Enterprises that fall behind in digital business now will have to deal with a serious competitive disadvantage in the future
Gartner says digital maturity in the Asia Pacific has reached a tipping point this year.
Its latest CIO survey finds 31 per cent of CIOs in the region have evolved their digital initiatives to the scaling stage, up from 19 per cent in 2018.
The 2019 Gartner CIO Agenda survey gathered data from more than 3,000 CIO respondents in 89 countries and all major industries.
Of these, 671 CIOs come from 16 countries within Asia Pacific, representing $6.1 trillion in revenue and $73.7 billion in IT spending.
Forty-seven per cent of Asia Pacific CIOs report their enterprises have already changed their business models or are in the process of changing them.
Forty per cent says evolving consumer demands are driving their business model change.
Andy Rowsell-Jones, vice president and distinguished analyst at Gartner, calls on CIOs to evolve their thinking to be in tune with this new era of rapid increases in the scale of digital business.
Gartner’s 2019 CIO Agenda Report, in particular, lists four areas organisations need to create and strengthen:
• Business model change: Nearly half of CIOs report that their organisation’s business model has changed or is currently changing. This change creates an opportunity for CIOs and IT leaders, since these new business models have IT on centre stage.
• Secure consumer-centricity: Whether CIOs work for a private-sector enterprise or a public-sector one, engaging with your consumers is a good idea, reports Gartner. But consumers and organisations have to be secure. It says top performers combine multiple elements to deliver superior consumer experiences, combining hard and soft aspects of cybersecurity.
• Resourced product management: This is how you deliver new functionality to your consumers. In a delivery context, product management is higher-order work, says Gartner. It assumes a longer life cycle of continuous release. This is supported by purposeful people and culture development. Some of the preparations for this involve DevOps, architecture and tools.
• Business-enabling technology: Success in the third era of enterprise IT hinges on sound I&T that combines new, disruptive technologies with a rebalancing of existing investments. Disruptive emerging technologies will play a major role in reshaping business models as they change the economics of public- and private-sector enterprises, the report points out.
IT budgets holding steady
The survey results indicate that transformation toward digital business is supported by steady IT budget growth.
CIOs globally expect their IT budgets to grow by 2.9 per cent in 2019, but Asia Pacific is the leading region with an expected 3.5 per cent growth. However, this is a significant cut from the 5.1 per cent projected budget increase in 2018.
Boards of directors typically also ask for a set of key performance indicators (KPIs) to measure digital transformation progress. The Gartner survey found that 81 per cent of Asia Pacific CIOs measure the return on investment (ROI) of digital.
Don’t rush into the goal of ‘digital first’. Instead, focus on creating continuous experience across the customer life cycle.
“CIOs should use their financial resources to make 2019 a transformative year for their businesses,” says Rowsell-Jones, who presented the Asia Pacific results of the survey during the annual Gartner Symposium/ITxpo on the Gold Coast.
He further advises: “Stay active in transformation discussions and invest time, money and human resources to remove any barriers to change. Enterprises that fall behind in digital business now will have to deal with a serious competitive disadvantage in the future.”
Shaping the CIO tech agenda
The CIO Agenda survey indicates that disruptive emerging technologies will play a major role in reshaping business models in Asia Pacific as they change the economics of all organisations.
Thirty-four per cent of CIOs in the region expect AI to be the most disruptive game changer for their organisations in 2019, taking the top spot away from data and analytics, which now occupies second place at 26 per cent.
Forty-nine per cent of Asia Pacific CIOs have already deployed AI technology or deployment is in short-term planning, coming in second behind cybersecurity (86 per cent). The top three ways Asia Pacific CIOs are using AI are for chatbots (37 per cent), process optimisation (27 per cent) and fraud detection (20 per cent).
“This rapid shift to AI looks revolutionary on the surface, but this bump in adoption rate may indicate irrational exuberance instead,” says Rowsell-Jones.
“While CIOs can’t afford to ignore this class of technologies, they should retain a sense of proportion. This latest batch of AI tools is yet to go through its Trough of Disillusionment.”
According to Rowsell-Jones, the strong focus on cybersecurity shows the necessity of creating a secure base for digital business that shields their organisation and clients.
The survey indicates that 45 per cent of Asia Pacific CIOs still own the responsibility for cybersecurity. However, the IT organisation alone cannot provide cybersecurity anymore, he says.
The rise of social engineering attacks, such as phishing, require a broader behavioural change of all employees.
CIOs should use their financial resources to make 2019 a transformative year for their businesses
In 24 per cent of the digitally top performing organisations in Asia Pacific, the boards of directors are accountable for cybersecurity rather than the CIO alone.
Nevertheless, CIOs are combining measures to harden information processing assets with efforts to influence the people that use technology to improve security against cyber threats.
“CIOs in the region excelled at scaling their digital business last year, but they now have to take it one step further and put their growing digital business on a stable and secure base,” says Rowsell-Jones.
"Their success hinges on a sound strategy that combines new, disruptive technologies with a rebalancing of existing investments.”
The leadership agenda: Delivering superior CX
Gartner says the third era of enterprise IT demands more consumer focus and cybersecurity. Here are their recommendations for CIOs across different categories.
For all CIOs and IT leaders
• Continue to drive towards improved consumer engagement: “Don’t rush into the goal of ‘digital first’. Instead, focus on creating continuous experience across the customer life cycle.”
• Measure what matters: “Digital key performance indicators should measure your progress on your digital journey and link directly to desired business outcomes. Key elements include current state, target state, business outcome benefits and a ‘balance point’ to reflect diminishing returns.”
For top performers
• Use persona-based customer journeys to boost consumers’ experiences: “Generally, top performers have effective cybersecurity programmes and measurement schemes. However, consumer engagement is the ongoing battleground as digitally capable competitors fight for supremacy.”
For typical performers
• Combine design thinking for consumers with risk-based thinking for cybersecurity: “Design thinking puts the user in the spotlight when designing service offerings. IT leaders supporting business applications and applications infrastructure initiatives should understand the importance of design thinking for their own solutions, especially in digital business.”
• Educate boards of directors about cybersecurity: “For cybersecurity, boards now commonly require periodic reporting and event-based updates on the state of IT risk and information security. Use these opportunities to educate senior leadership on how to think about and take more responsibility for cybersecurity risk.”
For trailing performers:
• Cybersecurity failure is a showstopper; don’t let it stop yours: “Examples of reputational and business damage arising from a cybersecurity failure are legion. Good mitigation starts with good governance. Institute cybersecurity and risk governance practices to improve information security.”
Source: The 2019 CIO Agenda (Gartner, October 2018)
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