Developing new products and services now the top priority for Australian ICT leaders

Priorities shift away from costs savings, as enterprises embrace emerging tech, including robotics, mobile first and IoT

SYDNEY, AUSTRALIA – The priorities for Australian enterprises in 2016 have significantly changed from 2 years ago as organisations spend more of their IT budgets on product development and digital transformation initiatives, according to emerging technology analyst firm Telsyte.

The Telsyte Australian Digital Workplace Study 2017 is a survey-based study of a representative sample of Australian organisations across all verticals (including public sector) ranging from 20 to 20,000+ employees. With 420 CIO and IT decision maker respondents, it is one of the largest studies of its kind in Australia.

IT has become increasingly strategic for Australian organisations in a time of unprecedented change with two-thirds (67 per cent) of IT departments providing regular updates to the board of directors (up 7 per cent from 2014).

According to the study, IT is now seen as the main driver in “transforming” organisations and, on average, 57 per cent of IT budgets are now spent on transformation (32 per cent) or innovation (25 per cent) programs. Only 43 per cent on average is spent on operations or “keeping the lights on”.

Changing business priorities make IT more strategic

In order to combat domestic and international competition, CIOs say developing new products and services is the number one business priority, replacing operational cost savings as determined in the 2014 survey.

“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.

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. This contrasts with the 2014 priorities which were mainly to save money and generate greater profit through improving business processes and productivity.

New spending patterns meet new technologies

To achieve this transformation, CIOs are collaborating more with the heads of lines of business within their organisations where IT spending is increasing.

IT spend is spreading outside of traditional IT departments and more than half of CIOs believe line-of-business IT spending will exceed IT department spending within five years. 8 per cent 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,” Noble 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 advisor unlike ever before.”

With this change in IT spending comes the uptake of a new generation of technologies that are tapping into the 25 per cent of budgets dedicated to innovation.

Telsyte 2016 digital workplace study highlights the following IT trends:

  • Cloud intentions are still strong, with 50 per cent of organisations intending to increase spending on Infrastructure as a Service.

  • The software opportunity is shifting to Platform as a Service (PaaS) as 70 per cent of IT leaders use or intend to use PaaS solutions to develop and deploy software. PaaS is seen as a key enabler of building customised applications and the competitive advantage that comes from it. More than a third of organisations indicated challenges with software customisation, increasing the appetite for PaaS and in-house software skills and recruitment

  • Most organisations are now “mobile first”. 84 per cent of organisations have at least one system in place to allow their staff to be mobile workers, from providing a secure VPN system to actively supporting Bring Your Own Device (BYOD) and Bring Your Own Apps (BYOA).

  • Adoption of Activity-Based Working is up 14 per cent during the past two years with 42 per cent of Australian enterprises now supporting it.

  • 3D Printing is gaining traction with 24 per cent using it or have exploratory projects in place.

  • 1 in 3 intend to use robotics and 25 per cent of large organisations (having >500 employees) are already using Robotic Process Automation (RPA).

  • Augmented Reality (AR) and Mixed Reality (MR) is of high interest with 57 per cent currently using or intending to use AR/MR technology. Interest in Microsoft’s HoloLens is very high.

  • IoT is quickly approaching mainstream with 22 per cent having IoT programs in production, or pilot programs and in development, while 29 per cent have IoT devices and a strategy, but nothing in operation yet.

“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.

For further information on the study or media enquiries contact:

Foad Fadaghi
Managing Director
Tel: +61 2 9235 5851
Twitter: @foadfadaghi

Steven Noble
Senior Analyst
+61 404 041 928
Twitter: @steven_noble

Telsyte’s digital workplace research program provides leading insights into the technologies and services that are re-defining how Australian organisations, including the public sector, deploy and manage ICT budgets, infrastructure and applications.

In preparing this study, Telsyte used:

  • An online survey of a representative sample of Australians CIOs and IT decision makers with 420 respondents completed in August 2016.

  • Interviews conducted with executives from software vendors, system integrators, hardware and cloud providers, as well as their channel partners.

  • On-going monitoring of local and global market and vendor trends.

About Telsyte

Telsyte delivers strategic insights and advisory services to businesses that are producing, or are impacted by, disruptive technologies. Telsyte publishes studies into emerging consumer and business markets and provides custom research and advisory services. Telsyte is an independent business unit of DXC Technology .

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