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Digital maturity among APAC CIOs reaches ‘tipping point’

30 Oct 18

The rapid influx of digital transformation among businesses in Asia Pacific (APAC) has reached a point where we will see many new innovations put into motion.

That’s according to a recent Gartner survey of more than 3,000 CIOs in 89 countries across all major industries, of which 671 are from 16 countries within APAC representing US$5.1 trillion in revenue and $73.7 billion in IT spending.

Within the APAC respondents, 31 percent have evolved their digital initiatives to the scaling stage, which is a surge from 19 percent in 2018. Gartner asserts this suggests digital business is maturing in the region from tentative experiments to application at a massive scale – the major driver being the intent to increase customer engagement via digital channels.

Gartner vice president and distinguished analyst Andy Rowsell-Jones recommends APAC CIOs to evolve their thinking to adapt to this new era of rapid increases in the scale of digital business.

“The ability to support greater scale is being invested and developed in three key areas: volume, scope and agility,” says Rowsell-Jones.

“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.”

47 percent of APAC CIOs affirm their enterprises have already changed their business models or are in the process of doing so, while 40 percent put evolving consumer demands as the main driver behind this change.

A trend that will put a smile on the faces of CIOs in APAC is the steadily growing IT budgets. Globally CIOs expect their IT budgets to grow by 2.9 percent in 2019, while APAC is the leading region with an expected 3.5 percent growth.

Despite these positive numbers, Gartner says it’s a significant drop from the 5.1 percent projected budget increase in 2018.

“CIOs should use their financial resources to make 2019 a transformative year for their businesses,” says 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.”

Looking ahead, APAC CIOs report they will be investing in a number of areas in 2019, with the top five being business intelligence and data analytics (42 percent), core system improvements and transformation (33 percent), artificial intelligence and machine learning (33 percent), cybersecurity and information security (32 percent), and digital business initiatives (30 percent).

Despite claiming third spot in terms of investment priorities, the majority of APAC CIOs (34 percent) claim AI will be the most disruptive game changer for their organisations in 2019, dethroning data and analytics from the top spot and into second with 26 percent.

49 percent of APAC CIOs have already deployed AI technology or are about to, with the most popular deployments being chatbots on 37 percent, process optimisation on 27 percent, and fraud detection on 20 percent.

“This rapid shift to AI looks revolutionary on the surface, but this bump in adoption rate 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.”

Cybersecurity is an ongoing concern, but Gartner asserts APAC CIOs appear to be combining measures to harden information processing assets with attempts to influence the people using the technology to improve security.

“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,” says Rowsell-Jones.

“Their success hinges on a sound strategy that combines new, disruptive technologies with a rebalancing of existing investments.”