Digital transformation will absorb a much greater share of IT budgets in Australia and New Zealand next year, but CIOs must look to Asia for inspiration, according to research group, Gartner.

For a country of a little over 24 million people, Australia tends to punch above its weight when it comes to technology adoption and digitalisation, says Jenny Beresford, research director at Gartner.

Take Deakin University, for example, which is building an ecosystem of learning and teaching designed to shift its business model from being faculty-centric to one that is student-centric and dependent on technology to scale. Its deployment of IBM Watson technology as a student advisor attracted global attention, helping to market the university to potential students from around Australia and abroad.

“This showcases the power of the CIO to use digital transformation to impact business results,” says Beresford.

Similarly, Children’s Health Queensland (CHQ), a specialist hospital and health service, is creating a digital ecosystem to integrate care across the state’s health services through improved sharing of data and information with partners, clinicians, and patients and their families. As well as delivering innovation, CHQ sees digital healthcare as a way to gain cost efficiencies.

Growing digital investment

Gartner’s 2017 survey of more than 2,500 CIOs worldwide, with 173 responses from Australia and New Zealand (ANZ), showed that CIOs are intensifying their efforts to strengthen digital leadership, organization and technology capability.

Overall, ANZ CIOs are performing well in leading and enacting the digital business agenda, reporting in the top cohort of global CIOs for:

  • Digital ecosystem participation
  • The average age/currency of their platforms and applications
  • Utilization of contemporary cloud and externally managed services
  • Effective operational management disciplines such as IT cost optimisation

CIOs — overall and in the ANZ region — are reporting that they expect increased spending on digitalization. ANZ CIOs are ahead of the global average, currently spending 21 per cent of the IT budget on digital initiatives and expecting that to grow to 32 per cent in 2018. However, that’s well below the 28 per cent (growing to 39 per cent) spent by Chinese CIOs.

Constraints facing ANZ CIOs

ANZ CIOs expect lower IT budget growth (2 per cent) in 2017 than last year (2.9 per cent), which is lower than the global average (2.2 per cent) and considerably lower than their neighbors in Asia. They feel constrained by a dearth of skills and resources.

Meanwhile, ANZ CIOs continue to face ever-growing business expectations for fast, productive, innovative and agile IT that is also extremely reliable, always available and secure.

As organizations embark on digital transformation, the role of the digital ecosystem and the role the enterprise takes in a given ecosystem become increasingly important. Top performers run, buy and sell through ecosystems.

The survey data shows that 49 per cent of ANZ CIOs are participating in digital ecosystems as platforms to exchange information and interact electronically with competitors, customers, regulators, stakeholders and other enterprises. However, while ANZ organizations are running (co-creating or providing) and buying through the ecosystem at the same level as average, they are less likely to sell and deliver services or products through the ecosystem.

“While many are actively participating now, ANZ CIOs need to take a more ambitious outlook and keep a sharp eye on Asia for ideas and inspiration,” Beresford says. “As CIOs, if you aren’t adding Asian ecosystem platforms into your repertoire of options, you’ve already fallen behind.”

Client Research: Gartner clients can read more in 2017 CIO Agenda: An Australia and New Zealand Perspective.

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