On May 11, Planit hosted its ‘Brisbane Discuss: The Gartner CIO Agenda 2017’ event. Over 75 C-Level and senior executives attended to learn about key industry trends and gain insight into how other organisations achieve digital success.
Growing local investment
Gartner Research Director of Digital Innovation, Jenny Beresford, kicked off the event with a session on how CIOs can seize the digital ecosystem opportunity. Her presentation provided a local perspective on what priorities are dominating the attention of Australian CIOs, complementing the analyst firm’s global CIO Agenda report released in February 2017.
Jenny cited that IT budgets in APAC are increasing and have grown by 4.3 per cent. This is higher than the global average of 2.2 per cent, as well as the 1.8 per cent growth in North America and 1.7 per cent in Latin America.
79 per cent of the overall IT spend, totalling $4.4 billion in ANZ, is the formal IT budget. The remaining 15 per cent is for business unit IT and seven per cent for shadow IT or technology used without official organisational approval.
According to Gartner’s research, local businesses are extending their technology core and evolving their leadership to become digital-ecosystem-ready. In fact, 44 per cent of CIOs said they are part of a mature digital business.
Evolving to digital
The drive towards digitalisation means IT spending is increasing. Today, 21 per cent of ANZ IT budgets are for digitalisation, and this is expected to grow to 32 per cent in 2018.
79 per cent of top performing companies worldwide have actively adopted digital ecosystems. Among local respondents, 49 per cent reported belonging to companies that have a digital ecosystem.
Digital ecosystem partners are also becoming more numerous, with local companies relying on an average of 26 partners. This is expected to continue growing at a CAGR of 22 per cent to 39 in 2018.
42 per cent of top performing companies are investing in business intelligence (BI), 33 per cent in the Cloud, and 28 per cent in digitalisation and digital marketing. ERP is no longer the high priority it used to be, and has fallen to fifth place at 17 per cent.
Adopting new technologies will deliver change to business. In ANZ, 84 per cent will be advanced analytics, 42 per cent for the Internet of Things (IoT), and 35 per cent for business algorithms.
Old and new approaches
The move to digital ecosystems is driving more in-house development. 32 per cent of companies are building in-house, while 39 per cent buy from existing partners and 27 per cent from new partners.
Adoption of a “bimodal” IT approach, where a company uses a tried and tested method together with an innovative one, is increasing. 46 per cent of local respondents use a bimodal approach and 68 per cent of the top performers use it.
64 per cent of companies reported to Gartner that the bimodal approach improved business perception of IT, 63 per cent reported a closer engagement between business and IT, and 59 per cent said it led to faster time to market.
The biggest barrier to a CIO’s success is a lack of skills and resources at 24 per cent. Other challenges include funding at 20 per cent and management support at 10 per cent.
At 31 per cent, analytics was picked as the top skill in short supply. Digital business and marketing came second at 18 per cent, followed by business/systems analysts at 17 per cent.
A better customer experience
The second session was delivered by Salesforce Regional Vice President of Innovation & Digital Transformation, Robert Wickham, who presented on technologies and trends impacting today's market. He also outlined how companies are innovating with online services to transform customer interaction for driving growth.
Robert commenced his address with a hard-hitting fact: We are now living in a smarter world where everyone and everything is connected, so delivering a connected customer experience is key. However, 77 per cent of customers remain unengaged with companies.
Future success will require businesses to adapt and evolve, as today’s customers expect a frictionless buying experience. They know what they want, they want it now, they want it where they are, and they want the whole customer experience to connect with them.
86 per cent of buyers will pay more for a better customer experience, so each touchpoint is an opportunity for deeper engagement. In many cases, mere satisfaction is not enough and the way to attract and retain customers is by creating an emotional connection.
Some companies like Apple, Google, Amazon and Uber have succeeded in creating an effortless customer and employee experience, setting an excellent example for businesses large and small in how to establish a customer-centric company.
The first step on this path is to develop a strong empathy and understanding of your customer journey. Then you align employee incentives on customer outcomes and find ways to close the gap between sales, service and marketing.
A new way of working
Like Gartner, Salesforce sees value in adopting a bimodal IT approach. According to IBM and their 2016 IBM Global CEO Survey, all of the leading CEOs surveyed are involved in “rapid experimentation, pilots and prototyping.”
A concept introduced by Gartner, the bimodal IT approach is the practice of breaking the IT department up into two separate groups. One team targets back-end systems and ensures stability, while the other works on new development projects and focuses on innovation.
In terms of development and testing of digital systems, the traditional team in a bimodal approach would use Waterfall, V-Model, and high-ceremony Iterative and Incremental Development (IID). The progressive team would instead use Agile, Kanban, and low-ceremony llD.
The data explosion
90 per cent of world’s data was created in the last 12 months. All of this information contains insights into customers, yet less than one per cent of customer data has been analysed and used to improve the customer experience.
This is a field where Artificial Intelligence (AI) can help. Once considered a pipedream, better algorithms, Big Data, and cheap parallel computation are finally making AI a reality.
AI is already transforming how consumers connect. Apple is using natural language processing to direct people to information faster, Amazon uses machine learning to match customers with products, and Facebook uses deep learning to automate member management.
The age of the customer
We have been living in an age of personal computing where you know your computer, but the introduction of new technologies and wearables has given rise to “intimate computing”. This is when your computer knows everything about you and the environment in which you operate.
It is still early days for intimate computing and it will require advances in machine intelligence to deliver on its potential, but companies such as General Motors are using elements of it for predictive marketing. Improvements in natural language processing, deep and machine learning, and predictive analytics will one day provide a single view of the customer and connect them with businesses in a whole new way.
With seven billion people and businesses expected to use 30 billion IoT endpoints by 2020, companies will need to build out their digital platforms to seize the digital ecosystem opportunity. They will also need to adopt digital leadership, which will require the involvement and support of the management team.
Since customer expectations have changed, the reactive approach of yesterday needs to be replaced with a proactive one for today. As technology and AI improves, a predictive approach will be needed for attracting and retaining the customers of tomorrow.