Australian organisations are spending more of their IT budgets on product development and digital transformation initiatives as IT becomes increasingly strategic at a time of “unprecedented change”, according to a newly released study by analyst firm Telsyte.
The 2016 digital workplace study reveals that IT is now seen as the main driver in “transforming” organisations and, on average, 57% of IT budgets are now spent on transformation (32%) or innovation (25%) programmes.
Changing business priorities make IT more strategic, and in order to combat domestic and international competition, chief information officers say developing new products and services is the number one business priority, replacing operational cost savings as determined in Telsyte’s 2014 survey.
And, top business priorities for Australian CIOs in 2016 and 2017 are to introduce new products to avoid becoming “irrelevant in a dynamic new marketplace, acquire and retain customers, and retain and develop skills”.
{loadposition peter}Telsyte says this finding contrasts with the 2014 priorities which were mainly to save money and generate greater profit through improving business processes and productivity.
“A critical tipping point has been reached with Australian organisations rapidly adopting emerging technologies, developing new products and services and looking to ICT to build competitive advantage in the face of increased global competition, and driving an intelligent automation revolution” Telsyte managing director, Foad Fadaghi says.
To achieve this transformation, Telsyte says CIOs are collaborating more with the heads of lines of business within their organisations where IT spending is increasing.
And, Telsyte notes that IT spend is spreading outside traditional IT departments and more than half of CIOs believe line-of-business IT spending will exceed IT department spending within five years – and 8% of organisations believe spending by non-IT departments already exceeds IT department budgets.
Telsyte senior analyst Steven Noble says so-called “Shadow IT” is just a small part of a “seismic shift” in the role of IT in business.
“This change invites CIOs to play a leading role in determining how companies create new products and services, and in how they bring employees together to create value,” he says.
“These shifts are a direct outcome of the changing priorities facing the IT leader, and elevating CIOs to the status of ‘manager of complexity’ and strategic adviser unlike ever before.”
According to Telsyte, with the changes in IT spending come the uptake of a “new generation of technologies” that are tapping into the 25% of budgets dedicated to innovation.
“With larger budgets dedicated to innovation, Australian IT departments are jumping on new technologies for pilot projects and wider deployment at an unprecedented rate,” Fadaghi says.