In the wake of the COVID-19 pandemic, technology leaders are considering how to build upon the business continuity, resilience and digital transformation they helped to realise. In spite of the significant impact of the crisis on their businesses, they are resistant to reducing their IT budgets. How can they use their response to disruption as the foundation of their organisation's recovery in the months ahead?
We asked more than 150 Chief Information Officers (CIOs) and Chief Digital Officers (CDOs) in 14 countries, including Ireland, about the impact the COVID-19 crisis has had on their business operations. Here, we look at the results of the survey, and the ways CIOs believe technology can be a driver of future strategy planning in the new normal.
70% of CIOs say the crisis has had a significant impact on their business. This equates with the sentiment shown by CFOs when they were asked the same question in our recent Pulse survey. 86% of Irish CIOs said their organisations' IT performance was good or better in addressing the immediate impact of the crisis.
It's impressive to consider that three-quarters of businesses were able to start working remotely within three days of the start of lockdown restrictions. Technology was the cornerstone of most organisations' response to the pandemic. CIOs and IT teams enabled companies to function almost seamlessly as ways of working changed radically.
Despite a high level of concern amongst CIOs around the impact of COVID-19, 41% of them are planning to reduce IT costs. Most are aiming for reductions of between 10 and 20%. This represents a departure from last year's survey, when most CIOs expected their budgets to increase in 2020. The number of CIOs considering cuts, though, is significantly less than the 55% of CFOs who believe that technology costs should be reduced. While technology leaders are conscious of the economic consequences of the pandemic and its effects on budgets, they are very aware that technology can be an important driver for recovery from COVID-19 and know that investment in IT is crucial.
Such investment is an essential step for CIOs as they look to build upon the progress they have made during the pandemic. CIOs rate themselves highly on the stability of the internal IT functions in the face of COVID-19 - such as workplace technology, infrastructure and IT support for their people. This internal strength meant they could achieve business continuity in the face of extreme disruption. CIOs see technology as a way of moving out of crisis and supporting the transformation potential of the business. They are shifting their focus from survival mode to accelerating real digital transformation.
In our CFO Pulse Survey in May 2020, 37% of CFOs said they were considering cancelling or deferring IT investments. In comparison, only 24% of CIOs want to defer or cancel IT investments. The challenges for CIOs will be to defend their investments and desired spending in light of COVID-19, and to reduce costs without stopping or deferring investments.
As we look to the future and the changed world of business after the pandemic, CIOs need to focus on making strong business cases and make clear the benefits of their proposed IT initiatives. They need to be part of a broader conversation involving all areas of the business. IT initiatives should be aligned with business' needs. They should be positioned as enabling strategic goals. CIOs need to uphold technology as a key priority in strategic and operational planning.
Now is the time for companies and organisations to shift their focus from survival mode to accelerating real digital transformation. The survey outlined that CIOs have several important considerations in this respect for the rest of 2020. They are most concerned about meeting the ongoing challenges of cybersecurity and privacy (64%). We have seen a transition from in-person experience to virtual and online. Two thirds of CIOs are also looking at digitisation measures to drive new business capabilities. These include investments in digital customer experience and new technology enabled business models.
With all these competing considerations, CIOs create clear prioritisation for the activities that will deliver the most beneficial business returns. After optimising investments to keep the lights on—such as cybersecurity and digital collaboration and workplace tools—CIOs should look at the differentiating digital capabilities they need to develop to stay relevant and that will provide market advantage.
Given the current landscape, we expect to see an accelerated drive towards digital across all sectors. This was prevalent prior to COVID-19, but the pandemic has accelerated its adoption. As organisations seek to remain competitive, we expect to see increased digitalisation to attract and retain customers. This means investing in strategic transformation. By focusing on reimagining the possible with new solutions and service offerings, CIOs can help their organisations prepare for the new business landscape.
COVID-19 has put a spotlight on how critical the role of technology is within organisations. We can see from the results of the survey and the sentiment of CIOs locally and internationally that more attention should be given to digital customer experiences, resilience in cybersecurity and privacy, and new-technology enabled business models. More investment in digital is needed not less. IT capabilities will be even more crucial in the new normal, and the extent to which CIOs can influence strategy will be essential in ensuring their business' future success and survival. With the move to remote working and the surge in online, companies who do not invest will be at a competitive disadvantage. More than ever, the technology strategy needs to be aligned to enable the overall business strategy.