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ANZ business users calling the shots in ICT decisions

Business users in ANZ firms have more sway about technology decisions, but it is not always a case of shadow IT

Enterprise technology departments in Australia and New Zealand (ANZ) have slid down the pecking order in terms of their share of ICT budgets and now languish in fifth position.

According to the 2019 State of Enterprise Software report, ICT now sits behind finance, HR, customer service and operations. Marketing is in sixth position followed by sales.

Conducted by Australia’s Intelligent Business Research Services (IBRS) and commissioned by TechnologyOne, the survey of 261 business leaders in ANZ has shown that business functions are having more sway about technology decisions and are increasingly opting for cloud-based applications.

But it is not always a case of “shadow IT” in the traditional sense where a business unit goes behind the technology department’s back to buy a product or service.

Instead, it is “enterprise shadow IT” selected with the blessings of IT, said Joe Sweeney, principal analyst at IBRS, adding that in some organisations, CIOs have transformed and are more supportive and consultative.

However, Sweeney acknowledged that there may be other CIOs who insist that technology purchases made by business users are still considered shadow IT. He said this group of CIOs often railed against any move to the cloud, citing security issues – but that no longer holds water.

“Given that Australian Signals Directorate-recognised protected cloud services are available (in Australia at least), and that the federal government is moving to cloud-delivered enterprise solutions aggressively, the security excuse is thin at best,” said Sweeney, noting that cloud suppliers are better at managing complex cyber security risks than most organisations.

Making savings

Ed Chung, CEO of TechnologyOne, which has been arguably slower than many of its peers to offer cloud services, said a third of the company’s customers now use its cloud applications. He added that the cloud applications deliver savings of about 30% compared to on-premise versions, and now accounts for all of TechnologyOne’s new business.

Enterprise demand for cloud continues to soar in Australia. Recently released research from Gartner indicates that public cloud is an increasingly popular choice for Australian enterprises, with spending forecast to rise 19% to A$6.5bn this year.

Last year, Australian organisations spent $3.6bn on cloud-based applications, and are expected to spend $4bn more this year. Infrastructure-as-a-service is growing strongly, but cloud-based applications eclipse all other categories.

The rise of cloud, however, has delivered an integration headache for IT teams, according to TechnologyOne’s report.

It noted that while cloud-based applications have enabled business units to easily acquire and run enterprise-grade business software specific to their needs, the ease of acquisition and deployment also means many organisations are now creating silos of information and processes.

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As such, the report singled out integration as a challenge for a growing number of organisations where business units have procured cloud-based applications with only superficial ICT involvement.

But Sweeney noted that in more mature organisations, business users are usually more aware of the need to ensure proper integration when selecting software.

He revealed that during the one-on-one interviews conducted as part of the research process, there were chief operating officers and HR leaders talking explicitly about integration at a technical level, including the use of application programming interfaces and mesh architecture.

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