2016 CIO Agenda: A China Perspective

Transcription

1 G CIO Agenda: A China Perspective Published: 19 February 2016 Analyst(s): Owen Chen Gartner's 2016 CIO survey results show that we are now knee-deep in the era of digital business, with many companies reimagining their business and operating models based on digital capabilities. This document explores the 2016 CIO agenda for China. Key Findings Most CIOs in China lead enterprise e-commerce efforts with one-third assuming a CDO role. Although China's GDP growth rate will slow down to 6.9%, the CIOs in China expect IT budgets to increase by an average of 12% compared to global CIOs' expectations of a 2% budget increase. Only about one-third of Chinese enterprises have bimodal, but the survey responses suggest a greater understanding of the capability. Still, many CIOs in China are not sure about their enterprise's bimodal plan. Although CIOs in China see talent as one of the biggest barriers, the lack of a need to change within the enterprise is inhibiting transitions to digital business. Although most CIOs in China have a transactional or partnership relationship with their CEO, almost half expect their power and influence to increase over the coming year. Recommendations Assume more of a digital leadership role and begin the transition from an operational perspective to that of digital business. Use the planned investments in digital technologies to prepare for a transition to develop the capabilities to capture business opportunities. Develop an understanding of the bimodal concept among IT and executive leadership with small, fast iterative project deliveries. Develop a plan to develop an IT and an enterprise bimodal capacity. Pursue innovative approaches to acquiring and managing talent especially in areas needed to transition to digital business.

2 Use your e-commerce success and bimodal projects to transition your relationship with the CEO from transactional to partner or from partner to trusted ally by reporting business successes. Table of Contents Survey Objective... 3 Data Insights... 3 As Digital Deepens, CIOs in China Continue the Shift to Digital Technology... 3 The Digital Focus in China Is Still Somewhat Operational... 3 The Shift to Digital Technologies Continues...4 CIOs in China Expect Substantial IT Budget Increases...6 Competition Seen as a Greater Threat Than Security by CIOs in China...7 The Biggest Barrier to Digitalization in China May Be the Lack of Perceived Need... 8 Ethical Issues Arise for Chinese and Global CIOs Equally...9 Bimodal Understanding Is Spreading Among CIOs in China CIOs in China Are Concerned With Talent Issues Talent Is One of the Biggest Barriers to CIO Success in China Information/Analytics and Digital Show the Largest Gaps in Chinese Talent CIOs in China Have an Opportunity to Lead Digital Transformation in China...15 CIOs in China Are Assuming the Role of CDO...15 CIOs in China Have an Opportunity to Enhance Their CEO Relationship CIOs in China Spend More Personal Development Days Than Global CIOs Methodology Gartner Recommended Reading List of Figures Figure 1. The Top Expected Outcomes or Impacts of Digital for Chinese Enterprises...4 Figure 2. Top Technology Priorities for 2016, China Versus Global... 5 Figure 3. Expectations of IT Spending to Increase in China and Across the Globe... 6 Figure 4. CIOs in China See New Competitive Threats as a Greater Risk Than Security...7 Figure 5. Digitally Enabled Traditional Competitors Seen as a Greater Threat to Chinese Enterprises... 8 Figure 6. CIOs in China Need to Make the Case for Digitalization...9 Figure 7. CIOs in China Also Face Digital World Ethical Questions Figure 8. China CIOs Are Implementing Bimodal Capabilities...11 Page 2 of 20 Gartner, Inc. G

