IT shifts its role amid new tech adoption

Across the world, there is an upward trend in companies’ tech spending, with 55% of CIOs reporting budget increases this year compared with 49% last year. This figure has risen for four consecutive years from 44% in 2015. These findings from the Harvey Nash/KPMG CIO Survey 2019 are despite geopolitical uncertainty across many regions and the IMF downgrading its prediction for global economic growth this year to 3.2% in July from 3.3% in April.

In the US, IT spending is expected to grow by 3.4% in the next 12 months, according to a recent survey of finance decision-makers by the Association of International Certified Professional Accountants. That’s in line with previous projections by CEOs, CFOs, and controllers in the quarterly survey.

Spending on tech is increasingly being managed outside the IT department. According to the Harvey Nash/KPMG survey of more than 3,600 respondents in 108 countries, this is the case with almost two-thirds (64%) of organisations.

However, only in 11% of companies is this shift to business-managed technology spend encouraged; in 53% of businesses it is allowed but not encouraged. In a further 36% it is not allowed, and the traditional model of IT-controlled tech budgets remains in place.

The shift brings increased risk in some cases, but also business advantages.

Enzo Tolino, FCMA, CGMA, Oracle’s vice-president of finance for Europe, Middle East, and Africa, said that when the business side is involved in making technology decisions, “users are more likely to get the functionality they want, and quicker”. He added that tech-savvy business and finance leaders have a “better idea of how technology can help solve specific pain points”.

However, there are downsides to this approach, he said, as business leaders sometimes make IT decisions in a vacuum. There is a danger that “many departmental solutions working independently can lead to a whole series of business process fragmentation, operating inconsistencies, security issues, and integration difficulties”.

The role of IT is to work with the business, Tolino said, and take a “business-strategy-first approach to investments and to IT, particularly ERP, for example”. He added that IT systems are needed that can “support and improve the ways of working efficiently and drive new business initiatives and outcomes”.

Tech adoption

The Harvey Nash/KPMG survey also looked at the extent of technology adoption within organisations. It found that 44% had large-scale adoption of cloud technology, with 33% working with it on a small scale and 10% at the piloting stage.

Stuart Stock, ACMA, CGMA, the CIO for UK and Ireland at Veolia, a global environmental solutions company, said it has 150 applications business-wide and has been moving from on-premise applications to cloud-based software-as-a-service solutions for several years. “We have a handful left on-premise including certain finance applications and our HCM [human capital management] application but should be fully cloud-based by the end of next year.”

The company is also using automation and artificial intelligence (AI), he explained. Data collected from the business is used for reporting but also for “starting to predict the future”. The company has a number of live AI-based prediction models and a pipeline of work to keep that increasing, he said.

A UK digital transformation team works closely with the company’s 10,000 UK field-based operatives to “automate their manual processes into a digital platform”, he added.

The company is at the early stages of using virtual reality headsets for operatives’ health and safety training and is assessing their benefits. It is also involved in a blockchain project within the waste sector, working with third parties.

Large-scale adoption of internet of things (IoT) technology, according to the CIO survey, is limited to 7% of companies. However, for Stock, IoT is “huge” across the business with “tens of thousands of sensors across our operations” — from equipment within its energy recovery facilities to sensors on bins to determine fill levels to those across its water network.

“This is again about capturing data to then build the data models in the background to allow us to move to prediction.”

However, the collection of data is constrained by the capability of the networks that bring the data back to the company, Stock explained. “NB-IoT [narrowband IoT], which is seen as the technology that everyone is looking forward to, to connect IoT sensors back to your dataset, is very much in its infancy. … There are only pockets of projects ongoing across the UK.”

He added: “It’s OK when you can connect to an existing Wi-Fi network on a plant or a site, but when you are looking at putting sensors where there is no connectivity, this is where the network needs upgrading in the UK and Ireland.”

Skills shortage

The CIO survey also found that 76% of CEOs of “digital leader” organisations want their technology projects to “make” rather than “save” money, compared to 58% of CEOs in other organisations.

However, the skills to do this are lacking. The survey found that IT skills shortages were at the highest levels since 2008, with larger and older organisations most affected.

Stock said: “The biggest skill shortage is in the AI and data analytics part. Data scientists are particularly difficult to recruit for.”

“There is definitely a skills gap — these people are predominantly maths graduates or Ph.D. students, and they transition to software and data analytics quite quickly. But there is a shortage of UK-based people.

“The market is huge — there is an explosion of job roles for these types of people, but there are not many coming through and that means they are in high demand.”

This negatively impacts staff turnover, which can be disruptive, Stock said.

Cybersecurity

According to the Harvey Nash/KPMG report, “Cybersecurity continues its stellar rise in importance, with 56% of respondents listing it as a board priority this year compared with 49% last year.”

It also highlights that the portion of IT leaders feeling “very well” prepared for cyberattacks has risen from 22% to 26% since last year, but many believe data security has an impact on their ability to innovate. A total of 83% say it limits it to some extent, and 14% say the effect is significant.

Stock said: “Our IT estate is increasing; therefore our exposure has increased.” He added that the “human firewall” is more difficult to manage than the technical one. “We have constant training and awareness programmes that we put out to the business, and phishing test programmes.”

— Oliver Rowe (Oliver.Rowe@aicpa-cima.com) is an FM magazine senior editor.