The 2008 State of the Asian CIO survey questionnaire was circulated via e-mail in September and October to the many thousands of senior IT decision makers on the Fairfax Business Media database, from across the Asia Pacific. Responses to this annual survey, of senior IT executives across the Asia Pacific, have been indelibly coloured by the on-going financial turmoil which is taxing the collective will of governments across the globe.
The overall results paint a picture of senior executives who are focusing on the core competitive advantage and expertise of their enterprises, reluctant to branch out or experiment with new technology trends, and cautious about the next 12 months.
The profile of the decision makers of this year’s survey is particularly senior. Nearly 80 per cent of the 250 were from the top end—the CIOs and CTOs, the senior and executive VPs who carry much of the weight of responsibility for IT spending—and their responses give a unique and valuable insight into the current IT consciousness in Asia.
Most (84.9 per cent) of the corporate leaders who took part in the 2008 State of the Asian CIO work in enterprises with annual revenues up to US$10 billion. And these executives came from a broad spread of sectors including manufacturing/process industries (17.6 per cent), finance/banking/accounting (9.4 per cent), insurance/real estate/legal (8.2 per cent), wholesale/retail/distribution (7.3 per cent) and transportation/utilities (5.7 per cent).
By reading the results we have produced, you can get a solid overview of how your particular enterprise sits in the current IT industry grand scheme for Asia.
Here is a summary of some of the key responses.
How will your IT budget and headcount change in the next 12 months?
One ray of sunshine in this year’s research was the intention, by nearly 43 per cent of respondents, to increase their IT headcount by between one and 50 per cent. More than a third of this group indicated they planned to increase IT staff by between one and 10 per cent, while more than a quarter (28 per cent) expect their tech staff numbers to remain unchanged through 2009. Less than 10 per cent of the movers and shakers who responded to our survey indicated that they expected to have to cut IT staff numbers, with most of those (nearly seven per cent) indicating an expectation of cuts up to 10 per cent. This adds fuel to the argument that the IT industry in the Asia Pacific will be more resilient to recessionary pressures than more mature markets in the US and Europe. What do you think? You can always give us feedback via our web portal at www.mis-asia.com.
Reluctant to trim
Despite the recent actions of at least one major Singapore bank, which has indicted IT staff are among its targets for achieving a reduction of 900 jobs, most enterprises seem to realise that further trimming ‘their IT engine’, when you could argue it’s time when technology is needed most, would be akin to ‘cutting of their nose to spite their face’.
When asked what they expected to be the greatest skills need from any new IT hires, our respondents highlighted application development (41.2 per cent), closely followed by technology infrastructure (37.6 per cent), business knowledge (33.1 per cent), industry knowledge (29.8 per cent) and database management. Interestingly, only 21.2 per cent indicated that they expected to need new people with expertise in emerging technologies. This may be symptomatic of a healthy caution—a ‘batten down the hatches strategy’—about relatively new approaches such as Web 2.0 and social networking for the enterprise, but appears to go against the grain considering the considerable enthusiasm for virtualisation, described by some as ‘the most profound technology change for IT this decade’. Another telling statistic is that only 9.4 per cent of respondents felt their new hires would need open source knowledge, and even less (6.9 per cent) would need vendor relationship expertise.
New hire skills
A significant 42.4 per cent of our sample said they would be looking for project management skills in new hires for 2009. Security skills (24 per cent), networking skills (22. 9 per cent), the web services expertise (22 per cent) were other popularly sought after skill sets.
Nearly a third (31.5 per cent) of respondents spend between one and five per cent of their overall budgets on information technology, representing a range of one million US dollars to US$5 million.
The survey highlighted the ‘lean and mean’ approach to IT staffing, with bigger organisations generally having less than 50 IT people to support up to 2,000 internal users.
What are your top technology priorities for 2009?
Perhaps it was the number of high profile and embarrassing data leaks in the Asia Pacific in the Year of the Rat, particularly involving Hong Kong’s healthcare sector that caused concern over enterprise IT security to move up a rung for 2009. Enterprise security came in at the third highest technology priority, after business intelligence and integrating/enhancing existing systems, which maintained its number two position.
