Digital maturity in Asia-Pacific has reached a tipping point as CIOs move from tentative experiments to application at a massive scale, according to a survey from Gartner.
The 2019 Gartner CIO Agenda survey – which gathered data from more than 3,000 CIO respondents in 89 countries across all major industries, with 671 CIOs representing 16 countries within Asia-Pacific – found 31% of APAC CIOs have evolved their digital initiatives to the scaling stage, up from 19% last year. The major driver for scale is the intent to increase customer engagement via digital channels.
Forty-seven percent of Asia-Pacific CIOs report their enterprises have already changed their business models or are in the process of changing them. Forty percent report evolving consumer demands are driving their business model change.
“The ability to support greater scale is being invested and developed in three key areas: volume, scope and agility,” said Andy Rowsell-Jones, vice president and distinguished analyst at Gartner. “All areas aim at encouraging consumers to interact with the organization. Generally speaking, 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.”
Rowsell-Jones recommends that CIOs evolve their thinking to be in tune with this new era of rapid increases in the scale of digital business.
IT budget growth helps
The survey results indicate that transformation toward digital business is supported by steady IT budget growth. CIOs globally expect their IT budgets to grow by 2.9% in 2019, but Asia-Pacific is the leading region with an expected 3.5% growth. However, this is a significant cut from the 5.1% projected budget increase in 2018.
Boards of directors typically also ask for a set of key performance indicators (KPIs) to measure digital transformation progress. The Gartner survey found that 81% of Asia-Pacific CIOs measure the return on investment (ROI) of digital.
“CIOs should use their financial resources to make 2019 a transformative year for their businesses,” said Rowsell-Jones. “Stay active in 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.”
The top five areas that Asia-Pacific CIOs will invest new or additional funding in 2019 are: business intelligence and data analytics (42%); core system improvements and transformation (33%); artificial intelligence (AI) and machine learning (33%), cybersecurity and information security (32%); and digital business initiatives (30%).
AI and cybersecurity shape CIO tech agenda
The CIO survey indicates that disruptive emerging technologies will play a major role in reshaping business models in Asia-Pacific as they change the economics of all organizations. Thirty-four percent of CIOs in the region expect AI to be the most disruptive game changer for their organizations in 2019, taking the top spot away from data and analytics, which now occupies second place at 26%.
Forty-nine percent of Asia-Pacific CIOs have already deployed AI technology or deployment is in short-term planning, coming in second behind cybersecurity (86%). The top three ways Asia-Pacific CIOs are using AI are for chatbots (37%), process optimization (27%) and fraud detection (20%).
“This rapid shift to AI looks revolutionary on the surface, but this bump in adoption rate may indicate irrational exuberance instead,” said 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’.”
According to Rowsell-Jones, the strong focus on cybersecurity shows the necessity of creating a secure base for digital business that shields their organization and clients. The survey indicates that 45% of Asia-Pacific CIOs still own the responsibility for cybersecurity. However, the IT organization alone cannot provide cybersecurity anymore.
The rise of social engineering attacks, such as phishing, require a broader behavioral change of all employees. In 24% of the digitally top performing organizations in Asia-Pacific, the boards of directors are accountable for cybersecurity rather than the CIO alone. Nevertheless, CIOs are combining measures to harden information processing assets with efforts to influence the people that use technology to improve security against cyberthreats.
“CIOs in the region excelled at scaling their digital business last year, but they now have to take it one step further and put their growing digital business on a stable and secure base,” said Rowsell-Jones. “Their success hinges on a sound strategy that combines new, disruptive technologies with a rebalancing of existing investments.”
The report is available here for Gartner clients.