Local tech chiefs moving at snail’s pace towards digital business progress: Gartner

While 30 per cent of organisations in Australia and New Zealand are starting to scale and get value from digital investments, the remaining 70 per cent are “falling behind in rethinking business models,” according to Gartner’s 2019 CIO Agenda.

Gartner spoke to 3,102 CIOs in 89 countries across all major industries, including 161 respondents from A/NZ.

The study found the majority of A/NZ firms are also falling behind in uplifting consumer experiences and shifting from project to product centricity. This comes despite the fact digital initiatives are the top priority for 25 per cent of A/NZ CIOs in 2019.

Revenue/business growth is ranked second (16 per cent), ahead of customer experience and cost optimisation/reduction (tied for third at 10 per cent). Cost optimisation/reduction has jumped from tenth priority in A/NZ last year, and is ranked fifth globally in 2019.

Gartner vice-president of executive programs, 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.”

Other survey findings show one in three A/NZ CIOs report to CEOs, compared with 43 per cent of CIOs in typical-performing organisations globally, and 56 per cent in high-performing organisations. One-third of A/NZ CIOs report to a COO, and 17 per cent to a CFO.

As a result, IT is failing to influence business change and growth, according to Ferreira.

“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,” he 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.”

Meanwhile, AI and analytics will shape the CIO technology agenda, according to the survey.

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 second place at 22 per cent.

“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.”

According to the survey, 77 per cent of A/NZ CIOs are already using AI technology. The top three ways AI is being used is for process optimisation (32 per cent), chatbots (26 per cent) and computer-assisted diagnostics (21 per cent).

Meanwhile, due to predicted economic tightening and low budget growth, cost optimisation/reduction has jumped from No. 10 priority in A/NZ last year to No. 3 (tied with customer experience), and is ranked No. 5 globally in 2019.

Survey results also indicate that transformation toward digital business is challenged by flat IT budget growth of 1.5 per cent in A/NZ in 2019, which is increasing less than the projected 1.9 per cent inflation rate.

This is compared with the 2.9 per cent 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 include: business intelligence and data analytics (54 per cent); cybersecurity and information security (40 per cent); core system improvements and transformation (34 per cent); cloud services or solutions (32 per cent); and customer/user experience (31 per cent).