
indicators (KPIs) and incentives to drive the digital transformation
of the business. Many organizations have now moved beyond a
stage of exploration where it is all about driving and generating
returns on the digital investments. This is going beyond the
marketing showcases and proof-of-concepts — KPIs and incentives need to be put in place that
help executives focus on generating new revenue streams based on digitally enhanced products,
services, and experiences

Furthermore, many CDOs view traditional IT as being too slow

and cumbersome. And as they started to deliver some quick wins, One example of a
they have been awarded more responsibility — taking on the
chief digital officer’s
role of partially “owning” certain digital products and services in
conjunction with the line-of-business (LOB) executives. In some viewpoint:
cases, they are running full business units with significant P&L “The IT guys are the
responsibility and competing directly for IT budgets. Because people who get the
projects, technology landscapes, and skills are so different in blame for everything.”
the traditional IT organization compared with the digital one,
organizational boundaries can start to develop. And as friction Chief digital officer (CDO) of a large U.K.-
based enterprise
points worsen, potential conflicts start to emerge — especially
given that some CTOs have also started to throw their hats into
the ring. As a result, it becomes more about internal competition
than the broader objective of accelerating the digital transformation of the organization, which
not only creates conflict but also slows projects and initiatives down. IDC’s research shows that
the more mature organizations in terms of digital transformation efforts are, the more they forge
fresh partnerships between new and existing roles and structures. Therefore it should not be
about the CIO versus the CDO, but more about how they work together to deliver the required
business outcomes, as both roles can potentially bring unique and critical capabilities to the table
to help accelerate the journey — ultimately complementing each other. The CDO needs to focus
on creating digital products, services, and experiences, and building the most profitable customer
propositions for them. The CIO and IT need to focus on building out the right platforms and
capabilities to deliver on those propositions.

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 CDO Scorecard

In this respect IDC sees three broad categories of CDOs in place across various
organizations along the following lines:

1. The digital evangelist – Reports a level or two down and is often part of the CMO or
CIO office, but is highly visible to the executive level. Sometimes there are multiple digital
evangelists federated across the organization. The digital evangelist is typically part
of, or leads, a small team designed to raise digital IQ. Often these executives focus on
transforming marketing and communications to improve the customer experience, but
beyond that also look to help support or build an enterprise digital platform.

2. The digital champion – Reports to the CEO (occasionally reports into business functions)
and leads a dynamic team charged with driving product and service innovation and cultural
transformation. Organizations may have multiple digital champions in place. These
executives usually have a strong technology background.

3. The digital GM – Reports to the CEO and leads the creation and/or transformation of a
significant business or business unit. These executives focus on the growth of digital within
the company and the transition of major businesses into digital.

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SCORECARD CDO Scorecard

Scorecard Dimensions
IDC believes that CDOs will increasingly be assessed on the following five dimensions:

1. Vision (Links to Leadership Mastery)

This involves creating an innovation-oriented culture focused on
generating multitier digital revenue streams while identifying new use
cases linked to emerging technologies with clear risk management
approaches in place. (IDC believes that this is an incentive that should be
shared with the CIO.)

2. Ecosystem Centricity (Links to Relationship Mastery)

This involves building an external customer focus for the entire IT
organization and developing consumer engagement expertise to support
discussions with the CDO and the business. (IDC believes that this is an
incentive that should be partially shared with the CIO.)

3. Data-Driven Business (Links to Information Mastery)

Digital transformation requires organizations to look at data in an entirely
different way. Digital leaders have already managed to take advantage
of this opportunity by monetizing data assets and reinventing business
models to create new revenue streams. Ultimately, information can
be used to introduce new revenue streams for the organization. (IDC
believes that this is an incentive that should be shared with the CIO.)

4. Profitable Digital Capabilities (Links to Operations Mastery)

This involves putting in place a digital platform architecture with
aggressive modernization of enterprise applications on standard
platforms and modernizing infrastructure to support digital organization.
(IDC believes that this KPI is unique to the CDO, while the CIO and the
IT department should deliver the right digital platform architecture to
support these profitable digital capabilities.)

