Spending on technology products and services is projected to reach almost A$78.7 billion in Australia and NZ$11.6 billion in New Zealand in 2015, and much of this spending will be driven by the digital industrial economy, according to Gartner, Inc. In the Asia Pacific region, Gartner forecasts that technology spending will grow 7.4 percent to reach US$811 billion in 2015 out of a worldwide technology spend of $3.9 trillion as organisation rush to embrace the digital economy.
While 58 percent of chief information officers (CIOs) in Australia and New Zealand expect that their budgets will be flat or declining, technology spending is forecast to grow 4.1 percent in 2015 in Australia (compared to 1.75 percent in 2014) and 2.9 percent in New Zealand (up from 1.2 percent in 2014).
Peter Sondergaard, senior vice president at Gartner and global head of Research, explained to an audience of more than 1,500 CIOs and IT leaders at Gartner Symposium/ITxpo in Australia today that this represents a dramatic shift in IT spending power, with a shift of demand and control away from IT and toward digital business units closer to the customer.
“Thirty-eight percent of global IT spend is outside of IT already, with a disproportionate amount in digital. By 2017, it will be over 50 percent,” Mr. Sondergaard said. “Digital startups sit inside your own organization, in your marketing department, in HR, in logistics and in sales. Your business units are acting as technology startups. Australia and New Zealand are increasingly known for creative and design expertise, with leading global vendors looking here to make acquisitions. You need to tap into this in your organization and make it a competitive advantage.”
Gartner estimates that 50 percent of all technology sales people are actively selling direct to business units, not IT departments. Millions of sales people, and hundreds of thousands of resellers and channel partners are looking for new money flows in the fluid digital world, and they are finding eager buyers.
The Digital Industrial Revolution
Mr. Sondergaard said there are seismic forces at work, creating permanent, structural changes in the business environment.
The impact that the digital business economy is having on the global IT industry is dramatic. Since 2013 650 million new physical objects have come online. 3D printers became a billion dollar market; 10 percent of automobiles became connected; and the number of Chief Data Officers and Chief Digital Officer positions have doubled. In 2015, all of these things will double again.
Gartner defines digital business as new business designs that blend the virtual world and the physical worlds, changing how processes and industries work through the Internet of Things.
“This year enterprises will spend over $40 billion designing, implementing and operating the Internet of Things,” Mr. Sondergaard said. “Every piece of equipment, anything of value, will have embedded sensors. This means leading asset-intensive enterprises will have over half a million IP addressable objects in 2020.”
The Hottest Skills in Digital Business
Digital businesses will impact jobs in different ways. By 2018, digital businesses will require 50 percent fewer business process workers. However, by 2018 digital business will drive a 500 percent boost in digital jobs.
Right now, the hottest skills CIOs must hire or outsource for are:
- User Experience
- Data sciences
In the future, three years from now, the hottest skills will be:
- Smart Machines (including the Internet of Things)
- Automated Judgment
Over the next seven years, there will be a surge in new specialized jobs. The top jobs for digital will be:
- Integration Specialists
- Digital Business Architects
- Regulatory Analysts
- Risk Professionals
Mr. Sondergaard told the CIOs in the audience, “The new digital startups in your business units are thirsting for data analysts, software developers and cloud vendor management staff, and they are often hiring them fast than IT. They may be experimenting with smart machines, seeking technology expertise IT often doesn't have.
“You must build talent for the digital organisation of 2020 now. Not just the digital technology organisation, but the whole enterprise. Talent is the key to digital leadership. Build credibility and build the two-speed bimodal IT organisation.”
Become a Bimodal Organisation
Bimodal IT fills the digital divide between what IT provides and what the enterprise really needs. Mode 1 is traditional, and the systems that support it must be reliable, predictable, and safe (like a great IT organisation). Mode 2 is non-sequential, emphasising agility and speed (like a startup) because disruption can occur at any time.
Mr. Sondergaard used the example of smart machines to highlight the disruption caused in digital business. Smart machines are an emerging “super class” of technologies that perform a wide variety of work, of both the physical and the intellectual kind. For example, school computers have been grading multiple tests for many year, and now they are grading essays, unstructured tests that require analysis.
“Not only is the grading more accurate, but students actually work harder on their essays when they are graded by a smart machine,” Mr. Sondergaard said. “Other professional tasks won’t be far behind: financial analysts, medical diagnostics, and data analytics jobs will be impacted. Knowledge work will be automated.
Smart robots will appear not just on the manufacturing floor, where they do physical work, but in the workplace and even in the home. Smart machines will automate decision making. Therefore, they will not only affect jobs based on physical labour, but they will also impact jobs based on complex knowledge worker tasks.
Mr. Sondergaard presented the opening keynote at Gartner Symposium/ITxpo on the Gold Coast today. For more information about the event, visit www.gartner.com/au/symposium or follow #GartnerSYM on Twitter.
About Gartner Symposium/ITxpo
Gartner Symposium/ITxpo is the world's most important gathering of CIOs and senior IT executives. This event delivers independent and objective content with the authority and weight of the world's leading IT research and advisory organisation, and provides access to the latest solutions from key technology providers. Gartner's annual Symposium/ITxpo events are key components of attendees' annual planning efforts. IT executives rely on Gartner Symposium/ITxpo to gain insight into how their organisations can use IT to address business challenges and improve operational efficiency. See www.gartner.com/symposium for more information.