CIOs in Australia and New Zealand (ANZ) place a higher priority on customer focus and digitalisation than their global peers, with more investing in digital initiatives and fewer in core systems such as ERP, according to Gartner, Inc.’s annual CIO survey. The survey data shows that ANZ CIOs are intensifying their efforts to strengthen digital leadership, organisation and technology capabilities this year.

The 2017 Gartner CIO Agenda Survey gathered data from 2,598 CIO respondents in 93 countries and all major industries, representing approximately US$9.4 trillion in revenue/public-sector budgets and US$292 billion in IT spending.

173 CIO respondents were from ANZ. The survey data shows that 49 percent of ANZ CIOs are participating in digital ecosystems* as platforms to exchange information and interact electronically with competitors, customers, regulators, stakeholders and other enterprises.

"The implications of digital ecosystems for ANZ CIOs are profound," said Jenny Beresford, research director at Gartner. "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. While many are actively participating now, ANZ CIOs need to take a more assertive and ambitious outlook to avoid falling behind in 2018."

According to the survey findings, ANZ CIOs expect lower IT budget growth in 2017 (2 percent) than last year (2.9 percent), which is also behind the 2017 global average of 2.2 percent. In Asia Pacific, the average increase expected is 4.3 percent, skewed by CIOs in both China and India reporting over 10 percent average increases in their IT budgets this year.

IT Spend on Digitalisation

CIOs globally are reporting that they expect to spend more on digitalisation in 2017, with ANZ CIOs ahead of the overall average on investment and focus. ANZ CIOs exceed global peers in their expectation of digital spend from the IT budget this year, as well as in their projections for 2018.

"One of the most significant digital investment challenges for ANZ CIOs is that digital programs require a multi-year budget approach,” said Ms. 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."

The survey reveals that ANZ CIOs are driving cost optimisation opportunities and applying savings to digital reinvestment and/or reducing technical debt.

Achieving Cost Optimisation

Gartner believes that ANZ CIOs are more successful than global CIOs at achieving IT cost optimisation targets. On average, ANZ respondents who have a cost optimisation target have achieved 78 percent of their goals.

In terms of cost efficiencies, ANZ CIOs are very business focused on average. They 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," Ms. Beresford said.

Overcoming Talent Gaps

ANZ CIOs cite a lack of skills and resources as their biggest barrier to achieving their objectives as a CIO. They identified the biggest talent gaps as information, analytics, data scientist and business intelligence skills, along with their global peers. However, in ANZ the next biggest gap is digital business/digital marketing skills, while CIOs globally cited security.

"In some cases, ANZ CIOs who are well connected with their peers and competitors in similar industries are exploring ways of overcoming talent gaps by talent sharing," said Ms. Beresford. "Some business and technology leaders are also exploring ways to cross expose business and technology staff for extended exposure."

Technology Priorities for 2017

The top areas of new technology investments clearly show that significant spending and opportunity continues in big data and analytics, and that cloud continues to have significant momentum (see Table 1). Digital investment is more popular among ANZ CIOs (28 percent) than global peers (16 percent). Proportionally fewer ANZ CIOs are reporting core or ERP systems to be a top technology area than their global peers.

Table 1: Technology Investment Priorities

*Note: Percentages represent the proportion of CIOs citing each priority as one of their top three areas of new IT spending. Source: Gartner (May 2017)

In terms of disruptive technologies, ANZ CIOs lean more toward less adopted technologies as potential disrupters than their global peers on average. ANZ CIOs consider advanced analytics, virtual personal assistants, machine learning and augmented reality to be more important as potential disrupters and sources of competitive advantage than CIOs globally.

Additional analysis is available in the complimentary webinar replay "CIO Agenda 2017 - An ANZ Perspective: Seize the Digital Ecosystem Opportunity" available now. During the webinar, Jenny Beresford discussed the CIO Agenda Survey findings with a focus on the unique challenges that IT leaders in Australia and New Zealand are facing.