CIOs expect IT budgets to increase 5.1 percent in 2023 – lower than the projected 6.5 percent global inflation rate, Gartner said in its CIO and technology executive survey.
CIOs and IT leaders must take action to accelerate time to value and drive top- and bottom-line enterprise growth from digital investments, according to Gartner.
Global spending on the digital transformation (DX) is forecast to increase 17.6 percent to $1.8 trillion in 2022, according to IDC. DX spending will sustain this pace of growth over the 2021-2025 forecast period with a five-year compound annual growth rate (CAGR) of 16.6 percent.
“CEOs and boards anticipated that investments in digital assets, channels and digital business capabilities would accelerate growth beyond what was previously possible. Now, business leadership expects to see these digital-driven improvements reflected in enterprise financials,” said Daniel Sanchez Reina, VP Analyst at Gartner.
Gartner analysts presented the survey findings during Gartner IT Symposium/Xpo. The 2023 Gartner CIO and Technology Executive Survey gathered data from 2,203 CIO respondents in 81 countries and all major industries, representing approximately $15 trillion in revenue/public-sector budgets and $322 billion in IT spending.
The survey analysis revealed four ways in which CIOs can deliver digital dividends and demonstrate the financial impact of technology investments:
Prioritize the Right Digital Initiatives
Survey respondents ranked their executives’ objectives for digital technology investment over the last two years. The top two objectives were to improve operational excellence (53 percent) and improve customer or citizen experience (45 percent). In comparison, only 27 percent cited growing revenue as a primary objective and 22 percent cited improving cost efficiency.
CIOs’ future technology plans remain focused on optimization rather than growth. CIOs’ top areas of increased investment for 2023 include cyber and information security (66 percent), business intelligence/data analytics (55 percent) and cloud platforms (50 percent). However, just 32 percent are increasing investment in artificial intelligence (AI) and 24 percent in hyperautomation.
95 percent of organizations struggle with developing a vision for digital change, often due to competing expectations from different stakeholders. To drive financial outcomes, CIOs must reconcile siloed initiatives by using a visual metrics hierarchy to communicate and demonstrate interdependencies across related digital initiatives.
CIOs should connect with functional leaders for each digital initiative to understand what ‘improvement’ means and how it can be measured. Creating a picture that reflects the hierarchy of technical and business outcome metrics for each initiative will help identify the chain of accountability that will collectively deliver the dividend in focus.
While strategic engagement with business unit leaders is necessary to accelerate digital initiatives, the survey exposed an IT mindset of “go it alone” regarding solution delivery. For example, 77 percent of CIOs said that IT employees are primarily providing innovation and collaboration tools, compared with 18 percent who said non-IT personnel are providing these tools.
Loaning IT staff to fusion teams that combine business experts, business technologists and IT staff will catalyze a team that is focused on achieving digital business outcomes, while also opening the way for reciprocity, such as integrating subject-matter experts from the business into an IT-led fusion team.
Many CIOs struggle to hire and retain IT talent to accelerate digital initiatives. The survey identified numerous sources of technology talent that are untapped. For example, only 12 percent of enterprises use students (through internships and relationships with schools) to help develop technological capabilities and only 23 percent use gig workers.
CIOs are often limited by policies related to preferred providers or employment contracts. They must stress to business and HR leadership that engaging unconventional talent sources can help accelerate the realization of digital dividends.
