Gartner : Says Malaysian CIOs are Well Placed to Become Digital Leaders

Survey Reveals 69 Percent of Malaysian CIOs Expect Internal IT Budgets to Grow in 2016

Malaysian CIOs face more favorable conditions than many of their peers when it comes to establishing themselves as digital leaders, according to Gartner Inc.'s 2016 CIO Survey.

While the survey found that global IT budgets are fairly static compared to 2015, with an average growth of just over two percent, Malaysia shows an average change in total IT budgets of eight percent. Furthermore, compared to their global peers, Malaysian CIOs have more control over their enterprise's IT investments and can leverage this to strengthen their position as digital influencers.

Gartner's 2016 CIO Agenda survey asked 2,944 CIOs worldwide about their top digital business opportunities, threats and strategies, with responses from 103 CIOs in Southeast Asia including 43 from Malaysia. Data from the 2016 survey shows that globally, the average CIO is expecting digital revenues to grow from 16 to 37 percent in the next five years. In the Southeast Asia region, CIOs expect to see digital revenues grow from 15 to 38 percent in the same period, indicating that they are poised to make the most of digital business opportunities.

'Malaysian CIOs are seeing their IT budgets increase, they are leading in digital initiatives and innovation, and there is a growing recognition from Malaysian businesses of the importance of digitalization for competitive advantage,' said Bard Papegaaij, research director at Gartner.

'This doesn't mean CIOs in Malaysia can just wait for things to go their way. They face a looming skills shortage, they need to keep working on growing their influence and power and they must take the lead in shaping the best possible circumstances for their enterprises to thrive as digital businesses.'

Spending Priorities

The survey revealed the top areas of new technology spending in Malaysia to be on BI/analytics, mobile and cloud (see Figure 1). With 35 percent cloud spending compared to a global percentage of 25 percent, it seems that Malaysian CIOs are leading the way in freeing up budgets and creating the flexibility for a more digital focus by reducing their investment in internal infrastructure and data centers.

'The need to innovate is driving penetration and deepening of the bimodal construct, where two separate, coherent modes of IT delivery are managed - one focused on stability and the other on agility,' said Poh-Ling Lee, vice president and executive partner at Gartner. 'With a larger increase of IT spending under their control than most of their global peers, Malaysian CIOs have more room to invest in setting up and developing bimodal capabilities. By using the extra room in their IT budgets this way, they can help their organizations reap the benefits of digitalization sooner than the competition.'

Figure 1: Top New/Discretionary Technology Spend, Malaysia

Q: 'Please indicate the top three technology areas where your organization will be spending the highest amount of new/discretionary funding in 2015.'

Source: Gartner (February 2016)

Demand for Talent

While Malaysian respondents in the Gartner CIO survey said that mobile, digitalization/digital marketing and BI/analytics are the most important technology areas to help their business differentiate, win and achieve its mission, skills and talent in these areas are in huge demand globally.

'CIOs everywhere state that talent is the single biggest issue standing in their way of achieving their objectives,' said Ms. Lee. 'The bottom line, however, is that CIOs and their enterprises aren't acting fast enough. The talent pool and talent management practices are not keeping up with the ever-increasing and changing needs of the digital world.'

Ms. Lee said that instead of thinking of talent as a strictly internal asset, CIOs must think about talent as a platform with semi-porous boundaries - where internal and external talent meet and collaborate and multiply their potential. Strategies may include rotating staff from outside the IT organization, working much more closely with universities, crowdsourcing and considering customers, citizens, vendors and partners as extensions of the talent platform.

Especially for Malaysian CIOs who are seeing their internal IT budgets grow more than that of their global peers, the rising trend of 'techquisitions' - buying promising startups to obtain both their technology and their talent - is something to consider. However, this strategy on its own is unlikely to be enough if the other barriers to success are not addressed in parallel.

Leadership and Culture

Great talent thrives only in a supportive culture and needs the right organizational structures, change-readiness and strong sponsorship from and relations with the business to be able to innovate and operate effectively. Just hiring or acquiring the best talent without creating the right environment will lead to newly brought-in stars quickly sinking into the background or leaving as soon as they see an opportunity.

'CIOs are being given, and they are taking, the opportunity to lead digital transformation, but they must adapt to build a powerful network of digital leadership, which is, after all, a team sport,' said Mr. Papegaaij. 'One thing that has not and will not change is that leadership is critical for all business success. IT and digital business are no different in that respect. Having strong and clear leadership as the IT and digital business worlds evolve continues to be critical.'

In Southeast Asia, 41 percent of CIOs believe that they are stepping up and taking the digital transformation leadership role, while a further 41 percent say they are taking on innovation leadership; both numbers are slightly higher than the global percentage (39 and 34 percent respectively).

An area of concern for Malaysian CIOs, however, is their power and influence in the organization.

Compared to their global peers, Malaysian CIOs report that 50 percent of them are in a partnering position with the CEO (on a par with the global percentage), but only 13 percent have moved beyond partnering to become trusted allies (compared to 23 percent globally), while a good 38 percent are still in the relative danger zone of the transactional relationship with the CEO (only 25 percent globally).

'Transactional CIOs need to spend more time and energy moving away from this position, and to use digital opportunities to show their business peers that IT can and must be much more proactive and strategically involved than just taking orders or keeping the lights on,' said Mr. Papegaaij. 'CIOs that have a partnering position must not stop there, but focus even more on showing true leadership and spend more time building close relationships with their peers in the C-suite.'

More detailed analysis is available for Gartner clients in the report '2016 CIO Agenda: A Malaysia Perspective.'

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