the situational it leader - pwc

The Situational IT Leader

Survey Results & InsightFebruary 2013

www.pwc.com.au

PwC’s Western Australia IT Leaders Survey FY13

PwC’s Western Australia IT Leaders Survey FY13

60% of IT Leaders do not report

directly to the CEO

Reporting and analytics

Aligning IT with business

Major Software/ERP

implementation

Improved project

execution

Top 3 key focus areas

for FY13BYOD and Mobility

Enhanced service

delivery

Top 3 critical success factors

for FY13

The lack of available IT talent in WA is a

significant challenge for 52% of IT Leaders

70% of organisations

do not fully include IT in the business

planning cycle

IT Leader’s key challenges

IT Leaders in Western Australia are facing unprecedented pressures and competing demands from the business to deliver rapid technology innovation while maintaining or reducing IT spend.

1PwC’s Western Australia IT Leaders Survey FY13

Be more strategic. It’s a mantra chief information officers (CIOs) and IT Leaders have heard repeatedly for more than a decade from the CEO, the chief financial officer (CFO), and other business colleagues as well as analysts, consultants, and the media. Easy to say, but hard to define or do. The CIO job, as typically understood, is difficult enough. For many, expanding the role to include being a major contributor to business strategy is a pipe dream at best, a nightmare at worst.

Yet it can’t be shrugged off as one more nonsensical demand or faddish request, especially in the reset economy we have today in Western Australia. Internal and external forces will soon compel CIOs and IT Leaders—if they aren’t already—to be more strategic in serving the business without giving up any traditional IT responsibilities. The message to be strategic tells the CIO to broaden beyond the narrower role of technology operations manager and to become a true business executive—a fully contributing member of senior management in identifying and capitalising on opportunities. Thus, the Situational WA IT Leader.

But being strategic isn’t always what your company wants. In the recent economic downturn most companies have asked CIOs and other executives to focus on the tactical—efficiencies and cost cutting—rather than developing new business and technology strategies. PwC believes the focus is fundamentally changing toward a demand for more strategic involvement by CIOs, but without losing the tactical strengths favoured recently.

Just how strategic a CIO and IT Leader should be —if at all—varies according to your company’s needs and expectations, and your skills and interests. The best CIOs and IT Leaders are beginning to act as chief innovation and process officers. Indeed, CIOs are the only C-suite executive who has to know how the business works end to end.

More so than other executives, this advantage provides today’s IT Leaders in WA with insight and leverage into making the business run better.

The Situational IT Leader in WA

2 PwC’s Western Australia IT Leaders Survey FY13

Introduction

Survey approach

Chief Information Officers (CIOs) and IT Leaders in Western Australia are facing unprecedented pressures and competing demands from the business to deliver rapid technology innovation while maintaining or reducing IT spend.

PwC recently asked 80 IT Leaders in WA what their biggest challenges and

opportunities are, in particular adapting to recent challenging market conditions and increased business demands to utilise technology innovation to enable operational efficiency and differentiation.

This is the first time that this survey has been carried out in WA. No comparators to previous surveys exist, and consequently in this first year we focus our attention on how the results of the survey relate to WA IT Leaders experiences and challenges.

I am delighted to publish this years results and I look forward to discussing these findings in more detail with you.

Sincerely,

Justin Scanlan

Partner Perth Technology Leader

The survey was conducted in July 2012 at WA’s inaugural IT Leaders Summit using real-time voting technology. The questions covered demographic information about each organisation including general information about IT (e.g. staffing, structure and spend); and specific questions on IT strategy, priorities and challenges.

Profile of respondents• Over 50% of respondents work in the Mining, Oil

& Gas, or Construction & Engineering sectors.

• 57% of IT Leaders who participated are from companies with more than 1,000 employees.

• Nearly 60% of IT Leaders work at organisations with an annual revenue/budget of $500m or above.

• Two thirds of IT Leaders surveyed have totally or mostly in-house IT services. Only 3 % have total outsourced IT services.


The WA economy has consistently outperformed the Australian economy in recent times. • It grew 6.7% in real terms in 2011-12. • WA’s per capita gross state product (GSP) was

the highest in Australia and 55% higher than the national average of $63,7541.

Despite this economic success, organisations are facing increased cost and performance pressures as a result of unstable commodity prices, foreign exchange exposures and a high labour cost. As a result, there are increased pressures being placed on organisations to not only introduce significant productivity and cost savings but also drive innovation through new technologies.

In addition, the convergence of operational technology with mainstream IT provides new opportunities and challenges for organisations in WA.

