by Lilia Guan

Business units dominate IT spending: study

Apr 08, 2019
Cloud ComputingDigital Transformation

Business units are now the major drivers behind technology spend in Australia and New Zealand, causing business-wide integration challenges at unprecedented levels, an IBRS study has found.

The2019 State of Enterprise Softwarereport, commissioned by TechnologyOne, found that 68 per cent of organisations plan to spend a considerable amount on overhauling their ageing enterprise solutions in 2019-2020 to take advantage of new technologies. However the drivers for that spend will be finance, human resources, customer service and operations – with IT pushed to the line.

TechnologyOne’s CEO Ed Chung said IT departments need to reinvent “themselves as a strategic, value-adding function”, which will empower line of business departments to drive transformation in line with an organisation’s integration strategy.

“If outdated technology or resistant-to-change IT teams are standing in the way of a department’s digital transformation aspirations, they will go around them,” said Chung.

“Gone are the days when IT could take months, possibly years to gather requirements, plan, select and implement enterprise software, and then expect immediate uptake and employee satisfaction,” said Mr Chung.

The five key findings ofThe 2019 State of Enterprise Softwarestudy are:

The pendulum swing away from ICT leading technology procurement

ICT must stop being solely focused on operational system uptime and instead focus more on improvement and innovation. If they don’t, business units will work around them. The clearest evidence of change is this study indicating that ICT now sits behind finance, human resources, customer service and operations, when it comes to ICT budget spend. Marketing came in at sixth place after ICT, followed by sales.

Integration is becoming an unseen pitfall of business-led IT

While SaaS has enabled business units to easily acquire and run enterprise-grade business solutions that are specific to their needs, the ease of acquisition and deployment also means that many organisations are now creating silos of information and processes.

A tidal wave of new enterprise software solution spend expected in 2019

Many organisations have held back enterprise solution upgrades or replacements, either adopting a ‘wait and see’ approach to cloud, or delaying until their existing vendors catch up with technology.

SaaS is improving satisfaction with change management and allowing businesses to innovate faster

Over 40 per cent of executives reported that encouraging staff adoption of enterprise solutions remains a major challenge, while a further 45 per cent indicate it remains a minor challenge. In short, 85 percent of organisations struggle to enhance staff uptake of new processes demanded by enterprise solutions. Interestingly, organisations with a preference for SaaS reported significantly fewer challenges with getting people to adopt cloud services.

Cloud myths that just won’t die – security, cost and integration

Despite Australia being a world leader in enterprise cloud adoption, this study unexpectedly revealed that some market segments remain in the grip of cloud myths. While most (80 per cent) of those surveyed – across all industry sectors – believed their organisation’s executives had a passable or higher level of understanding about cloud services.