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ANZ CIOs hit roadblocks in digital agenda

Top IT leaders in Australia and New Zealand are grappling with cultural roadblocks and slow progress in advancing the countries’ digital agenda

An annual CIO survey by Gartner has revealed that organisations in Australia and New Zealand (ANZ) have made slow progress in getting themselves ready for digital business.

According to the global survey involving more than 3,000 CIOs, including 161 in ANZ, IT budgets in the two countries are mostly flat, growing by just 1.5% a year on average.

But CIOs need to overcome that because ANZ organisations that lose their digital business nerve now may not be able to recover, the survey report warned. “Now is the time for CIOs to lead through adversity,” it said.

The odds seem stacked against local CIOs, however, with just one in three ANZ CIOs reporting directly to their CEOs. More than 40% of IT leaders also admitted that their business culture is blocking change.

But Brian Ferreira, Gartner’s vice-president of executive programmes, said: “We hear a lot of excuses about stumbling blocks that CIOs are not at the executive table. They defend themselves, see it as a valid excuse and then go into a state of freeze.”

That is a professionally and personally risky approach, said Ferreira, who called for CIOs to conduct honest internal introspection about their slow progress, or risk being replaced by more assertive professionals who could be brought across to the role from other functional areas.

Ferreira said he was aware of a construction business that had sacked its CIO after 17 years because he was no longer considered up to the task. Meanwhile, he said, business managers from other functions – such as HR and procurement – who had demonstrated their ability to drive change were now being rewarded with control of the IT function as well.

The problem, said Ferreira, is that “CIOs are not talking about how the business repurposes itself”.

He added: “If the CIO can’t talk in terms of the business model and how to repurpose people whose roles may be automated, then there’s chaos and you get pushback.”

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For ANZ enterprises, the go-slow mentality is a particular worry in an increasingly global business world led by US and European businesses which are moving faster on digital transformation, said Ferreira.

The 2019 CIO survey revealed that just 30% of local businesses are starting to scale their digital businesses and harvest the resultant value.

Ferreira acknowledged that part of the problem was the extent of Australian businesses’ technical debt – with many organisations saddled with legacy information and systems.

He said companies had failed to invest properly over a number of years, leaving them with significant technical debt that had to be tackled before any real progress could be made.

For some organisations, that meant allocating 4% of revenues to technology investments to create a digital platform that would let them play catch-up. “They get stuck at that point and then tend to blame the CIO,” said Ferreira.

AI gaining momentum

Disruptive emerging technologies are expected to play a major role in reshaping business models in ANZ as they change the economics of all organisations. Some 27% of ANZ CIOs expect artificial intelligence (AI) to be the most disruptive technology for their organisations in 2019, taking the top spot from data and analytics, which now occupies second place at 22%.

According to the survey, 77% of ANZ CIOs are already using AI technology. The top three ways AI is being used is for process optimisation (32%), chatbots (26%) and computer-assisted diagnostics (21%).

“The rapid shift to AI looks revolutionary on the surface, but ANZ CIOs aren’t very innovative in creating uses for AI,” said Ferreira. “They need to experiment more to identify a greater range of uses within their organisation if they’re going to keep up with the innovators and disruptors in the market who invest more in it.”

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