The opportunity to better utilise technology to drive strategic change is not negotiable. CIOs now face a new test of leadership, one that requires an agile mindset so that they may foster and adapt IT in order to better deliver on results.

PwC believes the IT Leader’s dilemma consists of two forces pushing the role and the business benefit in opposite directions. The first force is simplifying what used to be challenging. More and more technology becomes standardised, plug-and-play, and commonplace. Software as a Service, ‘Infrastructure as a Service’ and broader Cloud services are demonstrating that technology does not require an expensive, dedicated set of fixed resources. The traditional enterprise IT we’re familiar with is disappearing. In this world, a CIO is a vendor management officer, and most of the technology essentially takes care of itself. The CIO is dead.

The second force clears the path for more strategic value and promises more clout and responsibility than CIOs have ever had before. The best CIOs are beginning to act as chief innovation and process officers. This is because they’re the only C-suite executives who have to know how the business actually works from one end to the other. This advantage gives them insight and leverage into making the business run better. PwC’s 14th Annual CEO survey clearly shows CEOs’ and executive management’s desire for CIOs to take on greater strategic roles. Interestingly, only 55% of CEOs believe the CIO always speaks the language of the CEO and proposes new ways to advance strategic business priorities.

In many industries today the CIO is becoming increasingly thought of as a chief innovator, chief strategist, chief process officer, or all three.

Long live the CIO!

Market context

1 Australian Bureau of Statistics. Australian National Accounts. State Accounts. November 21 2012.

55%

of CEOs believe the CIO always speaks

the language of the CEO


Reporting and Analytics

Major software/ERP implementation

Bring Your Own Device (BYOD) and Mobility

Establishing an IT strategy

Top 4 WA IT Leader’s Technology Priorities

Analytics and business intelligence

Mobile technologies

Cloud computing (SaaS, IaaS, PaaS)

Collaboration technologies (Workflow)

Top 4 Global Leader’s Technology Priorities 3

01

02

03

04

2 PwC. 14th Annual Global CEO Survey 2011 – Main Report.3 Gartner. The 2012 Gartner CIO Agenda Report.

WA IT leaders point of viewLocally, IT Leaders believe their FY13 budgets will be cut back, despite the opportunity to use technology to drive productivity.

CEOs are asking their management teams to refocus on positioning their companies for growth while continuing to reduce cost. Indeed, 70% of CEOs surveyed said they are investing in IT to reduce costs and become more efficient2. The role of today’s IT Leader becomes increasingly challenging – balancing delivering technology innovation rapidly to drive business growth with keeping IT budget in check.

Comparing the top technology priorities of Western Australia IT leaders with IT leaders globally gives an insight into the unique challenges that are faced by WA CIOs. While business intelligence and mobile technologies are high on a CIO’s agenda both locally and internationally, cloud computing was not considered a priority by WA IT Leaders with only 23% stating that this is a key focus area. This may indicate that cloud services are becoming more mainstream, or that local cloud services are not mature. Major software/ERP implementation is a WA-specific priority with it being the second most frequently cited focus area by WA IT Leaders.

01

02

03

04


Integration with businessClose to 70% of respondent organisations do not fully incorporate IT in their business planning cycle.

Many IT Leaders struggle with aligning the IT Strategy into the broader strategy of the organisation. Nearly 70% of IT Leaders surveyed report that IT is not fully included in the business planning cycle, reducing the effectiveness of IT in taking a major role in implementing the business strategy. In addition, results show that the lack of IT strategy buy-in by senior level management in their organisation caused considerable frustration among 39% of IT Leaders. This is disappointing given the role of technology in enabling strategic change in an organisation has never been stronger.

Is IT included in the business planning cycle?

Yes fully 31%

Partially 47%

Not at all 22%


IT strategy focus areas

What are your 3 critical success factors for FY13?

More than half of IT Leaders say that business integration is the most important IT business critical success factor.

A lack of good communication and inter-departmental collaboration between IT and management causes disorganisation, poor business-IT alignment, and ultimately inability to realise strategic objectives. To ensure IT provides business value and the adaptability required for their organisations to thrive in an increasingly complex and fast–faced environment, IT Leaders ranked aligning IT with business as most important for FY13, followed by improved project execution and enhanced service delivery.

Wh

at a

re yo

ur 3

critic

al s

uc

ces

s fa

cto

rs fo

r FY

13?

