Chinese CIOs Face Technology, Organization and Leadership Challenges as Digital Business Progresses
CIOs in China are investing their fast-growing IT budgets in digitalization, according to Gartner, Inc. Gartner's annual global survey of CIOs found that the great success of digital-born companies in China, such as Alibaba and Tencent, is encouraging more Chinese enterprises to build or participate in digital ecosystems.
The 2017 Gartner CIO Survey gathered data from 2,598 CIO respondents in 93 countries and all major industries, representing approximately $9.4 trillion in revenue and public-sector budgets, and $292 billion in IT spending. Seventy-five CIOs from China responded to the 2017 Gartner CIO Survey.
"The survey results show that Chinese CIOs are firmly focused on digital priorities, rather than on traditional IT, and want their businesses to reap the benefits of digitalization," said Owen Chen, research director at Gartner. "Chinese enterprises spend, on average, 28 percent of their IT budget on digitalization, a figure that is expected to rise to 39 percent in 2018, which is 10 percent higher than the global average."
Fortunately for CIOs, as revenue in Chinese enterprises increases, so do IT budgets. Chinese survey respondents expect revenue to increase by an average of 10.9 percent at their enterprises, compared with the 4 percent global average. They expect their IT budget increase to be 10.2 percent, on average — much higher than the 2.2 percent global average increase. However, with the IT budget increase less than the revenue increase, IT spending as a percentage of revenue at Chinese enterprises will remain low, at less than half of the global average.
As more Chinese enterprises join digital ecosystems, Chinese CIOs are facing challenges in technology, organization and leadership, according to the Gartner survey.
CIOs Must Make Cybersecurity a Priority
The unpromising cyber/information security situation in China has led to the passing of the National Internet Security Act. However, despite state efforts "to protect the security and credibility of the internet," only eight percent of Chinese respondents indicate that security is a technology priority, which is about half of the global average.
"Although security, safety and risk rank among the top 10 business priorities of global enterprises, they do not feature in the top 10 priorities of Chinese enterprises," said Mr. Chen. "Chinese CIOs should allocate more spending to security management; otherwise, they risk long-term damage to the enterprise's reputation and loss of customers."
Use New Hire Channels to Help Close the Skills Gap
In common with their global peers, Chinese CIOs rank talent/skills issues as the biggest barrier to their success. Over the past several years, Chinese internet giants such as Baidu, Alibaba and Tencent have appealed to talent with attractive packages and development opportunities. This has resulted in a critical shortage of talent in the market, leading to concerns from many Chinese CIOs about their ability to hire, retain and develop talent.
Digital business/digital marketing, information/analytics/data science/BI and innovation/creativity are the biggest talent gaps, according to Chinese CIOs. To address these issues, CIOs must be more creative and use more new hire channels such as LinkedIn, adopt talent management practices such as management trainee programs, and work closely with universities and technology service providers.
Chinese CIOs are also well-placed to look to startups as a source for new talent, as the survey found that, compared with global CIOs, more Chinese CIOs engage with, buy or invest in startup companies. Such partnerships can allow enterprises to benefit from the innovation that startups excel at.
Build Strong Relationships With the Business
Twenty percent of Chinese survey respondents indicate management sponsorship/understanding/relationships is the biggest barrier to successfully achieving their objectives. This is much higher than the eight percent overall average and suggests that Chinese CIOs should make more efforts to improve on their relationship with the business.
Understand Business Priorities
While customer focus is among the top 10 business priorities of global enterprises surveyed, Chinese enterprises do not rank it in their top 10. Accordingly, CRM is among the top 10 spending priorities of global CIOs, but not in the top 10 spending priorities of Chinese CIOs.
In addition, fewer Chinese respondents (15 percent) indicate that growth/market share is a business priority than the global average (22 percent). Since this finding does not align with Gartner's discussions with Chinese business leaders, it may indicate that Chinese CIOs misunderstand the business priorities and need to shift from a back-office to a front-office mindset, especially where business priorities are concerned.
Gartner clients can learn more in the report: "2017 CIO Agenda: A China Perspective."
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