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Tech spend outside IT creates opportunities, but also potential risks

Tech spend outside IT creates opportunities

Nearly three-quarters (70 percent) of organisations across Australia now allow technology to be managed outside the IT department, a shift that brings with it both significant business advantages and increased privacy and security risks, reveals the 2019 Harvey Nash/KPMG CIO Survey.

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  • 2019 Harvey Nash/KPMG CIO Survey, of 254 Australian IT leaders, finds business-led IT is creating more value than ever before, but with it comes a need for better governance
  • When IT spend is managed away from the direct control of the CIO companies are more than twice as likely to have multiple security areas exposed, and more likely to become a victim of a major cyber-attack. Security and privacy risks rise for those business heads that sidestep the direct control of the IT department 
  • Up to 1 in 5 jobs are set to go to robots, but new jobs will compensate, say 68 percent of Australian CIOs

 

The largest technology leadership survey in the world, analysing responses from organisations with a combined technology spend of over US$250bn, reveals for Australian organisations where the IT team is formally involved in decision making around business-led IT, business advantages include improving time to market new products (24 percent more likely to be ‘better than competitors’) and employee experience (30 percent more likely to be ‘better than competitors’)

However, four in ten (41 percent) companies in Australia are not formally involving IT in those business-led IT decisions. These organisations are twice as likely to have multiple security areas exposed than those who consult IT , 41 percent less likely to be ‘very or extremely effective’ at building customer trust with technology, and 12 percent more likely to have been targeted by a major cyber-attack in the last 2 years. These risks are uncovered at a time when cyber security reaches an all-time high as a board priority (64 percent vs 56 percent last year).

The huge opportunity to capitalise on the value of business-led IT, but also manage its risks, comes at a time of significant change for the business, the CIO, and the IT department, as the survey found:

  • Fewer CIOs sit on the board – although the influence of the CIO remains intact (65 percent this year view the role as gaining influence compared to 62 percent in 2018), fewer CIOs now sit on the board – dropping from 55 percent to 49 percent in just 2 years. 
  • Artificial Intelligence (AI) and automation is driving huge change – as the IT department is being tasked by its board to use AI/automation to improve efficiencies (up 6 percent this year as a board priority), this is leading CIOs to expect that up to 1 in 5 jobs will be replaced by AI/automation within 5 years. This is likely to lead to a significant reorganisation of roles across the business. However, 68 percent of CIOs believe that new jobs will compensate for job losses to AI/automation. 
  • Skills shortages – technology leaders are still struggling to find the right talent with 58 percent of organisations saying a skills shortage prevents them from keeping up with the pace of change, compared to 60 percent last year. The three most scarce skills are Big data/analytics (45 percent) Cyber Security (44 percent) and AI (38 percent).

“Business led IT is creating more value than ever before. More Australian technology leaders reported increases in IT budgets under their control than at any time in the last 15 years, demonstrating the scale of the opportunities and risks facing CIOs. Those that get the balance right between innovation and governance will be the winners,” said Bridget Gray, MD Australia of Harvey Nash. “At the same time, boards are asking their CIO and technology team to prioritise automation of jobs. In a market characterised by skill shortages in key areas, how organisations adapt to automation will increasingly become a priority, and many are not at all ready.”

Guy Holland, Partner in Charge, KPMG Digital Delta, said, “Technology has rapidly emerged from the IT department to become the key driver of business strategy. But this research shows the IT team is often excluded, at a great cost to security and governance. In this world, a holistic approach is key to success. Organisations that put technology in the hands of value-creators while simultaneously connecting the front, middle and back office will be the ones that win in the market. The future of IT is a customer obsessed, well governed, connected enterprise where the CIO plays a key role in supporting transformation.”

Digital leaders perform better

Digital leaders, which are organisations who consider themselves ‘very effective’ or ‘extremely effective’ at using digital technologies to advance their business strategies, performed better than their competitors on every aspect surveyed:

  • These aspects included time to market (55 percent vs 28 percent for the rest), customer experience (65 percent vs 37 percent), revenue growth (55 percent vs 28 percent) and profitability in the last year (50 percent vs 28 percent). 
  • Digital leaders are also more likely to introduce ‘major new changes to products and services’ in the next 3 years (56 percent vs 38 percent for the rest), and focus on making money – 75 percent of CEOs in digital leader organisations want their technology projects to ‘make’ rather than ‘save money’, compared to 54 percent for the rest.

Gender diversity initiatives are failing big tech

  • 70 percent of IT leaders feel their diversity and inclusion initiatives within their teams are only moderately successful at best, and there has been only minimal growth in women on tech teams, 24 percent this year compared to 23 percent last year, and no change in the percentage of female technology leaders at 11 percent.

First signs of Quantum Computing

  • Although Quantum Computing is at such an early stage, 3 percent have implemented Quantum Computing to at least some degree.

IT leaders reporting budget increases – highest for 15 years

  • More technology leaders reported increases in IT budgets under their control than at any time in the last 15 years.
  • The jump in those reporting increases (from 49 percent to 56 percent)

About the survey

In its 21st year, the 2019 Harvey Nash/KPMG CIO Survey is the largest IT leadership survey in the world in terms of number of respondents. A total of 254 respondents in Australia were included in the global survey of 3,645 CIOs and technology leaders, which was conducted between 13th December 2018 and 4th April 2019 across 108 countries.

For more information about the survey and to request a full copy of the results, please visit www.hnkpmgciosurvey.com.  

About Harvey Nash

Harvey Nash has helped over half the world's leading companies recruit, source and manage the highly skilled talent they need to succeed in an increasingly competitive, global and technology driven world. With over 2,500 employees in 36 locations, we have the reach and resources of a global organization, whilst fostering a culture of innovation and agility that empowers our people across the world to respond to constantly changing client needs. We work with clients, both large and small, to deliver a portfolio of services: executive search, professional recruitment and IT outsourcing.

About KPMG International

KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 153 countries and have 207,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

For futher information

Ash Pritchard
KPMG Australia
apritchard2@kpmg.com.au
+61 411 020 680

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