It has long been a principle of information technology that the software and employees use must be strictly limited and controlled by IT. Otherwise, all hell would break loose: Employees would try to connect every imaginable contraption to the enterprise network using all kinds of software and putting at risk vast amounts of sensitive information — indeed, the integrity of the entire system.

As we know, that principle no longer applies. Younger employees now expect their company’s IT department not only to tolerate their smartphones and tablets, but to help support them and give them complete access to the Internet. They want to stay connected with Facebook friends, follow their Twitter feeds, play games, and generally mix business with pleasure over the course of their “working day”—which itself has fewer defined hours than ever before.

These trends will only accelerate, as the cohort born after 1990 joins the ranks of the world’s workers and consumers in growing numbers over the next decade. At Booz & Co., we call them Generation C—the C stands for connected, communicating, computerized, content-centric, community-oriented. Over the course of the next decade, our research indicates, this group will make up close to 50 percent of the worldwide workforce, and up to 40 percent of all consumers in the developed world.

Too many CIOs see nothing but risks associated with the rise of Generation C. From their short-term point of view, the security issues will continue to trump the added flexibility and employee loyalty to be gained through the consumerization of corporate IT — not to mention concerns about lower productivity, reputational risk, compliance and costs. Yet companies that can keep ahead of this trend will ultimately be giving themselves a real advantage in a matter of even greater importance: the race to meet the digital future head on.

Digitization's Impact

“Digitization” — the process by which technology is shaping every aspect of our public, commercial and private lives — is inevitable. Already, pervasive broadband, ubiquitous connectivity, cloud computing, and social networking, are all converging to transform how we work, play, communicate, socialize and do business. No CIO can afford to ignore or discount this process, as it will transform how every enterprise operates, both internally and externally. It will vastly increase the amount of insight businesses can gather about their customers; it will open up major new opportunities to capture value; and it will provide a huge productivity boost. As such, it holds the key to growth for global companies in virtually every industry as well as for government agencies and non-profit organizations for the foreseeable future.

CIOs looking to stay on top of the ongoing digitization of their employees, customers and overall operations need to understand just how well-prepared — or not — they are to meet this trend. On an internal level, they must assess their readiness to handle the needs of the coming wave of Generation C employees. The graphic below shows the tool we use to assess overall readiness to handle more consumer-oriented IT, as well as examples of average readiness in several different industries:

The assessment tool considers a number of criteria that determine readiness for consumer-oriented IT. Based on these factors, we can make the following assumptions:

• Security and privacy requirements: Companies in industries with stringent demands for security and privacy should move to a consumer model more cautiously.

• Maturity of IT support: Companies that already use ITIL or COBIT will be more prepared for the shift.

• Use of Web-based applications: Web-based applications have less dependence on PC-based software to function correctly; hence, they fit a consumer IT model better.

• PC-usage profile: Laptops fit the consumer IT model most strongly.

• Legal and compliance environment: A complex legal and compliance environment makes the use of consumer IT riskier.

• Risk culture:Risk-averse organizations are less likely to accept the risks associated  with consumer IT.

• Employee profile:Tech-savvy employees are more demanding but more comfortable supporting themselves.

• Working culture: A flexible culture requires looser security measures and is more open to the use of personal devices.

• Type of work: Employees who typically work 9-to-5 are less likely to mix work and life.

As part of this assessment, the critical issues to consider are security needs and the nature and culture of employees. An aerospace manufacturer, for instance, will naturally have a greater need for maintaining a high level of security than an advertising agency, for instance. And its employees are, perhaps, less likely to be the young, creative and Web-savvy employees an ad agency would attract.

The internal transformation, however, is only a first step in mounting an offensive strategy in the face of increasing digitization. Every organization must also expect the trend to affect its business model and must determine the capabilities it will need to create value in the future. Digitization, we believe, will affect industries in different ways, depending on three major factors:

1. Industries, such as retail and media and entertainment, where barriers to entry are low will look to digitization early, as a means of gaining a competitive advantage.

2. Industries where information in some form or another is the primary product or a key success factor are ripe for digitization. Here, examples include financial services and, again, media and entertainment.

3. Industries that are the most intensive in their use of capital — whether financial or human — offer big opportunities for digitization to reduce capital intensity and increase return on capital. Healthcare, and the public sector in general, fit both conditions.

As digitization takes hold, it will be the job of the CIO both to manage the transformation and to help prepare for the changes in the business and operating models needed to win in this environment. And that particularly means connecting, communicating and building communities with younger workers who will be leading the charge.

Roman Friedrich is a Booz & Company partner, based in Düsseldorf and Stockholm. He leads the firm’s communications, media and technology practice in Europe, and specializes in the strategic transformation of these industries in the context of digitization.