It seems that the frugal cost cutting pressures; the overwhelming spending clamp generated and tightened by the financial crisis, caused many senior IT executives to focus on making their IT machinery more lean and efficient. Not that this hasn’t been a long-standing philosophy for the past five years or more; the credit crunch has just heavily underlined its importance. However, virtualisation was highlighted by only slightly more than one third (33.5 per cent) of respondents for 2008, increasing to 38 per cent for the year to come.
In what’s likely to be a symptom of the need to focus on core competencies, despite all the prognostications about Enterprise Web 2.0, this did not even make the chart as a major technology concern for 2009. Nor did hardware refreshment or workflow systems. It seems senior information executives are currently in no mood to venture into new technology territory, but would rather focus on what they know best.
Business intelligence has jumped to number one spot as a technology priority for 2009, which could also be a result of the pressing need for executives to get the clearest ‘nuts and bolts’ view of their operations, so they can discover precisely where any waste may be happening.
Service-oriented architecture (SOA) was highlighted by more than a third (34.7 per cent) of respondents as a tech priority for the previous 12 months, and interest in this approach has increased to 38.8 per cent for 2009.
Interest in open source software has been ranked by a consistent 14.3 per cent of respondents for both 2008 and 2009.
What are your top management priorities for 2009?
From a management priorities perspective, aligning IT with business goals remains the top concern, as it has for some years past. Will this holy grail of enterprise management ever be completely achieved? Second cab off the rank is controlling IT costs, followed by IT-enabled process improvement, and improving internal customer satisfaction, both consistent for 2008 and 2009 intentions. Business continuity and risk management comes in at number four as a priority for next year. Regulatory compliance was only cited by 8.2 per cent of respondents as a management priority for 2009. Let’s hope this is because most major enterprises already have this covered, rather than this being an indication of a ‘couldn’t care less’ attitude.
Very few multi-national enterprises in this increasingly-regulated 21st century can afford to have a blasé attitude towards government oversight and at least one obvious and expected outcome of the prevailing global economic turmoil, will be some form of even tighter compliance regime, particularly for the financial services industry which has lost about 160,000 jobs globally since the economic downturn started about 15 months ago.
Interestingly, however, regulatory compliance ranked lowly as a management priority for 2009, with less than 10 per cent (9.8 per cent) of our responding executives choosing this as an issue of focus.
Nearly a quarter of respondents highlighted revenue generating services and products as one of their key priorities in the work year ahead, while 31 per cent said IT governance was a key focus and 30.2 per cent envisaged IT staff development as being a pressing issue.
Measuring and communicating IT value has been seen by more than a third (33.9 per cent) of survey respondents as a high priority technology focus.
What do you anticipate your outsourcing needs to be in 2009?
Outsourcing is becoming increasingly popular. Our respondents said that, in the past year, they outsourced up to 60 per cent of their IT labour—a 20 per cent increase on 2007. Despite their plans to mostly increase IT staff in 2009, our survey shows this won’t involve outsourcing, but will primarily mean internal hires. More than 80 per cent of respondents indicated that they have no plans to increase their outsourcing next year, despite the economic environment. Perhaps this points to a lack of confidence in external providers due to the fragile times. Less than nine per cent of respondents have no intention of using IT outsourcing at all in the year to come.
When it comes to choosing where to outsource, more than half (50.6 per cent) indicated they would use countries in South-East Asia. India was the outsourcing nation of choice for 19.6 per cent of respondents.
How do you currently spend most of your time?
In line with the trend for CIOs to become ‘business technologists’, more than half (51 per cent) of our respondents indicated that they spend most of their time ‘making strategic systems decisions’ and 48.2 per cent named strategic planning as their major focus, while 60.8 per cent said their time was dominated by interacting with internal partners. A significant 46.5 per cent said most of their time was spent interacting with IT vendors.
The next activities that kept the senior 2008 IT executive busy were leading projects (44.5 per cent), managing IT staff (40 per cent), and designing or optimising business processes (38.4 per cent). Budgeting (34.7 per cent) and compliance management—planning (31 per cent) were also significant time takers. Less than 14 per cent of the respondents cited security management and planning as an area that consumed much of their available hours.