5. Talent Management (Links to WorkSource Mastery)

This is attracting new types of top digital talent (e.g., developers, data
scientists, UX experts, design thinking consultants) that will effectively
turn digital use cases into a profitable digital capability in a short
timeframe.

Based on these dimensions, the next step is to think about the different types of KPIs that need
to be put in place. And more importantly, how these KPIs map to the CDO types mentioned
previously. The following table provides a comprehensive description of the different KPIs that
include a set of actions for the CDO that IDC believes need to be put in place to ensure alignment
between the CIO and the CDO.

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 SCORECARD METRICS CDO Scorecard

Description of CDO Scorecard Metrics

New Digital KPIs Description / explanation

Creating a digital agenda

The is about the ability to create a digital “vision” and conceive and forge new business ecosystems by
Vision linked to the broader
using digital technologies and disruptive business models.
company mission

IDC predicts that by 2020, 40% of the European FT500 will see the majority of their business depend on
% of Revenue derived from
their ability to create digitally enhanced products, services, and experiences. This should be focused on
digitally enhanced products,
using 3rd Platform technologies to create value and competitive advantage through new digitally enhanced
services, and experiences*
offerings and creating new relationships in the ecosystem based on these.

Delivering a digital These are the disciplines that create organizations that can continually adapt and change to meet
innovation structure changing ecosystem needs and opportunities.

New Digital KPIs Description / explanation

NPS is a metric that allows business leaders to gauge the general satisfaction of customers or client
relationships. It serves as an alternative to traditional customer satisfaction research (e.g., customer
Ecosystem Net Promotor Score (NPS)*
tickets, social media following, customer reviews) and claims to be correlated with revenue growth. NPS
has been widely adopted. NPS is typically calculated based on responses to a single question: “How likely
Centricity is it that you would recommend our company/product/service to a friend or colleague?” The scoring for
this answer is most often based on a 0 to 10 scale. Organizations should strive for a mean score of >7.

Examples of measures could be the number of API calls, mobile app usage, website usage, downloads, or
New customer touchpoints
new “subscriptions” from the ecosystem. Ratings of customer-facing apps in App Stores could also be a
driven by the CDO*
measure.

As the organization develops a platform and connects with the ecosystem, it will require a clear API
strategy that allows the use and delivery of services to third parties. The API strategy can form a basis
Delivering the API strategy
for the creation of value for internal organizations as well as the users on the platform, whether they are
customers, partners, or suppliers.

A set of disciplines that enable leaders to continually gather and process ecosystem intelligence; distill
Driving ecosystem that intelligence into new products, services, and business models; and build collaborative relationships
experience to disrupt ecosystems. CDOs will need to work closely with the CMO and CIO office in order to drive
relevance internally as well as externally.

New Digital KPIs Description / explanation

New revenue-generating Digital transformation requires organizations to look at data in an entirely different way. Digital leaders
information-based have already managed to take advantage of this opportunity by monetizing data assets and reinventing
services launched in the business models to create new revenue streams. Ultimately, information can be used to introduce new
Data-Driven last quarter* revenue streams for the organization.
Business

Analytics is not only important for the discovery of meaningful patterns in data, but also for the
Use of advanced analytics
communication of knowledge. An organization driven by data needs to prepare itself by extracting
and visualization
information where it can and applying statistics to derive information, develop knowledge, and create
technologies*
predictive models.

Data privacy and security relates to forms of data and information security and implies that it is not just
Data privacy and security about protecting data from breaches and ensuring data integrity, but also being compliant with industry
approach* regulations. At a time when multiple apps and systems access the same data, it is necessary to design
new digital products or services in a “privacy-by-design” fashion.

