• Steve Bates, Leadership |

Even in the context of 2020, a year with many profound upheavals, the latest Harvey Nash / KPMG CIO Survey generated some remarkable findings. We had a high response rate, with 4,200 companies across 83 countries taking part, and because of COVID-19, we ran two surveys, one before the pandemic and one during. But while we might expect to see everything change, for CIO’s, many of the imperatives remain the same.

The top two priorities for boards haven’t changed: improving operational efficiency and improving customer engagement. But 2020 also saw workforce enablement and remote working top the priority list, for what is, to many, a permanent shift to remote or hybrid working.

Sector specific approaches

A significant impact of COVID-19 is that sectors are no longer rising or falling together with the tide, so it’s important that CIOs understand where their company is headed, and what kind of recovery pattern they can expect. Some sectors, like travel, non-profit and traditional retail are going to be looking at a significant hard reset and will need to find new viable business models. Others, like media, technology or life sciences are dealing with a huge surge in demand and investment. Because the strategies for these recovery patterns will be vastly different, CIOs will need to tailor their approach to help their organization emerge stronger and more competitive.

COVID-19 spurs technology spending

The pandemic led to a huge and unprecedented spike in technology spending. Leaders reported a median additional spend of about 5 percent to their overall IT budgets. That might not sound like a lot, but over the first three months of the crisis, it added up to about U.S. $15B weekly added to IT budgets. Annualized, that’s a 20 percent increase. Tech leaders really were given an open checkbook as the pandemic unfolded. Going forward, the question is, will the impacts to opex and run-budgets be sustainable? Expect CFOs and CIOs to be scrutinizing their budgets in 2021.

Reflections on the survey results

  1. I don’t think the spike in tech spending will be sustainable over the long term, and I believe that many organizations will need to optimize their investment portfolios. We’re going to see a lot of cost pressure on both the IT function and the business technology budget. For many companies, this is the opportunity to fully commit to digital transformation, accepting the “good costs” that enable future capabilities, things like cloud, low code, ML/AI and modern data architectures. This is the moment for executives to challenge legacy costs, fixed capacity, under-utilized applications, or skills that are just not as relevant.
  2. I believe we’re also going to see a rapid maturation in cyber and I expect to see a lot of increased collaboration here from the board, the CEO, the CIO and the CISO. The attack surface has grown so large that it now includes the kitchen table. While phishing and malware attacks are at an all-time high, the insider threat—the lack of awareness about what attacks look like—is the biggest cause of cyber security issues right now. There will be a lot of investment in awareness programs, an increased emphasis on zero-trust architectures and a new generation of AI-powered tools to monitor and proactively manage the threat landscape.
  3. I think there will be great market demand and competition for skillsets that are currently in short supply: cyber, organizational change, engineers, data architects and cloud architects.
  4. Finally, I expect to see a greater focus on IT teaming with HR around how to develop those skills in-house, and there will be greater efforts towards learning in the flow of work. It’s going to take time to develop this new set of learning capabilities and skills inside organizations, so in the short term, the external market will benefit.

What should CIOs be most concerned about?

To move out of reaction mode and enable the new reality, you must be world-class at ruthless prioritization. Regardless of the chaos in the moment, you need to invest immediately in the foundational things that matter to the business in the future.

As any experienced technology executive will attest, the most important elements in sustainable change are not related to technology. Pay attention to the layers of the operating model and to your people agenda. Identify what you need to embed and retain within your culture, as well as setting aside those things that are no longer helpful. The new reality is already reshaping the employee deal and the dynamics with leaders and management.

But above all, you need to understand what kind of recovery pattern your company is experiencing. If you don’t, there’s a greater chance that you’re applying the wrong strategy. Your investments in new capabilities will be driven by intimately understanding the internal and external forces shaping your business model over the next year—everything starts there.