More than one in five (20.5 per cent) has a focus on back room technology instead of board room strategy. This small group said that much of their work time was taken up with managing IT crises which indicates the ongoing volatility of managing technology in ever-changing times.
What do your regard as the biggest hurdles to your effectiveness right now?
The perennial communication and mindset gap between CIOs and their CEOs and CFOs again came to the fore. Inadequate budget was the number one worry (46.9 per cent), with most technology leaders realising that this situation is only likely to worsen in the year to come. For as far back as most can remember, technology leaders have been pressured to do more with less, and it could be argued that most IT shops have had all the fat cut from them; any further cuts must strike muscle and even bone.
Number two was the difficulty proving the value of IT (said 45.7 per cent of respondents) when the bean counters demand precise, defined and measurable metrics to be attached to any tech initiatives, no matter how hard these may be for the CIO to deliver.
Not surprisingly, given the tenure of today’s times, risk and uncertainty has rocketed up the chart since last year to number three in what’s on decision makers’ minds. Uncertainty remains the likely dominating theme for global business at least for 2009 and perhaps beyond.
Then there’s the perceived lack of business sponsorship. Many CEOs would rather stay clear of ‘risky’ IT projects. Who can blame them, considering the less than impressive success rate for many information technology projects?
In keeping with the mantra of greater expectations on CIOs and the business requirement for them always over-achieve, our respondents listed ‘overwhelming backlog’ as number five on the headache chart. With IT project timelines perpetually being extended, and new ‘innovations’ (i.e. new IT projects) continually pumping through the pipeline, it is natural for CIOs to throw up their hands in frustration.
Who controls the Budget?
Perhaps it is a good sign that the business and IT units of enterprises are increasingly working in partnership, nearly half (49 per cent) of our survey respondents said that control of information technology spending was ‘blended’, that is, equally shared. More than a third (34.3 per cent) said that the tech budget was ‘centrally controlled by IT’ and some 18 per cent declared that it was ‘directly controlled by business units’ or ‘centrally controlled by non-IT executives’. Who controls the purse strings has ultimate power in any enterprise, so this reasonably high proportion of ‘blended’ responses could be an indication of an increasing maturity in Asian businesses relating to IT budget decisions.
When it comes to primary responsibility for achieving return on investment (ROI) for IT expenditure, the partnership approach between business and IT units was again dominant.
More than 48 per cent of respondents said that IT and business units shared accountability for IT ROI, while about a quarter indicated that this was the realm of the IT unit leadership. Less than seven per cent felt that IT ROI was the sole responsibility of the business unit leadership.
When asked to rate the effectiveness of different aspects of their job, more than 57 per cent of respondents declared that having ‘IT objectives aligned with the CEO’s objectives and overall business strategy’ was number one. It seems definite progress is being made with the thorny issue of IT—Business alignment. The next most popular choice (53.4 per cent) was that the ‘CIO is part of the executive team’, which seems to indicate that Asia’s tech executives are increasingly gaining CXO respect. The third most popular choice for effectiveness was that the ‘CIO has healthy relationships with other CxOs’ chosen by more than half (52.3 per cent) of respondents.
On the perennial issue of driving innovation, most survey participants agreed that ‘IT is co-leading innovation initiatives with business executive sponsors’.
What do you expect to be the major impact of IT on your enterprise in 2009?
As to expectations that Asia’s senior tech leaders have for what technology will deliver in the coming Year of the Ox, the most popular was ‘Create/enable competitive advantage’, followed by ‘Enable/drive business innovation’, then ‘Reduce costs through efficiency/increased productivity’. Interestingly, innovation came ahead of cost cutting.
Our CIOs seem to prefer to put on their thinking caps rather than jumping on the bandwagon with the razor gang. All in all, this year’s ‘State of the Asian CIO’ research seems to show that IT leaders are definitely ‘coming of age’ and making solid progress towards working in acknowledged partnership with their fellow business executives. Nevertheless, achieving nirvana with enterprise information technology is a journey, not a destination and, no doubt, there remains much work for everyone in the year to come.
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