3 Figure 9. Talent Is the Biggest Barrier to Success for CIOs in China Figure 10. Talent Scarcity Is Reaching Crisis Proportions for CIOs in China...12 Figure 11. Chinese Talent Gaps Are Greatest for Information/Analytics and Digital Figure 12. CIOs in China Primarily Lead E-Commerce or Assume the CDO Role Figure 13. CIOs in China Mainly Have a Transactional or Partnering Relationship With Their CEO Figure 14. Almost Half of CIOs in China Expect to Increase Their Level of Power and Influence in Figure 15. CIOs in China Invest More Time Than Their Global Peers in Personal Development Survey Objective This document was revised on 25 March For more information, see the Corrections page on gartner.com. The purpose of the 2016 Gartner CIO Survey is to help CIOs and other IT leaders set and validate their management agendas for the coming year. To achieve this, the 2016 Gartner CIO Survey gathered data from 2,944 CIO respondents in 84 countries and across major industries, representing approximately $11 trillion in revenue and public-sector budgets and $250 billion in IT spending. Respondents came from a range of industries including manufacturing, government, professional services, banking, energy/utilities, education, insurance, retail, healthcare, transportation, communications and media. Data Insights As Digital Deepens, CIOs in China Continue the Shift to Digital Technology The Digital Focus in China Is Still Somewhat Operational In China as well as globally, the top impacts of digital are still relatively operational for most businesses (see Figure 1): Driving revenue through better operations Using digital channels more Forming tighter partnerships Much of this may be about doing the same thing digitally rather than reimagining the possibilities in the light of digital capabilities. Gartner, Inc. G Page 3 of 20

4 Figure 1. The Top Expected Outcomes or Impacts of Digital for Chinese Enterprises Note: Question: "Please choose the top three expected outcomes and/or impacts that digital represents for your enterprise." However, Chinese and global CIOs are far apart in their view of how digital impacts engaging and empowering employees. While global CIOs ranked engaging and empowering employees third (40%), only 8% of CIOs in China selected it as one of their top three. This might be attributed to a much greater number of blue-collar workers than white-collar in China or to a perspective by Chinese executives that employee engagement is not a high priority. CIOs in China should not ignore this wide difference with their global peers and its potential impact on productivity, innovation and retention. The Shift to Digital Technologies Continues Of the top five technology areas selected by CIOs in China for new/discretionary funding in 2016, four are digital technologies: business intelligence (BI)/analytics, digitalization/digital marketing, mobile and cloud (see Figure 2). For CIOs in China, the elevation of digitalization/digital marketing to second from sixth and the drop in rank of traditional IT technologies, such as ERP, indicate a continuing shift in investment toward digital technologies. Page 4 of 20 Gartner, Inc. G

5 Figure 2. Top Technology Priorities for 2016, China Versus Global Note: Question: "Please indicate the top three technology areas where your company/business unit/government or public entity will be spending the highest amount of new/discretionary funding in 2016." Of the four top digital technologies, more CIOs in China than global CIOs selected the first three in Figure 2. The lower percentage of Chinese than global CIOs selecting cloud for investment may be due to continued Chinese concerns with cloud security, application integration, vendor maturity and the cost of implementation. CIOs in China should engage in trial cloud implementations with small, noncritical projects to gain experience. Noncloud security is seen as a much smaller issue by CIOs in China. Whereas 15% of global CIOs ranked security as an investment priority, only 4% of CIOs in China did so. Network attacks are a growing problem in China (see "Emerging Market Analysis: China's Top 10 Technology Trends for Gartner, Inc. G Page 5 of 20

6 ") and CIOs in China should allocate more resources to security and risk management to protect business assets. CIOs in China expect to invest slightly more than their global peers (6% versus 4%) in the Internet of Things (IoT). The large number of asset-intensive Chinese companies are looking toward the IoT for new business opportunities representing a move toward digitalization. CIOs in China Expect Substantial IT Budget Increases China's GDP growth rate is expected to slow to 6.9%, according to the National Bureau of Statistics of China. However, whereas 51% of global CIOs expect the average IT budget increase in 2016 to be only 2%, the majority of CIOs in China (see Figure 3) expect their IT budgets to increase by 12% on average, an increase from the 2015 expected increase of 8.5%. Only 2% of CIOs in China expect a decrease in their IT budget, while 15% of global CIOs expect to operate with a lower budget. Historical data shows that Chinese IT budgets are generally much lower than the global average (see "Survey Analysis: IT Key Metrics Data Shows IT Spending and Staffing Trends in Chinese Enterprises"). The expected big increase in Chinese IT budgets will have an even greater impact coming from perspective of a very low base level. CIOs in China should continue focusing on digital IT priorities in digital rather than traditional information technologies and look to help their businesses reap the benefits of digitalization. Figure 3. Expectations of IT Spending to Increase in China and Across the Globe Page 6 of 20 Gartner, Inc. G

