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ASEAN CIOs to spend more on digital transformation

Data analytics, internet of things and cyber security are some of the areas that have the most potential to transform businesses in the ASEAN region

IT head honchos in the Association of Southeast Asian Nations (ASEAN) region will spend 2.2% more in 2017, mostly on digital initiatives aimed at transforming their businesses, according to a survey by Gartner.

While similar to the global average, this modest spending is not surprising, given that CIOs in the region are facing revenue pressures and an overall lack of skills in all areas.

Siddharth Deshpande, principal research analyst at Gartner, said ASEAN CIOs reported their company or business unit’s revenue is expected to grow by 11.5% this year, which is higher than average for top performers globally.

“This is a telling commentary on the expectations that CEOs and business leaders have for their technology leaders,” he said.

The 2017 Gartner CIO survey gathered data from 2,598 CIO respondents in 93 countries and all major industries, representing $292bn in IT spending.

Some 86 CIOs in ASEAN economies – including Malaysia, Vietnam, Singapore, Thailand, Philippines, Indonesia and Myanmar – participated in the survey. On average, they spent 26% of their IT budgets on digitisation – a top business priority in the region – in 2016. This is set to increase to 38% by 2018.

However, ASEAN CIOs still lag behind their global counterparts, which are looking to increase the proportion of IT spending on digitisation from 33% in 2016 to 43% in 2018.

Deshpande called for ASEAN CIOs to increase their spending on digitisation as a proportion of IT spending to achieve business expectations.

“Increasing spending on digitisation certainly has a direct correlation with increased revenue for the business,” he said, adding that ASEAN CIOs should increase the proportion of their IT budget on digitisation to at least 40%.

In addition, innovation, research and development (R&D), and new products and services ranked as one of the top three strategic priorities for 7% of ASEAN CIOs, compared with 20% globally.

“Increasing spending on digitisation has a direct correlation with increased revenue for the business”
Siddharth Deshpande, Gartner

“It’s just not possible to increase revenue through digital business without focusing on R&D, innovation, and new products and services,” said Deshpande.

“The costs of investing in R&D can be offset by leveraging ecosystems that bring in revenue from new types of channels and partners,” he said, adding that any R&D activities undertaken by ASEAN CIOs should focus on building or leveraging platforms associated with digital ecosystems.

While ASEAN CIOs spent more on infrastructure and datacentre services in 2016, they could shift some of that spending towards public cloud services in 2017 as regulatory attitudes towards cloud services ease and more localised cloud services options emerge, according to Gartner.

CIOs also cited advanced analytics, internet of things and digital security as the top three areas that have the most potential to transform their business over the next five years.

“CIOs have a real opportunity to treat digital risk and security issues as business enablers, and to use them to help their businesses make key risk-based decisions about engaging in digital business,” Gartner noted. “A greater focus on digital security also indicates that organisations are looking to take new approaches to build trust and resilience in the digital world.”

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