While 30% of organisations in Australia and New Zealand (A/NZ) are now starting to scale and harvest value from their digital investments, the remaining 70% are still evolving their digital business foundations, falling behind in rethinking business models, uplifting consumer experiences and shifting from project to product centricity, according to a survey from research and advisory firm Gartner, Inc.
The Gartner 2019 CIO Agenda Survey gathered data from 3,102 CIO respondents in 89 countries and across all major industries, including 161 respondents from A/NZ.
Gartner Executive Programs VP Brian Ferreira said digital resilience will be required for A/NZ organisations evolving toward digital business maturity this year.
“CIOs must step up to lead their enterprises through a year of predicted tightening economic conditions, competition from digital giants and political volatility. It’s more important than ever to maintain momentum during times of uncertainty, not only for digital business transformation but also for long-term business viability.”
According to the survey, digital initiatives are the highest priority for 25% of A/NZ CIOs in 2019. Revenue/business growth is ranked second (16%), ahead of customer experience and cost optimisation/reduction (tied for third at 10%). Cost optimisation/reduction has jumped from #10 priority in A/NZ last year and is ranked #5 globally in 2019.
Flat IT budgets
The survey results indicate that transformation toward digital business is challenged by flat IT budget growth of 1.5% in A/NZ in 2019, which is increasing less than the projected 1.9% inflation rate. This is compared with the 2.9% growth that CIOs globally expect this year. Flat IT budgets in A/NZ will limit capacity to meet the leading CIO priority of digital initiatives.
“The risk during these uncertain times with limited budgets is to make short-term investment decisions, which can slow or even reverse digital business transformation progress,” Ferreira said. “For those who stick to their plans and focus on the long-term vision, the returns will be there.”
The top five areas in which A/NZ CIOs will invest new or additional funding in 2019 are: business intelligence and data analytics (54%); cybersecurity and information security (40%); core system improvements and transformation (34%); cloud services or solutions (32%); and customer/user experience (31%).
AI and analytics shape the CIO technology agenda
The CIO Agenda survey indicates that disruptive emerging technologies will play a major role in reshaping business models in A/NZ as they change the economics of all organisations. Twenty-seven per cent of A/NZ CIOs expect AI to be the most disruptive technology for their organisations in 2019, taking the top spot away from data and analytics, which now occupies a second place at 22%.
According to the survey, 77% of A/NZ CIOs are already using AI technology. The top three ways AI is being used is for process optimisation (32%), chatbots (26%) and computer-assisted diagnostics (21%).
“The rapid shift to AI looks revolutionary on the surface, but A/NZ CIOs aren’t very innovative in creating uses for AI,” said Ferreira. “They need to experiment more to identify a greater range of uses within their organisation if they’re going to keep up with the innovators and disruptors in the market who invest more in it.”
C-Suite reporting lines lagging the global trend
Only one in three A/NZ CIOs report to CEOs, compared with 43% of CIOs in typical-performing organisations globally, and 56% in high-performing organisations. One-third of A/NZ CIOs report to a COO, and 17% to a CFO. As a result, IT is failing to influence business change and growth, according to Gartner.
“A/NZ CIOs have the chance to step up to become more influential business leaders, but most are not seizing that opportunity to drive change,” Ferreira said. “Those that take the lead with their business peers can drive innovative thinking in business models, consumer experience and moving from a project to product focus in how technology is delivered.”