6%Outsourcing

35%Effective

IT organisationstructure

40%IT Strategy

buy-in

26%Securing

appropriatebudget

51%Business

integration/Partnership

9%

Improvedvalue from

procurement/sourcing

43%Improved

projectexecution

14%Establishingan effective

PMO

43%

Improvedservice delivery/

Management(e.g. ITIL)

23%Infrastructure/

Applicationsstability

Who does the head of IT/CIO report to?

61% of CIOs do not report directly to the CEO.

Problems with the integration of IT Strategy into business and getting buy-in of IT Strategy at executive level are found to occur more frequently in organisations where the head of IT/CIO reports to the CFO or COO.

34%CFO (or otherFinance role)

13%COO (or otherOperations role)

13%None of the above

40%CEO (or GM/MD)

70% of organisations do not fully include

IT in the business planning cycle


Reporting and analytics is keyThe top focus area for IT leaders is to create a competitive advantage for business by leveraging data and advanced analytics.

Using business intelligence and analytics to leverage informational assets is the primary focus of 48% of IT Leaders. While this may be more relevant for large companies who predominately have the largest volumes of data, the results also indicate that this is a concern across most business sectors. Organisations are requiring flexible reporting that gives them the ability to drill down to varying layers of detail and IT Leaders are required to obtain this information from an ever shifting mass of information that is not readily available in enterprise information systems.

What are the 3 focus areas for your IT technology strategy?

Establishing an ITstrategy

35%

BYOD & mobility 38%

Security 26%

Desktop/Officetools refresh

14%

Collaboration/social media

29%

Major software/ERP implementation

40%

Application portfoliorationalisation

25%

Virtualisation 15%

Cloud computing(IaaS, SaaS, PaaS)

23%

Reporting andanalytics 48%

The volume and variety of data is rapidly increasing as stakeholder interactions and business complexity evolves. This provides an opportunity for leading organisations to formulate and adopt a comprehensive strategy for analytics and decision support – in order to realise sources of advantage. PwC believes that with a business focus, not technology focus, organisations can drive superior performance and demonstrably increase economic value through enhanced information management, analytics, and decision making capabilities.


40% of IT Leaders see major software/ERP implementation an important part of their IT strategy.

Large scale software implementation, particularly ERP, is a key concern for 40% of IT Leaders. The implementation or significant upgrade of an ERP is a significant change event for an organisation, impacting the conventional business model and core business practices. IT leaders are concerned about the complexity of these projects, given there is a high risk of the project not achieving its business goals or being scoped incorrectly. It is estimated that between 50% and 60% of ERP implementations are perceived as failures4. Additional concerns arise with solution selection, data quality assurance, other technical issues and adoption at different organisational levels.

Given that less than 40% of ERP implementations are successful and fully deliver upon business objectives, WA based organisations embarking on this journey require a tight Project Governance and robust planning and control.

As BYOD goes mainstream in the enterprise, over one third of respondents view BYOD support, security, and integration a key IT focus.

The “consumerisation of IT” has led to an increase in employee-supplied devices in the workplace. Over 40% of devices used to access business applications are personally owned by the employees themselves5. While these tools enable increased productivity by workers, it challenges the IT Leader in controlling access to sensitive information by non-corporate devices and securing the data once it leaves the confines of the corporate network. 38% of surveyed IT Leaders stated that BYOD is one of their key focus areas.

The level of support that the organisation is willing or able to provide to personal devices used for work is an additional concern for IT Leaders. Providing integration on an increasingly wide selection of devices, platforms and applications places a larger burden on an organisation’s IT support infrastructure.

4 Ganly D. Address Eight Key Factors for Successful ERP Implementation. Gartner. November 2012.5 PwC. The Consumerisation of IT. November 2011.

BYOD and mobility is a key focus of

38% of IT Leaders

ERP and mobility are priorities for the WA IT Leader


IT Leader’s frustrationsKeeping pace with changing business needs and requirements.

The most frequent cause of concern for 53% of IT Leaders surveyed is the constant flux in business demands from their organisations. This is perhaps not surprising when you consider over 70% of WA organisations surveyed do not fully incorporate IT in their business planning cycle.

In today’s business world, change is the only constant. Almost all of the respondents’ organisations experienced business restructuring, transformation, or some sort of change brought about by organic or inorganic growth. Only 9% experienced neutral company growth. None showed downsizing.

Acquisitions, divestments and expansion of operations place demands on the IT function in many organisations in WA. The responsibility then rests on the IT Leader to implement a flexible, robust and agile IT strategy in the face of constantly changing business environment.

This indicates a lack of understanding of technology within the business and/or a breakdown in communication processes between the business and IT. PwC believes this can be improved through better IT Governance and Strategy planning.