7 Competition Seen as a Greater Threat Than Security by CIOs in China Economic slowdowns force enterprises to seek new development and transformation opportunities that introduce higher levels of competition. As Figure 4 shows, 62% of CIOs in China, compared to 41% of global CIOs, feel new competitive and commercial threats are more of a danger than security and cyber-risk threats. Figure 4. CIOs in China See New Competitive Threats as a Greater Risk Than Security Note: Question: "For each pair, choose the scenario you feel is the greater threat to your organization." * = Sample size is less than 30. However, only 35% of CIOs in China, compared to 47% of global CIOs, see competition from other industries as a greater threat than competition from traditional industry competitors (see Figure 5). In China, retail, banking and insurance companies are facing competition from Internet companies. But the traditional asset-intensive companies remain isolated from such industry competition. However, CIOs at these companies should not underestimate threats from outside their industry. Gartner, Inc. G Page 7 of 20

8 Figure 5. Digitally Enabled Traditional Competitors Seen as a Greater Threat to Chinese Enterprises Note: Question: "For each pair, choose the scenario you feel is the greater threat to your organization." * = Sample size is less than 30. The Biggest Barrier to Digitalization in China May Be the Lack of Perceived Need CIOs in China see a greater threat to moving to digitalization from a lack of the ability to see or agree to the need for change (65%) than the ability to execute (35%) (see Figure 6). This is an almost complete reversal from their global counterparts (37% need and 63% ability) and a moremature enterprise attitude toward digitalization. CIOs in China need to find a means of educating their business concerning the threats from digitally enabled competition and highlight both the value from digitalization and need for it. Page 8 of 20 Gartner, Inc. G

9 Figure 6. CIOs in China Need to Make the Case for Digitalization Note: Question: "For each pair, choose the scenario you feel is the greater threat to your organization." * = Sample size is less than 30. Ethical Issues Arise for Chinese and Global CIOs Equally As shown in Figure 7, 54% of CIOs in China have faced an ethical question when dealing with the digital world. This number is close to the global average of 60%. Gartner's "Kick-Start the Conversation on Digital Ethics" provides a starting point for dealing with ethical issues. Gartner, Inc. G Page 9 of 20

10 Figure 7. CIOs in China Also Face Digital World Ethical Questions Note: Question: "Has your organization faced an ethical question when dealing with the digital world, such as balancing freedom and safety, or balancing personalization of services versus respecting customers'/citizens'/employees' privacy?" * = Sample size is less than 30. Bimodal Understanding Is Spreading Among CIOs in China In Gartner's 2014 CIO survey, 62% of CIOs in China said their enterprise had bimodal IT, compared to 35% in this year's survey saying they have bimodal either enterprisewide or within IT (see Figure 8). However, this does not necessarily indicate that bimodal is less important or declining in Chinese enterprises. Rather the results may indicate an increase in bimodal understanding among CIOs in China. A better understanding would not count practices such as the implementation of an agile development method as constituting a Mode 2 capability. Many CIOs in China (47%) are not sure about their enterprise's bimodal plan. Gartner sees bimodal as a critical capability to create more business opportunities with digital technology and lessen competitive risk. CIOs in China need to have an understanding of the bimodal concept and should start building a bimodal capability now. (See "Chinese CIOs Must Take a Balanced and Holistic Approach to Building Bimodal IT.") Page 10 of 20 Gartner, Inc. G

