Digitalisation's a Growth Oriented Strategy

Andy Rowsell-Jones, Research Vice President, Gartner

Andy Rowsell-Jones, Research Vice President, Gartner

The Asia Pacific region is rapidly moving towards digital business, bringing increased market competition, efficiency gains and revenue growth opportunities. Now’s the time for CIOs to invest in new approaches to delivery, talent and leadership to industrialise their organisation’s response to digitalisation.

Although digitalisation rates vary across the region, the overall importance of digital revenue streams for the private sectoris expected to increase strongly over the next five years, according to Gartner’s 2016 CIO Agenda survey for Asia Pacific and Japan.In the public sector, digital processes are expected to increase almost as much.

"The CIO Agenda indicated that Asia Pacific CIOs are more concerned about the risk of missing a market opportunity than global peers, and commensurately less worried about cyber risk."

Unlike their global counterparts, however, Asia Pacific CIOs are more bullish about the prospects of digitalisation improving revenue directly through growth that new channels will bring, while making a direct contribution to improved coordination among business partners.

Market Risk Concerns

With digitalisation tied to growth and becoming central to the way enterprises operate, it will inevitably bring new threats. The CIO Agenda indicated that Asia Pacific CIOs are more concerned about the risk of missing a market opportunity than global peers, and commensurately less worried about cyber risk.

While cyber threats are seen as a significant issue, strikingly new competitive or commercial threats are seen as an issue by more CIOs in the region thanglobally.Interestingly, they also view competition from existing players to be more of an issue than competition from new entrants. This indicates that competitors are digitally more dynamic and fluid than in other parts of the world — making digitalisation even more of a priority for businesses in the region.

IT Budgets Growing Faster

As a consequence of digitalisation being seen as a growth strategy, IT budgets are increasing and are a bright spot for CIOs in Asia Pacific.

According to the 2016 CIO Agenda survey, enterprise IT budgets are forecast to grow by an average of 4.1 percent across the region, whereas all other regions show slower growth.

Greater importance is being attached to digitalisation as a market growth strategy and greater increases are occurring in budgets to fund investments. As a result, technology investments are more closely related to big data, cloud and mobile. This is in contrast to global peers, who are investing more heavily in traditional data centre and ERP.

It’s surprising that investment in operational technology (OT) and the Internet of Things (IoT) didn’t rate higher this year, but I’m certain this will change over the next few years as digital things become a significant consideration in more industries and society as a whole.

Take a Different Approach

Digitalisation is expected to intensify across the region, driven by opportunities to improve operations and create new sources of revenue with better levels of coordination among business ecosystems. In this environment, it’s becoming clearer that hard coded business and operating models will not suffice. A different approach is needed instead.

According to thedigital leaders surveyed, focusing on delivery, talent and leadership is an important way to industrialise digitalisation.

1. Delivery

CIOs are struggling between two competing pressures: to provide stable, secure, high-performance services and to deliver agile, innovative, technology-intensive services quickly. Bimodal IT provides a way to address both. It involves operating two separate, coherent modes of IT delivery – one focused on stability and the other on agility.

Gartner’s CIO Agenda Survey indicates that CIOs in the region have been more aggressive in their adoption of bimodal IT than global peers. There are some areas where they do lag, however, such as the use of multi-disciplinary teams, where developers and business experts sit together to develop solutions to business problems.

2. Talent

Scarcity of talent is a perennial problem for CIOs digitalising their enterprise. The bottom line is that CIOs and their enterprises are not acting fast enough. They all see the issue, and aside from being slow, they are not effective enough.

The real talent shortage areas are in information and digitalisation domains: big data, analytics, information management and business acumen. A worrisome difference between Asia Pacific and the rest of the world is in security – Asia Pacific doesn’t have much of a security skills gap.

Looking at where CIOs in the region rate security as a technology investment in the 2016 CIO Agenda, coupled with the lack of concern for cyber security, a reasonable conclusion is that it is likely to be de-emphasising security for the sake of meeting business demands for faster growth. One way to address this issue, without a huge investment, is to focus on people-centric security

3. Leadership

Asia Pacific CIOs have the right roles for digital leadership, just not the right relationships. They’re better placed than global peers at fulfilling digital leadership roles. However, it’s concerning that they have poorer relationships with their CEOs. Culture or not, Gartner strongly urges CIOs to work on CIO/CEO relationships as digital becomes central to more enterprise's playbooks.

A greater percentage of CIOs fulfil the role of chief digital officer (CDO)than their global peers in addition to their CIO responsibilities, implying that CIOs in the region are more deeply involved in digitalisation of their enterprise than peers.