Geopolitics, the macroeconomy - and enterprise technology

The role of the CIO is evolving rapidly. Orchestrating and deploying technology solutions is no longer at the top of the strategic checklist. Navigating the complex and dynamic landscape of macroeconomic, geopolitical, and regulatory policies is. And it’s changing the very nature of the role, the office, and the contribution envelope of the CIO.

Over the past few years, we have experienced a global pandemic, a macroeconomic downturn, and several devastating geopolitical conflicts – and we have the possibility of more to come. And yet, at the same time, we have seen an acceleration in new disruptive technologies, the opportunity to reimagine entire business models, and a real re-anchoring of businesses around their foundation of data, technology, and AI. By any measure, it’s been a whirlwind of evolution – of new opportunities and challenges. We also now know the speed of change is the slowest it will ever be.

This time is like no other. The unprecedented challenges and opportunities of the 21st century are shortening the window of opportunity for driving business impact, increasing the threshold of investment return on new digital initiatives, and driving a more nuanced approach to enterprise architecture designs.

The macroeconomic volatility is changing the investments we need to make in data, technology, and AI. Economic cycles are becoming shorter, customer demand more unpredictable, supply chains vulnerable for many, and excess capacity a significant drag for others. It is becoming increasingly challenging to drive sustained investments predictably – and balancing long-term resilience with near-term agility takes a new meaning. Digital, we know, is a long game, and yet investments we make must deliver returns in the short term.

Geopolitical issues are layering incredible complexity into technology strategy and investments. The recent tragic and unresolved conflict in the Middle East and the continuing Ukraine-Russia situation are disrupting the innovation ecosystem, talent supply, and global IT operations. For instance, the shifting sands of international relations in the US-China theater and the executive order on US investments, or Brexit before it, drive a deep rethink in how we architect our technology infrastructures globally. This need for flexibility is destroying one of the core tenets of enterprise technology – the leverage of building it once and using it across the corporation. Segmenting infrastructure, air-gapping systems, separating enterprise application instances, and duplicating IT environments is becoming increasingly the norm - and at once incredibly expensive, complex, and inefficient. It is forcing CIOs to rethink investment models built over decades under the premise of globalization and scale economies.

Regulatory complexity is increasing significantly. GDPR, CCPA, antitrust laws, the Investment Reduction Act, energy policy, the evolving AI regulations, and the changing cyber security environment are just a few challenges that global CIOs must now navigate. In addition to the maze of compliance requirements, CIOs have to redesign data and AI infrastructure around changing sovereignty requirements, build resilience to new threats, and align IT strategies and practices around the evolving legal and ethical expectations of customers, employees, regulators, and society. All of these drive increasing complexity in technology choices, talent and operational decisions, and agility and resilience in enterprise architectures.

And so, the CIO’s quest is to now to balance three key equations simultaneously – long-term foundational investments versus short-term returns borne out of the macro-economic environment, IT operations leverage versus business flexibility resulting from geopolitical considerations, and enterprise architecture agility versus structural resilience in response to regulatory requirements. Anticipating these vectors and setting up to pivot quickly in response to changing economic, geopolitical, and regulatory circumstances are now the critical success drivers of the CIO’s office.

And so the CIO’s office is no longer the service provider organization, relegated to executing business requirements from the corporate headquarters’ top floor. It’s becoming the seat of corporate strategy, the sharp focus of significant board attention, and the fundamental driver of durability and success in the new world climate.