What are your top 3 frustrations?

Lack of opportunityto drive IT strategy

throughout business24%

Constant changingdemands from

the business53%

Unrealistic expectationsfrom the business 48%

Unsuitable technologyarchitecture 17%

High cost andperformance of

service providers12%

Available IT talent 27%

Employee churn 8%

29%Lack of sufficientinvestment

39%Lack of IT Strategy

buy-in at senior levelin business

18%IT regarded onlyas a cost


What are the greatest people challenges facing your organisation?

Top talent challenges facing IT LeadersOver half of the IT Leaders see a lack of available local IT talent as a major challenge.

With the current growth rate of WA industries, acquiring new IT talent whilst retaining existing IT staff is a critical concern for IT leaders. The survey results indicate that a lack of IT talent is the biggest people challenge for WA IT Leaders with 52% stating it as a major factor in maintaining a stable operational base of IT skills in the organisation. Compounding the problem are the salary demands made by existing IT staff, where 45% of respondents believe this is their second biggest people challenge in talent retention. In addition to an ageing workforce, the demand side for IT talent outstrips supply from traditional sources (e.g. schools, colleges and universities) requiring an increasing number of the IT workforce to be sourced from overseas.

WA currently has a significant shortage of IT graduates emerging from higher education, tertiary and vocational. This is a significant issue for the State moving into the future. It is up to all IT organisations in WA to consider stimulating more interest by offering internships and graduate programs for young people in WA.

Recruitmentprocesses

31%

Employee churn (IT) 16%

Employee valueproposition

28%

Lack of availableIT talent in the makret

52%

Appropriate retentionstrategies 34%

Lucrative offers fromother companies 30%

Salary demands 45%

The lack of available IT talent is a challenge for 52% of IT Leaders


ConclusionMany of the challenges facing WA IT Leaders are also faced by IT leaders and CIOs globally. One of the key challenges facing the WA IT Leader is integrating IT strategy into their organisations. Several of the challenges and frustrations, such as unrealistic expectations of IT and a lack of IT strategy buy-in by executives, result from this lack of or insufficient integration and inter-departmental collaboration.

Put simply, the CIO role is often not taken seriously by many WA based organisations. Many CIOs struggle to establish a seat at the executive table and many CEOs and CFOs fail to communicate business strategy and tactics to CIOs in a timely manner. Given the convergence of operational technology and information technology and an increased demand across all key sectors in WA for productivity improvements, the CIO should be seen as the key enabler to this objective. In particular, given the rapid advances in technology.

Some priorities, such as major software and ERP implementation, are WA-specific. Interestingly, while cloud computing was considered to be a top priority of global IT leaders, it is not one of the key focus areas among WA IT Leaders. This may indicate that the Australian Cloud market has still not matured its commercial models or that Cloud may be becoming more mainstream in IT organisations.

The increasing demands of business are expanding the traditionally defined role of the CIO. IT leaders are now being required to focus on growth, performance and efficiency while facing pressures to reduce IT spend. This increased responsibility also gives unparalleled insight into the business as a whole, giving the IT Leader leverage into making the business run better.

Regardless, the WA IT Leader has an opportunity to drive valuable business change by taking the initiative to work with Executives to plan, execute and realise the benefits of smart technology investments.


PwC has developed a significant amount of thought leadership in Technology and Innovation

PwC Technology Forecasthttp://www.pwc.com/us/en/technology-forecast/index.jhtml

PwC Centre for technology and innovation (CTI)http://www.pwc.com/us/en/technology-innovation-center/index.jhtml

Publications


Justin Scanlan Partner and Leader of Western Australia Technology Practice

+ 61 (8) 9238 [email protected]

Jodie Hatch Director

+61 (8) 9238 3616 [email protected]

Chris Hannan Director

+ 61 (8) 9238 [email protected]

JoAnn Theriault Director

+61 (8) 9238 [email protected]

The Survey was conducted at the inaugural WA IT Leaders Summit hosted by Business Insights Australia.

This paper was produced in conjunction with Business Insights Australia, Australian Computer Society, Justin Scanlan, Chris Hannan, Tony Long, Kam Ling Chau and Stephan Dahinden.

Contacts

© 2013 PricewaterhouseCoopers. All rights reserved. PwC refers to the Australian member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. Liability is limited by the Accountant’s Scheme under the Professional Standards Legislation. PwC Australia helps organisations and individuals create the value they’re looking for. We’re a member of the PwC network of firms in 158 countries with close to 169,000 people. We’re committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.au

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