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 SCORECARD METRICS CDO Scorecard

New Digital KPIs Description / explanation

The ability to get new digital capabilities of all types — including new features, configuration changes, bug
Frequency of releases of
fixes, and experiments — into production or into the hands of users, safely and quickly in a sustainable way.
Profitable digital capabilities
This is should also track the number of new use cases generated on a monthly and quarterly basis.
Digital
Capabilities
Clear payback period metrics for every digital project once it passes the minimum viable product (MVP)
Time to ROI for new digital
stage of the digital project life cycle (from generate idea => use case => business case => proof of
capabilities
concept => rapid prototyping => fail fast OR => digital capability delivery)

The most successful digital transformation initiatives enjoy close alignment between IT, business, and
digital functions. As teams are formed to execute on digital objectives organization should strive to
IT-business-digital structure include relevant stakeholders from IT, business, and potentially digital units. Communication should
address digital project management, as well as ideation exercises, sharing opportunities, identifying
barriers, and overcoming obstacles.

New Digital KPIs Description / explanation

The objective should be to have this in the top 100 at a minimum, but with a metric in place to improve it
Best place to work ranking
Talent on a year-to-year basis.
Recruitment

Running digital bootcamps is critical for the growth of the “digital IQ” (or awareness) within an
Running of digital organization, in addition to the collection and development of talent required to drive digital capabilities.
bootcamps Organizations should aim to run tracks that address or articulate the corporate digital strategy, familiarize
employees to new digital offerings, and expose digital talent to people outside their environment.

This is attracting new types of top digital talent (developers, data scientists, UX experts, design thinking
Recruiting “A+” digital talent
consultants, etc.) that will effectively turn digital use cases into a digital capability in a short timeframe.

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CDO SCORECARD FRAMEWORK METRICS CDO Scorecard

The CDO Scorecard framework

Using the scorecard and KPIs provided above, IDC believes CDOs should review their activities
along a CDO Scorecard framework which highlights the interdependencies between objectives
and across dimensions. The framework below provides a reference point on how a CDO can start
charting and connecting KPIs across the five scorecard dimensions.

Delivering a digital innovation

structure
Vision

Creating a digital agenda linked to the broader

company mission
% of revenue derived from
digitally enhanced products,
services, and experiences

Number of
Customer Centricity

new customer
touchpoints drivenby
the CDO in the last
Net Promoter Score (NPS) quarter

Driving ecosystem Delivering the API

experience strategy
Data Driven Business

Data privacy and security by design

New revenue-generating
Information-based services Enterprise-Wide usage of advanced
launched in the last quarter analytics and visualization technologies

Frequency of releases of
Profitable Digital

digital capabilities
Capabilities

Delivering tangible profitable Time to ROI for new digital

digital capabilities capabilities

Clear IT/business/digital
organizational structure and
responsibilities
Talent Recruitment

Attracting “A+” digital talent

Best place to work ranking Number of digital bootcamps run in the

last quarter per geography

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CONCLUSION CDO Scorecard

IDC believes that measuring the CDO should not just be about creating
new digitally enhanced products, services, and experiences — there
should also be a focus on forging partnerships with the CIO (and the
line of business)

Below are a set of actions that IDC believes need to be put in place across the five key dimensions
(vision, customer centricity, data-driven business, simplification and integration, talent
management) that CDOs should focus on as opposed to traditional technical service-level KPIs
that determined the success of the IT department in the past. To drive improvements across
these five dimensions, IDC recommends that the various CDO types look at their respective next
steps along the following lines:

