While 30% of Australia and New Zealand (ANZ) organisations are scaling and harvesting 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 recent Gartner survey.
The Gartner 2019 CIO Agenda Survey gathered data from 3,102 CIOs in 89 countries across all major industries, including 161 respondents from ANZ.
Brian Ferreira, vice president Executive Programs at Gartner, said digital resilience will be required for ANZ 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 ANZ CIOs in 2019; revenue/business growth ranked second (16%) ahead of customer experience and cost optimisation/reduction (both third at 10%).
Flat IT budgets
The report indicated that digital business transformation is challenged by flat IT budget growth (1.5%) in ANZ in 2019, less than the projected 1.9% inflation rate and much less than the 2.9% growth that CIOs globally expect this year. Flat IT budgets in ANZ 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,” said Ferreira. “For those who stick to their plans and focus on the long-term vision, the returns will be there.”
The top five areas ANZ 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 report indicated that disruptive emerging technologies will play a major role in reshaping business models in ANZ as they change the economics of all organisations: 27% of ANZ CIOs expect AI to be the most disruptive technology for their organizations in 2019, taking the top spot away from data and analytics, now second at 22%.
According to the survey, 77% of ANZ CIOs are already using AI technology. The top three ways AI is being used are:
- Process optimisation (32%);
- Chatbots (26%); and
- Computer-assisted diagnostics (21%).
“The rapid shift to AI looks revolutionary on the surface, but ANZ 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 global trend
Only 33% of ANZ CIOs report to CEOs, compared with 43% of CIOs in typical-performing organisations globally, and 56% in high-performing organisations. One-third of ANZ CIOs report to a COO, and 17% to a CFO. As a result, IT is failing to influence business change and growth.
“ANZ CIOs have the chance to step up to become more influential business leaders, but most aren’t seizing that opportunity to drive change,” Ferreira said. “Those that take the lead can drive innovative thinking in business models, consumer experience and moving from a project to product focus in how technology is delivered.”