Digital innovation budgets on the rise across A/NZ

Digital innovation budgets on the rise across A/NZ

As the digital maturity of organisations in A/NZ continues to rise

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Budgets for digital innovation projects appear to have enjoyed an increase this year, despite spending cuts elsewhere, according to new research. 

Just over half of the chief information officers (CIOs) in Australia and New Zealand surveyed in a new study by industry analyst Gartner said that funding for digital innovation in their organisation has increased this year as a result of the COVID-19 pandemic.

While 54 per cent of respondents revealed an increase in spending this year, two-thirds said they expect it to increase in 2021.

The 2021 Gartner CIO Agenda survey gathered data from 1,877 CIO respondents in 74 countries, including 111 CIOs in A/NZ, across the public, private and non-profit sectors.

Globally, survey respondents projected a 2 per cent IT budget increase for 2021, on average – slightly down from the 2020 survey.

However, respondents in A/NZ reported, on average, flat budgets for 2021 compared with this year. 

By comparison, in the Asia Pacific region overall, CIOs expect their budgets to grow 1.9 per cent on average.

The research also revealed that the digital maturity of organisations in A/NZ continues to rise, with the percentage of CIOs that reported being at the ‘scaling’ and ‘harvesting value’ phases of digital transformation now sitting at 47 per cent, a few points higher than last year.

According to Gartner, A/NZ organisations are “further down the path” to recovery than those in most other regions, with 44 per cent of A/NZ CIOs reporting that their organisation has planned and is now implementing their “new normal strategy”, compared to an average of 33 per cent globally.

Unsurprisingly, the work underpinning the shift to remote work has loomed large over CIOs across A/NZ, with two-thirds of employees now able to work from home and 54 per cent of those now working from home more than half of the time, according to A/NZ CIOs.

Moreover, 67 per cent of A/NZ CIOs expect this to increase in 2021, compared to 52 per cent globally, clearly indicating a greater appetite among the local markets for a continuation of new, remote work scenarios. 

“Many CIOs managed to get thousands — maybe even tens of thousands — of workers set up remotely in just a few weeks to keep the enterprise running during the lockdown. CIOs can be justly proud of this accomplishment,” said Gartner distinguished research vice president Andy Rowsell-Jones.

“Last year, I told CIOs that success in 2020 meant increasing the preparedness of both the IT organisation and the enterprise as a whole to withstand impending business disruption.

“This truth came at enterprises full force with the COVID-19 pandemic. In 2021, CIOs must build on the momentum they created for their enterprises and continue to be involved in higher-value, more strategic initiatives,” he added. 

Gartner’s research indicated that, despite fluctuations in IT investment, the list of technologies that interest CIOs looks roughly the same as in recent years.

Globally, CIOs ranked artificial intelligence (AI) and machine learning (ML) in first place in terms of which technology area they expected would be a “game changer” for their enterprise in 2021, but these areas came in second for A/NZ CIOs.

When asked about their enterprise's plans in relation to a provided list of digital technologies and trends, 91 per cent of CIOs said they had already deployed digital workplace technologies to support working from home. 

A third, meanwhile, said they have already deployed distributed cloud, and 27 per cent have deployed robotic process automation (RPA) with a further 40 per cent planning to do so within the next two years.

5G is a longer-term consideration, however, with 60 per cent of CIOs planning to deploy it between 12 months and three years from now. At the same time, 60 per cent of CIOs in A/NZ — and almost half globally — said they have no interest in blockchain.

It should come as little surprise that CIOs continue to prioritise cybersecurity investments as investment shifts toward technologies that support digitalisation — with the opening of new attack surfaces due to the shift to remote work, cyber security spending continues to increase. 

Indeed, 67 per cent of A/NZ respondents said they are increasing investment in cyber security, second only to business intelligence and data analytics.

Cloud services and solutions are also hot right now, with 53 per cent of CIOs flagging investment in this area.

According to Gartner, core system improvements and transformation, along with user experience round out the top five technology areas targeted for greater investment in 2021. 

Over half — 51 per cent — of CIOs said they planned to reduce investment in infrastructure and data center technologies in 2021.

Additionally, a whopping 90 per cent of A/NZ CIOs said they expect the use of digital channels to reach customers or citizens to increase even further in 2021.

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