Report warns on tech spend outside IT department

Written by Peter Walker
12/06/19

Tech spend outside IT department creates opportunities, but opens back door to potential security and consumer trust risks, according to the world’s largest technology leadership survey.

Now in its 21st year, the 2019 Harvey Nash/KPMG CIO Survey was conducted among 3,645 chief information officers and technology leaders between December and April 2019, across 108 countries.

Almost two thirds (63 per cent) of organisations now allow technology to be managed outside the IT department. When IT spend is managed away from the direct control of the CIO, companies are twice as likely to have multiple security areas exposed, and more likely to become a victim of a major cyber attack.

For those organisations where the IT team is formally involved in decision making around business-led IT, advantages include improving time to market new products (52 per cent more likely to be ‘significantly better than their competitors’) and employee experience (38 per cent more likely to be ‘significantly better than their competitors’).

However, 43 per cent companies are not formally involving IT in those business-led IT decisions.

These organisations are twice as likely to have multiple security areas exposed than those which consult IT, 23 per cent less likely to be ‘very or extremely effective’ at building customer trust with technology, and nine per cent more likely to have been targeted by a major cyber attack in the last two years. These risks are uncovered at a time when cyber security reached an all-time high as a board priority (56 per cent versus 49 per cent last year).

The research also revealed that fewer CIOs now sit on the board, dropping from 71 per cent to 58 per cent in just two years, although the influence of the CIO remains intact – 66 per cent this year view the role as gaining influence, compared to 65 per cent in 2018.

Artificial intelligence (AI) and automation is driving huge change, as the IT department is being tasked by its board to use AI to improve efficiencies (up 17 per cent this year as a board priority), which is leading CIOs to expect that up to one in five jobs will be replaced by automation within five years.

This is likely to lead to a significant reorganisation of roles across the business. However, 69 per cent of CIOs believe that new jobs will compensate for job losses to AI/automation.
Another pressure is that technology leaders are struggling to find the right talent, with skills shortages at their highest level since 2008. The three scarcest skills are big data/analytics (44 per cent), cyber security (39 per cent) and AI (39 per cent).

On the upside, more technology leaders reported increases in IT budgets under their control than at any time in the last 15 years. The jump in those reporting increases (from 49 per cent to 55 per cent) is the largest seen, with the one exception of 2010, when organisations were still clawing their way out of the global recession.

“In an age where anyone with a smartphone and credit card can set up an IT system, there are both incredible opportunities and major risks,” commented Albert Ellis, chief executive of Harvey Nash. “Those enterprises that get the balance right between innovation and governance will be the winners.”

Steve Bates, global leader for the CIO Advisory Centre of Excellence at KPMG International, said there is no longer business strategy and technology strategy, it’s simply strategy with technology driving it.

“This research clearly shows that organisations putting technology in the hands of value-creators and connecting the front, middle and back office are winning in the market.”

The study also looked into the quantum computing, which it admitted was still at such an early stage, that only four per cent (107 global organisations) have actually implemented it to at least some degree – with big pharmaceuticals, financial services and energy firms making bets in this area.

A fifth (22 per cent) of organisations implementing quantum computing were based in the UK, followed by 19 per cent in the US, and seven per cent for both Australia and the Republic of Ireland.