How CIOs in Southeast Asia are managing IT budgets

How CIOs in Southeast Asia are managing IT budgets

As resources get tighter and costs continue to sprawl, just how does today’s CIO keep a handle on their IT budget?

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Within the modern enterprise, executives across all departments are increasingly being faced with tightening budgets and expanding remits.

No one knows this better than the CIO, responsible for the ever-sprawling IT budget that houses one of the most expensive outgoings: Digital security.

It’s not all bad news, however. Last year, CIOs in Southeast Asia reported modest growths in their IT budgets, allowing them to keep pace with IT leaders around the globe.

However, it’s not all smooth sailing. Despite this small spending increase, there are a number of challenges still faced by CIOs when it comes to prioritising what they put their hard-fought allowance towards.

So, in the face of all this, just how does the modern CIO in the ASEAN region manage their IT budget?

What are CIOs spending money on?

According to research by Gartner, CIOs throughout the ASEAN region saw their budgets rise by around 2.2 per cent last year.

While this growth was lower than that seen by Asia-Pacific as a whole, the figures are in line with the global average and enough to allow businesses to make smart investments that could then be translated back into profit growth; 11.5 per cent on average.

So, what are CIOs in Southeast Asia spending these bigger budgets on? The top answer is digitisation initiatives.

Over recent years, the percentage of IT budgets earmarked for digital transformation has consistently grown, reaching an all-time high of 38 per cent in 2018 – the global average is closer to 43 per cent.

However, there are some who don’t believe digital spending has gone far enough in the region, suggesting an increase to at least 40 per cent of IT budgets being dedicated to digitisation.

It’s no secret that digital innovation has fundamentally changed the business landscape and recent closures of long-established corporations are a stark reminder that failing to adopt this new digital-first approach could result in the end of your organisation.

Digitisation is a top business priority for the countries in the bloc because unlike other IT investments, increased spending on digital transformation can be linked to real term revenue growth.

Furthermore, these spending increases can also be used to further digital innovation, research and development efforts throughout the region; a priority for seven per cent of CIOs in Southeast Asia, according to Gartner.

Public cloud services have also been tipped as another potential spending priority in the coming year, however, after digitisation the biggest budget percentages are expected to go towards advanced analytics, the Internet of Things and digital security.

All three of these areas have the potential to greatly impact on the future of business, helping to further promote a digital-first approach and enable organisations to meet changing business expectations.

Relationship between the CIO and CFO

While the CIO has always been responsible for setting the IT agenda within an organisation, as their role continues to expand beyond just the technical, being challenged to use IT strategies and solutions to drive business-wide innovation and transformation.

There is an obvious amount of fiscal responsibility that comes from divvying up the IT budget, unless your CIO comes from a financial background, they’ll need the skills and know-how from someone who does in order to understand the overarching financial goals of their organisation. Enter the CFO.

Earlier this year, Deloitte reported that globally, 28 per cent of CIOs now report directly to the CFO a figure that might be considered low in light of another report that states of the 500 global business executives surveyed, 96 per cent believe that close CIO/CFO collaboration is important for business success.

However, despite the business benefits of this working relationship, traditionally there have been a number of barriers stopping this partnership from flourishing.

CIOs often report that CFOs can have limited technical knowledge and don’t understand the changing nature of their role. CFOs often regard IT as the department of sprawling costs and limited fiscal self-control.

Furthermore, this lack of communication has been directly linked to cyber security failings, with CIOs stopping complaints of poorly performing security systems from ever reaching the desk of CFO out of fear the CFO will pull the plug on something they deem to be too financially draining.

While their priorities might sometimes conflict, the success of these digital technologies relies heavily on the CIO and CFO having a collaborative and mutually beneficial relationship.

Nevertheless, the role of the CIO is not the only one that is expanding in the modern enterprise, the CFO is now routinely tasked with helping the company to foster growth strategy, acting as a catalyst for enterprise-wide change.

As a result, the two roles are now more likely to overlap than ever before.

This article originally appeared on CIO Asia

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