11 Figure 8. China CIOs Are Implementing Bimodal Capabilities Note: Question: "Does your organization explicitly have two parts of its IT organization or project portfolio; one more safe, predictable and industrialized, the other more innovative, fast and/or collaborative? Beyond just IT, would you say that the rest of your organization has these two modes of operation? Does it plan to in the next three years?" * = Sample size is less than 30. CIOs in China Are Concerned With Talent Issues Talent Is One of the Biggest Barriers to CIO Success in China Although CIOs in China rank talent issues second to the top ranked technology challenges, more CIOs in China (33%) than their global peers (22%) see talent as a big barrier to their success (see Figure 9). Furthermore, as Figure 10 shows, 50% of CIOs in China strongly believe that talent scarcity is reaching crisis proportions, while 38% moderately believe so. Globally, only 11.4% CIOs strongly believe talent scarcity is reaching crisis proportions, and 31.3% of CIOs moderately believe so. Over the past several years, Internet companies such as Baidu, Alibaba and Tencent have attracted a lot of good talent with high incentive packages and potential development opportunities. The result is a critical shortage of good talent in the market, leading to concerns from the other CIOs in China around their ability to hire, retain and develop good talent. Gartner, Inc. G Page 11 of 20

12 Figure 9. Talent Is the Biggest Barrier to Success for CIOs in China Note: Question: "What is your biggest barrier to achieving your objectives as a CIO?" This question was asked only of respondents who completed the survey during Phase 1 of fieldwork, which accounts for the smaller total sample size. Figure 10. Talent Scarcity Is Reaching Crisis Proportions for CIOs in China Note: Question: "Please indicate your belief as a business leader regarding talent by moving the slider." * = Sample size is less than 30. Page 12 of 20 Gartner, Inc. G

13 Information/Analytics and Digital Show the Largest Gaps in Chinese Talent As shown in Figure 11, both CIOs in China and their global peers rank information/analytics as their biggest talent gap. Half of all CIOs in China say that information/analytics is their biggest talent gap. This is only 10% more than global CIOs. However, 39% of CIOs in China say that digital is their second biggest talent gap, more than twice as many as their global peers (15%). The percentages for Web also show a wide gap between CIOs in China (15%) and global CIOs (3%). All of the remaining talent areas show single-digit differences. Gartner, Inc. G Page 13 of 20

14 Figure 11. Chinese Talent Gaps Are Greatest for Information/Analytics and Digital Note: Question: "What would you say is the biggest talent gap (i.e., lack of skills) related to information, technology or digital business your company/business unit/government or public entity is trying to fill at the moment?" * = Sample size is less than 30. Page 14 of 20 Gartner, Inc. G

15 To address the need for talent, CIOs in China need to be more innovative. Gartner does not see many CIOs in China trying new hiring channels such as LinkedIn or talent management practices such as trainee programs or working closely with universities. For advice on creative approaches to acquire and develop skills/talent internally and externally, CIOs in China should see "Survey Analysis: CIOs Are Reshaping IT Workforce Profiles for Digitalization" and "Ten Practices CIOs Can Use to Find the People and the Ideas They Need." To unlock existing talent and productivity, consider Baidu's approach of allowing individuals to choose their projects and managers (see the Baidu case study in the appendix of "Building the Digital Platform: The 2016 CIO Agenda"). CIOs in China Have an Opportunity to Lead Digital Transformation in China CIOs in China Are Assuming the Role of CDO Strong digital leadership is a critical success factor for digital business. Gartner has followed the rise of the chief digital officer (CDO) over the past couple of years but considers the role temporary as digital business becomes embedded in every business and IT role. This evolution seems to be happening quicker than expected. The CDO growth rate is stalling as more CIOs take on a digital leadership role. Survey results in Figure 12 show 36% of CIOs in China have taken on the CDO role, which is only slightly less than the 39% of global CIOs. Figure 12. CIOs in China Primarily Lead E-Commerce or Assume the CDO Role Note: Question: "In which areas are you designated as the person in charge of any aspect of the business other than IT?" * = Sample size is less than 30. CDO = chief digital officer; CRO = chief risk officer. Gartner, Inc. G Page 15 of 20

