Just six per cent of new funding us set to be spent on innovation, according to new research.
Following a survey of 150 Australian and New Zealand Chief Information Officers and digital leaders representing companies responsible for 27% of our GDP and 9% of our workforce, local technology research and advisory organisation, ADAPT, has released the results of its 2023 CIO Edge survey, which outlines the top priorities of, and challenges facing, Australia's top digital executives.
Gabby Fredkin, Head of Data & Analytics at ADAPT, said while increased investment into digital initiatives is encouraging, with just six per cent of new funding set to be spent on innovation, combined with persistent levels of internal friction, companies are unlikely to see meaningful improvements in their ability to capture value and make leaps in productivity.
"As it stands, the vast majority of technology resources, both time and cash, are still being deployed by frazzled IT departments to move away from legacy processes, which almost always prevents the exciting work that meaningfully creates value and drives productivity," says Fredkin.
"Until CIOs and digital leaders feel supported by the C-suite and the Board to focus on big picture issues, such low levels of investment into innovation will remain a handbrake on our economy."
Rates of emerging tech adoption revealed
When asked about plans to implement emerging technologies over the next 12 months, CIOs and digital leaders responded with the following:
- Digital assistants (e.g. chatbots) - 54% already deployed, 21% piloting
- Internet of Things - 41% already deployed, 20% piloting
- Machine Learning - 40% already deployed, 29% piloting
- Generative AI - 30% already deployed, 41% piloting
- Digital twins - 24% already deployed, 16% piloting
Fredkin says that while the uptake of emerging technology is encouraging, it is important to remember that without the fundamental, supporting infrastructure of a digitally fit workforce, many initiatives will fail.
"Those pain-free IT projects returning immediate value that CEOs dream of can only materialise when company leadership understand how to drive successful adoption of the technology through the entire breadth of their company," he says.
CIOs must get the culture right before deploying growing tech spend
The report found that 50% of CIOs and digital leaders indicated they will be receiving increased funding for their IT initiatives over the next 12 months, with 19% expecting a funding increase of up to 5%, 6% of respondents expecting a funding increase of between 10% and 15%, while a full 25% of respondents indicated they expect funding increases of over 15%.
Fredkin says the success or failure or IT initiatives wont rest on the funding available, but rather the ability of CIOs and leadership teams to drive cultural change and reduce the internal friction involved with the rollout of new processes.
"Even though budgets continue to increase, allocating it effectively remains a huge problem. As legacy processes continue to present a huge barrier to the success of digitisation projects, prevailing wisdom might suggest that shiny new technology is the silver bullet to solving business problems, but to invest in huge initiatives without the support of a robust IT culture is just putting the cart before the horse," he says.
"What separates our most successful innovators from their less digitally mature peers is their ability to eliminate the friction involved in the rollout of IT projects by first addressing the culture preventing the scaling of cross-functional knowledge, and then deciding on the technology of best fit," Fredkin says.
"That can be easier said than done though, as heads of IT often struggle to address the issue with leadership teams because communicating where their organisation is, and where it should be relative to its peers, is really complicated."
Prioritising cybersecurity key to company growth: ADAPT Analyst
When asked about their top strategic business priorities, 83% of CIOs and digital leaders claimed improving the security of their data was their top concern over the next financial year. Fredkin believes CIOs are correct to prioritise the issue.
"A company's ability to create value relies a great deal on how well it can secure its data. Organisations need the right cyber strategy which allows them to stay resilient and focus on improving the customer experience and create new revenue streams," he says.
"When organisations aren't cyber resilient, it means they're much more hesitant of working with external partners because they're fearful of potential security risks. It seems counterintuitive, but those with the right cyber strategy are actually more open to working with others in their ecosystem because they are confident in their ability to set the right governance frameworks."