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A/NZ CIOs hungry for digital transformation but budget remains barrier

09 May 2017

Gartner’s annual CIO survey has revealed CIOs in Australia and New Zealand (A/NZ) place a higher priority on customer focus on digitalisation than their global peers.

There is a greater percentage investing in digital initiatives (28 percent compared to the global figure of 32 percent) and fewer in core systems such as ERP, while efforts to strengthen digital leadership, organisation and technology capabilities have intensified in A/NZ this year.

The 2017 Gartner CIO Agenda Survey (2,598 CIO respondents in 93 countries across all major industries with 173 from A/NZ) found that 49 percent of A/NZ CIOs are participating in digital ecosystems as platforms to exchange information and interact electronically with competitors, customers, regulators, stakeholders and other enterprises.

Research director at Gartner, Jenny Beresford says the implications of digital ecosystems for A/NZ CIOs are ‘profound’.

"Many will need to shift their enterprise from a linear value chain business, trading with well-known partners and adding value in steps, to being part of a faster and more dynamic networked digital ecosystem,” says Beresford.

“While many are actively participating now, A/NZ CIOs need to take a more assertive and ambitious outlook to avoid falling behind in 2018."

However, budget remains a hurdle for this growth moving forward. A/NZ CIOs expect lower IT budget growth in 2017 (2 percent) than last year (2.9 percent), which is below the global average of 2.2 percent and well below the Asia Pacific average of 4.3 percent.

"One of the most significant digital investment challenges for A/NZ CIOs is that digital programs require a multi-year budget approach,” says Beresford.

“They share frustration with their business executives in trying to accelerate digital investment while budgets are still adjusted on a quarterly or annual basis, lagging changes in revenue forecasts and pace of digital demand."

Despite this, Gartner believes that A/NZ CIOs are more successful than their global peers at achieving IT cost optimisation targets. A/NZ CIOs are more likely to prioritise using IT for business cost optimisation over cutting the cost of day-to-day IT services than global peers.

"The strong business focus of ANZ CIOs also shows in their strong performance on stakeholder satisfaction with IT services, where ANZ CIOs are slightly above average on a global scale," Beresford says.

And in terms of technology priorities for the year ahead, significant spending and opportunity continues in big data analytics, while cloud continues to have significant momentum. Digital investment is more popular among A/NZ CIOs (28 percent) than around the world (16 percent), while proportionately fewer are reporting core ERP systems to be a top technology area than their global peers.

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