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Digital impact being felt by majority of Asia’s CIOs in 2016

Distributed IT, shadow IT and data security risks are the big issues as businesses across Asia and worldwide respond to the threat from digital disrupters

Singapore, 24 October – Businesses across Asia are responding to the threat posed by digital disrupters like Über and Airbnb, a trend that poses significant challenges for CIOs, a study carried out by international IT solutions and managed services provider Logicalis (www.logicalis.com) has revealed.

The Logicalis Global CIO Survey 2016 polled 101 CIOs in Asia and 708 CIOs worldwide found that the digital transformation of business is gathering pace, with 80% of companies in Asia now digitally enabled to some extent. This number is slightly higher and closely aligned with global findings, where 73% of companies are digitally enabled. Overall, the study found, digital adoption confirms to an innovation bell curve:

  • The digitally enabled innovators, or digital disrupters, account for 6% of businesses in Asia (7% globally).
  • Early adopters make up 21% of businesses in Asia (22% globally).
  • The early majority accounts for 53% of firms in Asia (45% globally), while 20% (22% globally) fall into the late majority.

“The results clearly indicate that digital transformation is already impacting organisations and we are seeing IT decisions increasingly being distributed throughout the business rather than being held centrally by IT. CIOs will have to work closely with line of business employees, who are now more tech savvy, to drive innovation and deliver better business outcomes,” said James Tay, CEO of Logicalis Asia.

“In time, we see IT becoming internal service providers and digital enablers. CIOs in Asia have shown that they are as similarly prepared as their global counterparts to embrace the transformation and reshape their roles.”

Big challenges for CIOs

This rapidly changing environment does indeed pose big challenges for CIOs, as the survey has found. CIOs have, for instance, less control over IT spending than ever before – 41% (40% globally) now say they make 50% of spending decisions or less. 

CIOs also face the threat of line of business buying technology without involving IT at all. The proportion reporting that this happens often, very often or most of the time has impacted about a third, or 37% of CIOs in Asia (39% globally).

Distributed IT and the Shadow IT Department

One result of this loss of control is a move away from centralised IT, with more and more CIOs now operating in ‘distributed’ IT environments. This decentralisation of IT, a natural extension of ‘shadow IT,’ is no longer seen as subversive, however, and is instead viewed as a positive and essential element of digital transformation. 

For example, though the vast majority, or 84% of CIOs in Asia, which is almost similar to 83% globally, report that line of business departments now employ IT people whose role is to support business function-specific software, applications and cloud services – shadow IT departments - CIOs seem content to work with them.  About a fifth or 21% (22% globally) work with ‘shadow IT departments’ on a daily basis and 43% do so at least weekly, compared to 41% of CIOs globally.

Security challenges

Together, the combination of IoT, distributed IT and the increased pervasion of apps into the very core of the business – along with an ever-evolving threat landscape - represent a perfect security storm.

As a result, the CIOs surveyed cited security as far and away the biggest challenge related to the increased use of cloud services.  About three quarters or 72% (78% globally) pointed to security as a challenge, with related issues like data sovereignty (37% in Asia; 47% globally) and local data regulations (26% in Asia; 37% globally) among the top 6 CIO concerns.

Looking at security threats in more detail, 52% of CIOs in Asia (61% globally) expect the prevalence of increasingly sophisticated threats to be the number one issue for the next 12 months, while issues like ransomware and corporate extortion were highlighted by about two-thirds (63%) of the CIOs, compared to 56% globally.

Looking outside for help

The sheer range of issues facing CIOs in Asia as a result of digital transformation means the pressure to hand off day-to-day technology management, to focus on strategy and reframe IT departments as internal service providers, is greater than ever.

In response, CIOs are increasingly seeking partner-led and delivered services.  This year, about a quarter (21%) of CIOs in Asia (24% globally) outsource most of their IT (more than 50% outsourced), and the number outsourcing none or just 10% of their IT has fallen dramatically – respectively, to 7% (9% globally) this year from 29% (13% globally) in 2015 and to 9% (19% globally) this year from 14% (26% globally) in 2015.

 “As digital innovation accelerates, the winners will create new customer experiences and make faster and better decisions through smarter collaboration. They can also scale their organisations by creating new digital business models and revenue streams securely,” said Mr Tay.

“CIOs and IT leaders can play a leading role in enabling that innovation, drawing on skills from insightful partners to help shape their businesses and lead their sectors through the application of digital technologies. Logicalis is actively engaging clients to enable them in their digital transformation journeys, so as to deliver real and tangible business outcomes in this constantly evolving business and technology environment.”