Australian organisations are struggling to scale their digital initiatives and local CIOs are less likely than their global counterparts to hold a strategic role in their organisation.

Australia and New Zealand data from Gartner’s 2019 CIO Agenda survey released this week found only 30 per cent of organisations in ANZ are now starting to scale and get value from their digital investments.

The remaining 70 per cent are still evolving their digital business foundations, falling behind in rethinking business models, uplifting consumer experiences and shifting from project to product centricity, according to a survey from research and advisory firm Gartner.

The insights are based on a survey of 3,102 CIO respondents in 89 countries and across all major industries, including 161 respondents from ANZ.

According to the survey, digital initiatives are the highest priority for 25 per cent of ANZ CIOs in 2019, while revenue/business growth is ranked second (16 per cent).

The survey also identified a renewed focus on cost reduction. Cost optimisation/reduction has jumped from the number 10 priority in ANZ last year to number three, and is now tied with customer experience.

“CIOs must step up to lead their enterprises through a year of predicted tightening economic conditions, competition from digital giants and political volatility. It’s more important than ever to maintain momentum during times of uncertainty, not only for digital business transformation, but also for long-term business viability,” said Brian Ferreira, vice president Executive Programs at Gartner.

Digital transformation progress will also be hindered by flat IT budgets, which are expected  to grow just 1.5 per cent in ANZ in 2019, which is increasing less than the projected 1.9 per cent inflation rate.

“The risk during these uncertain times with limited budgets is to make short-term investment decisions, which can slow or even reverse digital business transformation progress,” Ferreira said. “For those who stick to their plans and focus on the long-term vision, the returns will be there.”

Strategic role

As digital technologies become core to the way companies operate, the role of the CIO has risen in strategic importance to ensure a holistic approach to security and integration. However local IT leaders are failing to influence business change and growth, according to Gartner.

Only one in three ANZ CIOs report to CEOs, compared with 43 per cent of CIOs in typical-performing organisations globally, and 56 per cent in high-performing organisations. One-third of ANZ CIOs report to a COO and 17 per cent to the CFO.

“ANZ CIOs have the chance to step up to become more influential business leaders, but most are not seizing that opportunity to drive change,” Ferreira said. “Those that take the lead with their business peers can drive innovative thinking in business models, consumer experience and moving from a project to product focus in how technology is delivered.”

Investment areas

The top five areas in which ANZ CIOs will invest new or additional funding in 2019 are: business intelligence and data analytics (54 per cent); cybersecurity and information security (40 per cent); core system improvements and transformation (34 per cent); cloud services or solutions (32 per cent); and customer/user experience (31 per cent).

AI has surpassed data analytics as the technology that CIOs believe will be the most disruptive.

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

“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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