CIOs in the Asia Pacific region need to become more strategic if they are to ensure that enterprise IT plays a leading role in the digital transformation of major businesses. Across Asia, the CIO role lags behind that held by technology leadership peers in Europe and North America, but the adoption of enterprise cloud computing is providing CIOs with the tools they need to be seen as business leaders and not just an internal IT service.
In just two years' time half of the gross domestic product (GDP) in the Asia Pacific region will be digitally generated, says technology analyst house IDC. "2020 is the year where we will see the emergence of a new breed of digital disruptors," says Sandra Ng, Group Vice President for ICT Research at IDC Asia Pacific. She made this statement in late 2019 and wasn't to know that the region would be the first to experience the impact of the global Coronavirus pandemic. All regions have seen an increase in digital demand as a result of the pandemic, accelerating a trend Ng and IDC had already identified.
Just as in Europe and North America, Asia is experiencing demand for digital methods. Succeeding with CIO led Digital Transformation, a global report of 950 business technology leaders by IDC found: "Four in five survey respondents say business demand for digital initiatives and capabilities is on the rise. Yet only 40% of enterprises have a long-term company-wide strategy in place to coordinate and focus initiatives, and CIOs will be driving less than half of those."
"They don't have time, so the line of business is not going to wait," says Shanker Das, who was CIO for the fast food retailer Domino's in Malaysia and Singapore. "The pace of digital transformation required to catapult the business into the digital world is fierce, so sometimes CIOs are not able to compete," he says of the region. The CIO, who also has experience in the Middle East adds a note of caution: "When business units and functions lead transformation, compliance, governance and security become an afterthought rather than part of a framework."
Lily Haake, Head of the CIO Practice at global technology recruiter, Harvey Nash disagrees: "Historically, some may have viewed the CIO role in Asia Pacific as being behind the curve of Europe and the US - perhaps leveraged more often as a service provider rather than a strategic business-enabler. However, our research suggests that technology investment in APAC is set to be a driver of growth in 2020." She adds that CIOs in the region are 12% more likely to receive an increase in budget than their peers in other regions.
The IDC study backs up Das' experience and reports that IT teams are not well placed: "Less than 30% of enterprise IT departments meet the IDC criteria for being considered business partners," it says of a global study. "Around 60% of enterprises struggle with technology enabled agility, making it difficult to keep up with industry expectations. They also struggle with creating technology driven experiences across physical and digital customer touchpoints."
The IDC report though, believes that CIOs in all markets should be taking the lead on digital transformation. "Orchestration must be central to digital leadership and how to handle the emerging complexity," Succeeding with CIO Led Digital Transformation reports.
If organisations already have a significant level of line of business digital transformation taking place, IDC advises CIOs to make the most of the opportunity these programmes offer and to engage with the business lines to ensure they have the compliance, governance and security boxes ticked. IDC advises regular meetings between IT and line of business teams to "foster creation of cross-functional leadership and redefine business processes". The industry analyst also says tech workshops, which can help create a digital mindset amongst both IT and line of business teams. They also recommend embedding IT into business units.
The risks
John Bovill, who has held CDO roles at major Australian supermarket chain Woolworths and David Jones a department store chain says there is too much risk associated with "shadow" digital and IT developments. "I have never believed in shadow IT or shadow anything. It depends on the capabilities of the organisation. Digital is about the connection between all the different parts of the organisation. If we don't adapt to that as businesses then we die. To create a shadow innovation team is too dangerous."
Ultimately, when digital transformation is spread across a wide variety of projects and teams with no central coordination, it is the business that suffers. In a study of the Asia Pacific region carried out for database giants Oracle it was revealed that less than 20% of innovation projects saw the light of day. Poor focus, leadership, processes and change management were cited as the main reasons. This has led to a stalling of business change in the region, the study of 1850 Asia Pacific based business technology leaders found. The majority had no innovation programmes for the next three years planned. "There is an impending 'innovation winter' coming," Andrew Sutherland, Senior Vice President, Technology and Systems, Oracle APAC and EMEA told a sister title to IDG Connect.
"APAC technology leaders are also more forward-thinking in the use of automation to drive business advantage and save costs - 44% expect at least one fifth of their workforce to be automated in the next five years, compared with the 33% global average," counters Haake at Harvey Nash. "The CIOs I know well in the region have worked tirelessly to build agile, innovative and revenue-generating technology functions. Many of them - less constrained by decades of legacy in technology, people and processes - are now world-class, and showing the West how it's done."
IDC says the CIO should therefore be the broker for cross functional transformation. "This is a crucial area where the CIO should be exercising their influence. Your exposure to the many different parts of the enterprise make you ideally suited to connecting enterprise goals and strategies to the broad digital platforms that will enable functional units to collaborate and thus increase business value," IDC told CIOs.
The alternative is for IT to become a support function. "It is about how IT and the CIO is perceived. Is it seen as strategic or as support? In the Middle East IT is still seen as support, Das says, adding that in Asia there is a realisation that technology is a business enabler." IDC's research raises concerns about this scenario: "Being seen as a support function, rather than as a strategic business partner creates a gravity well that can suck time and resources and hamper faster, enterprise wide digitisation." Adding that these issues are often caused by skills, legacy technology and budget responsibility challenges.
Clouds are clearer
The growing adoption of enterprise cloud computing across the Asia Pacific region is improving the position of the CIO though. Over 40% of business technology leaders in the Asia Pacific region told the Nutanix Enterprise Cloud Index study that: "existing IT skill set challenges were driving cloud computing adoption decisions". In 2019 adoption of private cloud significantly outstripped hybrid cloud adoption (33% private versus 10.8% for hybrid), driven by a belief that private cloud is more secure. On-premise cloud was seen as more secure by 21.5% of technology leaders in the region and 11.5% believe managed private cloud is more secure.
As these technologies become more widely accepted, and enable digital transformation projects to succeed, the CIO role in the Asia Pacific region will become increasingly business centric and less technology management oriented. "IDC predicts that by 2024, leaders in 50% of the top 2,000 Asia-based organisations will have mastered "future of culture" traits such as empathy, empowerment, innovation and customer-and data-centricity," says analyst Ng. Das agrees: "At some point there is always a need to fall back on the technology team. The BAs, network and security experts, these are the people who are the fine threads that hold a transformation together."