16 It is worth noticing that 60% of CIOs in China are leading e-commerce at their enterprises. This number is much higher than the global average of 18.1%. While the result reinforces the earlier observation that the focus of CIOs in China is still operational, it may also indicate that Chinese executives believe e-commerce is more an IT than a business initiative. In either case, the current state of business provides numerous development opportunities for CIOs in China. CIOs in China Have an Opportunity to Enhance Their CEO Relationship Most CIOs in China describe either having a partnering (46%) or transactional (41%) relationship with their CEO, compared to global results of 50% partnering and 25% transactional (see Figure 13). These survey results again reflect the focus on e-commerce, the CIOs in China's e-commerce leadership role and the reliance on IT services. Also, note that there are no at-risk responses in China, yet 13% of respondents in China said they have a trusted ally CEO relationship. This suggests there is a power base for CIOs in China to develop opportunities for increasing their level of influence with their CEOs and thus their contribution to business success. Figure 13. CIOs in China Mainly Have a Transactional or Partnering Relationship With Their CEO Note: Question: "How would you describe the current levels of influence and power of the CIO and IT?" The survey also indicates that almost half (46%) of CIOs in China expect to see their power and influence increase over the next year (see Figure 14). Although much lower than the global CIOs 78%, it is a positive sign that CIOs in China are looking to assume more leadership. Page 16 of 20 Gartner, Inc. G

17 Figure 14. Almost Half of CIOs in China Expect to Increase Their Level of Power and Influence in 2016 Note: Question: "How do you see your level of power and influence changing over the next year?" CIOs in China Spend More Personal Development Days Than Global CIOs To realize the digital leadership opportunity, CIOs need time to develop their leadership capabilities. As Figure 15 shows, CIOs in China spend a significant amount of time in personal development. Their median of 50 days per year is five times global median of 10 days per year. The higher time for personal development may be due to two factors: CIOs in China tend to be younger, and some of them are devoting the time to pursue Master of Business Administration programs. The Chinese government provides training courses for CIOs, as well as others, working at stateowned enterprises. In all cases, CIOs in China should focus their training on management, leadership and business instead of technology. Gartner, Inc. G Page 17 of 20

18 Figure 15. CIOs in China Invest More Time Than Their Global Peers in Personal Development Note: Question: "How much of your time did you invest in personal development last year (in days)?" Median: China: 50 days; All: 10 days. Methodology This research is based on data collected for the 2016 CIO survey. Using an online survey, Gartner canvassed Executive Programs members and other IT leaders between 4 May 2015 and 24 July Gartner collected input from 2,944 CIO respondents in 84 countries and across major industries and the public sector. Together, these organizations represent approximately $11 trillion in revenue and public-sector budgets, and $250 billion in annual IT spending. Gartner designed the survey to prove or disprove a series of hypotheses devised by a core team of Gartner research analysts and Executive Programs representatives. The research involved extensive review prior to publication. The findings from the total dataset were published in their entirety as "Building the Digital Platform: The 2016 CIO Agenda." Gartner Recommended Reading Some documents may not be available as part of your current Gartner subscription. "Building the Digital Platform: The 2016 CIO Agenda" "2015 CIO Agenda: A China Perspective" Page 18 of 20 Gartner, Inc. G

19 "Supporting Digital Business in China" "What Chinese CIOs Should Do With 'Internet Plus'" "Chinese CIOs Must Take a Balanced and Holistic Approach to Building Bimodal IT" "Emerging Market Analysis: China, Top Technology Priorities for Your Market Strategy and Growth" "Emerging Market Analysis: China's Top 10 Technology Trends for " "Hype Cycle for ICT in China, 2015" "Hints and Tips on Using Gartner Numbers When Reviewing IT Spending Plans" Evidence This research is based on data findings from the 2016 Gartner CIO Survey. The original survey data was collected online from 2,944 members of Gartner Executive Programs and other IT leaders between 4 May 2015 and 24 July More on This Topic This is part of an in-depth collection of research. See the collection: 2016 CIO Agenda: Global Perspectives on Building the Digital Platform Gartner, Inc. G Page 19 of 20

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