DIGITAL EVANGELIST DIGITAL CHAMPION DIGITAL GM

• Deliver the digital vision • Seek operational • Ensure a digital P&L is in

for the company and raise excellence and place with clear payback
awareness to the senior standardization in digital period timescales.
leadership team. transformation.
• Broker high-value
• Create innovation • Create a multitier digital multithread DX programs.
awareness by setting up revenue strategy.
• Use ecosystem awareness
regular digital bootcamps
• Create a pan-enterprise and feedback as constant
jointly with the IT
information and data inputs to business driving
department.
management strategy. organizational culture,
• Identify key use cases goals, and projects.
• Implement a cross-
that reflect an “outside-
functional program • Implement cognitive
in” approach to how the
management office for systems, augmented
business should be run.
digital transformation reality, and smart products
• Align efforts with IT and initiatives. to create enhanced
LOB units and agree on customer and partner
• Use program/project-
measures and incentives. experience.
level DX to create centers
• Use program/project- of excellence that seed • Adopt a process-driven
level DX to create centers enterprise processes. approach to the continuous
of excellence that seed creation of new business
• Adopt a startup-like, all-or-
enterprise processes. models.
nothing mentality for new
DX initiatives. • Empower cross-functional
agile PMOs to lead
disruptive initiatives.

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CONCLUSION CDO Scorecard

CDO – Key Questions to Answer

The questions below highlight the areas that should be top of mind for the CIO as part of charting
this digital journey. In fact, these are critical questions that the CIO will need to answer to
deal with broader business expectations (increasingly from the CEO) as part of the company
transformation.

• How to ensure relevance in the external ecosystem?

• What new and emerging technology platforms to use?
• How to identify and prioritize use cases?
• Which advisors to use and who to partner with?
• How to use the external disruption to educate key internal stakeholders?
• Create an innovation culture that can generate digital revenue streams

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CONCLUSION CDO Scorecard

Conclusion
IDC believes that the CDO role is an important one to accelerate digital
transformation efforts. However, in many organizations it could well be
a transient one. Part of the challenge is that the role often lacks clear
definition and can reside within various functions across the organization.
And because he or she generally has the mandate to drive change, there
tends to be “organizational friction” associated with the role.

To execute on your digital ambitions, IDC believes that CDOs will need to be able to balance multiple
IT and business dimensions in harmony during and beyond the journey. It is critical that the CDO
plays a role to aggressively modernize technologies, processes, and methodologies to enable the
transformation of the enterprise. More importantly they champion change management, manage
risk, and support the IT department in creating a strategic platform architecture that will provide a
foundation for future innovations.
Finally, IDC recently investigated how most successful digital strategies are formed and executed,
and created a series of “Recipes for Success.” Though primarily written for the CIO audience, these
show that that CDOs need to build a special partnership with the CIO and should play a leading
role in the transformation journey. Together, finding and developing relevant use cases, defining
and charting the digital vision of the company using an outside-in approach, and ultimately helping
to launch a platform-driven business model will lead to success for the organization. To start, IDC
believes CDOs and CIOs need to work together along the following three-step process:

1. Identifying and prioritizing relevant use cases (by industry and domain) linked to
emerging technologies (IoT, artificial intelligence, robotics, blockchain, etc.)

2. Building out the business case for prioritized use cases across the digital leadership
team

3. Charting out the use case journey over a 6-, 12-, and 24-month timeframe

For CDOs to drive change within their respected organizations, IDC believes that it will be critical
to keep an open mindset, collaborate across all business functions, and find the right balance
between long- and short-term objectives across different dimensions. CDOs should not take the
KPIs listed in this document at face value, but should use them as guiding principles for how they
can evaluate their position and assess their contribution to the organization.

Besides this CDO Scorecard, IDC has also developed an overview of KPIs and scorecards for the
CIO which should be taken into consideration. This new set of digital leadership KPIs together with
the learnings from IDC’s Recipes for Success should give CDOs the right tools and framework for
their digital transformation journey.

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 CDO Scorecard

About IDC
International Data Corporation (IDC) is the premier global provider of market intelligence,
advisory services, and events for the information technology, telecommunications and
consumer technology markets. IDC helps IT professionals, business executives, and the
investment community make fact-based decisions on technology purchases and business
strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on
technology and industry opportunities and trends in over 110 countries worldwide. For
50 years, IDC has provided strategic insights to help our clients achieve their key business
objectives.
IDC is a subsidiary of IDG, the world’s leading technology media, research, and events
company.

Further information is available on our websites at www.idc.com

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