Digital business is maturing, from tentative experiment to application at a massive scale. CIOs must evolve their thinking to be in tune with this new era of rapid increases in the scale of digital business.
Gartner’s annual global survey of CIOs showed that the CIO role will remain critical in transformation workflows.
The 2019 Gartner CIO Agenda survey gathered data from more than 3,000 CIO respondents in 89 countries and all major industries, representing approximately US$15 trillion in revenue/public-sector budgets and US$284 billion in IT spending.
The survey results show that digital business reached a tipping point this year - 49% of CIOs report their enterprises have already changed their business models or are in the process of changing them.
“What we see here is a milestone in the transition to the third era of IT, the digital era,” says Gartner vice president and distinguished analyst Andy Rowsell-Jones.
“Initially, CIOs were making a leap from IT-as-a-craft to IT-as-an-industrial-concern. Today, 20 years after we launched the first CIO Agenda survey, digital initiatives, along with growth, are the top priorities for CIOs in 2019. Digital has become mainstream.”
Scaling digital business
The survey found that 33% of respondents worldwide evolved their digital endeavours to scale, up from 17% in the previous year. The major driver for scale is the intent to increase consumer engagement via digital channels.
“The ability to support greater scale is being invested in and developed in three key areas: volume, scope and agility. All aim at encouraging consumers to interact with the organisation,” Rowsell-Jones says.
“For example, increasing the scope means providing a variety of digital services and actions to the consumer. In general, the greater the variety of interactions that are available via digital channels, the more engaged a consumer becomes and the lower the costs to serve them are.”
Steady IT budgets
The transformation toward digital business is supported by steady IT budget growth. Globally, CIOs expect their IT budgets to grow by 2.9% in 2019, only slightly less than the 2018 average growth rate of 3%.
A look at the regional differences shows that the regions are moving closer together: The leader in budget growth is once again Asia/Pacific with an expected growth of 3.5%. However, this is a significant cut from the 5.1% projected budget increase in 2018.
EMEA (3.3%) and North America (2.4%) both project an increase, while Latin America trails behind with projected growth of 2% in 2019, down from 2.8% this year.
“CIOs should use their financial resources to make 2019 a transformative year for their businesses,” Rowsell-Jones adds.
“Stay active in the 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.”
AI and cybersecurity shape the CIO agenda
Disruptive emerging technologies will play a major role in reshaping business models as they change the economics of all organisations.
Gartner asked CIOs and IT leaders which technologies they expect to be most disruptive.
Artificial intelligence (AI) was by far the most mentioned technology and takes the spot as the top game-changer technology away from data and analytics, which is now occupying second place.
Although this year’s question was asked slightly differently, the jump to first place is enormous: even the top performers went from only 7% to 40%.
With regards to implementation, when asked about their organisation’s plans in terms of following digital technologies and trends, 37% responded that they already deployed AI technology or that deployment was in short-term planning. In fact, AI comes in second, behind cybersecurity (88%).
“On the surface, this looks revolutionary. However, this bump in adoption rate of AI 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.”
The strong focus on cybersecurity shows the necessity of creating a secure base for a digital business that shields their organisation and clients.
The survey indicates that in most enterprises the CIO still owns the responsibility for cybersecurity. However, the IT organisation alone can’t provide cybersecurity anymore.
The rise of social engineering attacks, such as phishing, require a broader behavioural change of all employees.
In 24% of the digitally top-performing organisations, it is the boards of directors that are accountable for cybersecurity rather than the CIO alone. Nevertheless, to improve security against cyber threats CIOs are combining measures to harden information-processing assets with efforts to influence the people that use technology.
“Last year, I said that CIOs must start scaling their digital business. They excelled,” Rowsell-Jones says.
“This year, they have to take it one step further and put their growing digital business on a stable and secure base. Success in the third era of enterprise IT hinges on a sound strategy that combines new, disruptive technologies with a rebalancing of existing investments.”