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Tech spend outside IT function creates opportunities, but opens back door to potential security and consumer trust risks

Business-led IT creates opportunities & potential risks

‘Business-led IT’ spend creates opportunities but also potential security risks, finds largest technology leadership survey.

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  • 2019 Harvey Nash/KPMG CIO Survey, of over 3,600 IT leaders, finds business-led IT Initially referred to as `shadow IT', business-led IT refers to the inexorable rise of technology expenditure controlled outside of the IT department. is creating more value than ever before, but with it comes a need for better governance
  • 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 69% of CIOs 

Almost two-thirds (63%) of organizations 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. When IT spend is managed away from the direct control of the CIO companies are twice as likely to have multiple security areas exposed, and more likely to become a victim of a major cyber-attack.

The largest technology leadership survey in the world, analyzing responses from organizations with a combined technology spend of over US$250bn, reveals for those organizations where the IT team is formally involved in decision making around business-led IT, business advantages include improving time to market new products (52% more likely to be `significantly better than their competitors') and employee experience (38% more likely to be `significantly better than their competitors').

However, four in ten (43%) companies are not formally involving IT in those business-led IT decisions. These organizations are twice as likely to have multiple security areas exposed than those who consult IT 16% of organizations that don't formally involve IT in business-led IT decisions versus 7% for those that do., 23% less likely to be `very or extremely effective' at building customer trust with technology, and 9% more likely to have been targeted by a major cyber-attack in the last two years. These risks are uncovered at a time when cyber security reaches an all-time high as a board priority (56% vs 49% 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 (66% this year view the role as gaining influence compared to 65% in 2018), fewer CIOs now sit on the board  - dropping from 71% to 58% in just two 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 17% 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 reorganization of roles across the business. However, 69% of CIOs believe that new jobs will compensate for job losses to AI/automation. 
  • Skills shortages  - technology leaders are struggling to find the right talent with skills shortages at their highest level since 2008. The three most scarce skills are big data/analytics (44%), cyber security (39%) and AI (39%).  

“In an age where anyone with a smartphone and credit card can set up an IT system, there are both incredible opportunities and major risks. Those enterprises that get the balance right between innovation and governance will be the winners,” said Albert Ellis, CEO of Harvey Nash. “At the same time, boards are asking their CIO and technology team to prioritize automation of jobs. How organizations adapt to automation will increasingly become a priority, and many are not at all ready.” 

Steve Bates, Global Leader, CIO Advisory Centre of Excellence, KPMG International, said, “There is no longer business strategy and technology strategy, it's simply strategy with technology driving it. This research clearly shows that organizations putting technology in the hands of value-creators and connecting the front, middle and back office are winning in the market. The future of IT is a customer obsessed, well governed, connected enterprise.”

Digital leaders perform better 

Digital leaders, which are organizations that 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 (53% vs 34% for the rest), customer experience (65% vs 49%), revenue growth (55% vs 43%) and profitability in the last year (50% vs 37%). 
  • Digital leaders are also more likely to introduce `major new changes to products and services' in the next three years (55% vs 39% for the rest), and focus on making money - 76% of CEOs in digital leader organizations want their technology projects to `make' rather than `save money', compared to 58% for the rest.

Gender diversity initiatives are failing big tech

  • 74% of IT leaders feel their diversity and inclusion initiatives within their teams are at most moderately successful, and there has been only minimal growth in women on tech teams, 22% this year compared to 21% last year, and no change in the percentage of female technology leaders at 12%.

First signs of Quantum Computing

  • Although Quantum Computing Quantum computing is the use of quantum-mechanical phenomena such as superposition and entanglement to perform computation. is at such an early stage, 4% (107 global organizations) have implemented Quantum Computing to at least some degree  - with big pharmaceuticals, financial services and energy organizations making bets in this area.
  • A fifth (22%) of organizations implementing Quantum Computing were based in the UK, followed by 19% in the US, and 7% for both Australia and the Republic of Ireland.

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% to 55%) is the largest seen, with the one exception of 2010, when organizations were still clawing their way out of the global recession.
  • For technology projects where the CEO prefers to `save money' almost half (45%) of respondents report budget increases compared to just 38% last year, suggesting many CIOs are investing to save, for instance through automation.

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. The survey of 3,645 CIOs and technology leaders 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: technology recruitment, IT outsourcing and leadership services.

To learn more, please visit www.harveynash.com.

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.

Media Contacts:

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ProServ PR
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Michelle Thomas
Harvey Nash
michelle.thomas@harveynash.com
+44 (20) 7333 2677

Amy Greenshields
KPMG International
+1 416 777 8749
amygreenshields@kpmg.ca

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