Tuesday, 27 October 2015 23:53

Australian, NZ CIOs do the hard yards on digital transformation

Australian, NZ CIOs do the hard yards on digital transformation Image courtesy of cooldesign, freedigitalphotos.net/images

Progress in transforming to digital business in the Australian-New Zealand region is lagging the rest of the world, and CIOs have been warned that leading businesses must shift to platform thinking in terms of their business models, delivery mechanisms, talent and leadership, in order to survive and thrive.

And, the latest global survey of CIOs, including in Australia, by research firm Gartner shows that while a higher proportion of ANZ CIOs lead digital transformation and innovation in their enterprise, progress towards digital business in the region is slower than the global average.

The survey also reveals that Australian and New Zealand chief digital officers are not being put in place as fast as expected, with 9.1% of ANZ enterprises currently employing one.

Security is higher on the priority list for ANZ CIOs than their overseas counterparts.

They are concerned about security risks, with 66% of CIOs surveyed saying security and cyber risk poses a greater threat to their business than new competitive and commercial threats (compared to 54% globally).

And, on spending, Business Intelligence and Analytics tops the list of new technology investment priorities for CIOs in the ANZ region in 2016 as they look to monetise big data.

With ANZ CIOs expecting average budget increase of 2.9%, slightly higher than the global weighted average of 2.2%, digital revenue is expected to grow from 14% now to 32% of total revenue in the next five years.

Graham Waller, Gartner vice president and co-author of the new Gartner book – Digital to the Core - presented the survey findings at Gartner Symposium ITxpo on the GoldCoast.

The worldwide survey gathered data from 2,944 CIO respondents representing more than US$250 billion in CIO IT budgets in 84 countries, including 175 in the Australia-New Zealand region.

While the average ANZ CIO expects digital revenue to grow from 14% now to 32% of total revenue in the next five years, a global comparison shows that CIOs in other countries expect digital revenues to grow from 16% to 37% in the next five years.

And, in the ANZ public sector, CIOs are predicting a rise in digital processes from 38 to 79%, compared to a rise from 42% to 77% globally.

"As digitalisation is intensifying, it is becoming clear that hardcoded business and operational models will not suffice and that a more adaptable approach is required," said Waller.

"Leading businesses and government agencies are looking less like fixed ‘systems’ and more like platforms. A platform provides the business with a foundation where resources can come together — with the ability to rapidly configure groups of assets both across the business and the broader ecosystem — to create value.

"Leading economists have noted the increasing prevalence of platform business models, where multiple networks of stakeholders bring value to each other by exploiting network effects. Technologists have long recognised the power of platform approaches to information and technology architecture. What is new is that platform dynamics are being applied to create value in all aspects of the business.”

Waller says that the Gartner survey showed that the purse strings are loosening, “but only a little”.

According to Gartner, Australian and New Zealand CIOs expect an average budget increase of 2.9%, slightly higher than the global weighted average of 2.2% and an improvement over last year’s expected slight decline in ANZ of 0.2%.

And, ANZ CIOscited money as their biggest barrier to achieving their objectives as a CIO, while globally, skills are seen as the top barrier.

Regardless of the barriers faced by CIOs, the survey found that 52% of ANZ CIOs are the leaders of digital transformation in their enterprise, and more than 40% are the innovation leader - significantly higher than the global averages of 40 and 30% respectively.

“These results show that CIOs are being given the opportunity to lead digital transformation, but they must adapt their leadership style to exploit platform effects in leadership, building a network of digital leadership inside and outside the enterprise,” Waller said.

The survey also found that chief digital officers (CDOs) are not being put in place as fast as expected - currently 9.1% of ANZ enterprises said they have a CDO, around the same as the global average of 9.3%, up from 6.6% globally two years ago.

When asked to choose whether security and cyber risk, or new competitive and commercial threats, posed a greater threat to their business, 66% of ANZ CIOs chose security and cyber risk, compared to 54% in the overall global survey).

On the competition front, ANZ CIOs said they are equally concerned about digitally driven competition from traditional industry competitors (50%) and digital-enabled companies entering their industry from other industries (50%).

According to the survey, 49% of ANZ CIOs believe there is a talent crisis, and yet, says Gartner, there is surprisingly little talent innovation.

"It is time to think of talent as a platform and innovate with it," said Waller.

“CIOs must look at digital talent beyond the boundaries of the IT organisation, and indeed beyond the boundaries of the enterprise.

“Innovative talent management opportunities abound and include getting closer to universities by helping define and deliver courses and projects, performing reverse mentoring and implementing job rotations. CIOs should also think of their partners as extensions of the talent pool."

Gartner also found that CIOs globally, and in ANZ, identified the biggest talent gap as information and analytics skills.

In addition, in ANZ, the next two biggest skills gaps are project management and architecture skills, while globally, CIOs cited business acumen and security as the biggest skills gaps.

Concluded Sondergaard: “The new suppliers of digital platforms must be: able to support fast-fail projects, in the cloud, on demand, and highly automated with short-term engagements and pay-as-you-go models, and provide real-time insights with advanced automation.

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Peter Dinham

Peter Dinham - retired in 2020. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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