Gartner to CIOs: ‘Get ready for the digital ecosystem surge’

‘While many are actively participating now in digital ecosystems, CIOs need to take a more assertive and ambitious outlook to avoid falling behind in 2018’

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Top-performing organisations participate more in digital ecosystems

Gartner ANZ CIO survey

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.

The analyst firm says its annual CIO survey shows 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.

Of these, 173 respondents were from ANZ, with 150 from Australia and 23 from New Zealand, according to Gartner.

The survey data shows that 49 per cent of ANZ CIOs are participating in digital ecosystems as platforms to exchange information and interact electronically with competitors, customers, regulators, stakeholders and other enterprises.

Gartner defines a digital ecosystem as an interdependent group of actors (enterprises, people, things) sharing standardised digital platforms to achieve a mutually benecial purpose.

The report author, Jenny Beresford, research director at Gartner, points out: “Digitalisation in most enterprises is maturing, and as it does it becomes much more likely that these enterprises will become part of a digital ecosystem where competitors, customers, regulators, other stakeholders and other enterprises exchange information and interact electronically in converged physical and virtual scenarios.”

"The implications of digital ecosystems for ANZ CIOs are profound," she adds.

Jenny Beresford of Gartner at the 2017 CIO100 event.

Re-evaluate your ecosystem involvement, in particular considering if a more strategic role in co-creating/running the ecosystem would be relevant given the enterprise's current context.

"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."

The 2017 Gartner CIO Survey shows clearly as enterprises — globally and in the ANZ region — embark on the digital journey, the role of the digital ecosystem and the role the enterprise takes in a given ecosystem become increasingly important.

Based on analysis of responses to the 2017 survey, plus case study interviews with leading enterprises, it is clear that top-performing organisations participate more in digital ecosystems, the report states.

These top performing organisations also differ from typical and trailing performers in three areas: their technology infrastructure prioritises interoperability, their IT organisations have a more external mindset, and their business leadership is more focused on mastering interdependence.

Overall, the 2017 CIO Survey responses on the involvement and role in digital ecosystems point to ANZ CIOs being well-aware of the power of digital ecosystems, participating actively now, and expecting continued growth in activity, reach and impact in the next two years.

ANZ CIOs cite a lack of skills and resources as their biggest barrier to achieving their objectives as a CIO.

However, ANZ may fall well behind by 2018 without taking a more assertive, ambitious outlook.

Thus, Gartner issues the following call to action for ANZ CIOs:

■ Re-evaluate your ecosystem involvement, in particular considering if a more strategic role in co-creating/running the ecosystem would be relevant given the enterprise's current context.

■ Continue to assertively seek to grow the number of partners in your ecosystems, in order to catch up with global peers and meet your own projections.

Where ANZ lags

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

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,” says 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.

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 per cent 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," Beresford says.

Mind the talent gap

ANZ CIOs cite a lack of skills and resources as their biggest barrier to achieving their objectives as a CIO.

In terms of the specic talent gaps, a third of ANZ CIOs, like their global peers, are seeing shortages in analytics, data scientists and BI.

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," says Beresford.

"Some business and technology leaders are also exploring ways to cross expose business and technology staff for extended exposure."

Johnson & Johnson is teaching Watson to read and understand scientific papers that detail clinical trial outcomes used to develop and evaluate medications and other treatments.

Top tech investments

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.

Digital investment is more popular among ANZ CIOs (28 per cent) than global peers (16 per cent). Proportionally, fewer ANZ CIOs are reporting core or ERP systems to be a top technology area than their global peers.

In terms of disruptive technologies, ANZ CIOs lean more toward less adopted technologies as potential disruptors 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 disruptors and sources of competitive advantage than CIOs globally.