Australian IT spending to near $80bn in 2016

Australian IT spending is forecast to reach almost $80 billion next year, up 2.8% from 2015, according to Gartner.

The research firm predicts that spending will be driven by the rise of the digital business and the connected world.

CIOs in Australia and New Zealand expect their digital revenue to more than double in the next five years to account for 32% of total revenue, up from 14% today.

Gartner has also presented research showing that ANZ CIOs expect average IT budget increases of 2.9% in 2016, slightly higher than the global weighted average of 2.2%.

Top technology investment priorities for Australian CIOs next year are expected to include business intelligence and analytics (43%), the cloud (33%), digitalisation (25%) and mobile (24%).

The IoT market is also hurtling into the mainstream, with Gartner predicting that worldwide spending on IoT hardware will exceed US$2.5 million ($3.5 million) per minute in 2016. In five years time, one million new devices will be coming online every hour, the company added.

Speaking at the Gartner Symposium/ITxpo on Tuesday, Gartner global head of research Peter Sondergaard said the future of business will be defined by interconnections, relationships and algorithms.

“Data is inherently dumb. It doesn’t actually do anything unless you know how to use it; how to act with it. Algorithms are where the real value lies. Algorithms define action. Dynamic algorithms are the core of new customer interactions,” he said.

“The algorithmic economy will power the next great leap in machine-to-machine evolution in the Internet of Things. Products and services will be defined by the sophistication of their algorithms and services. Organisations will be valued not just on their big data, but [on] the algorithms that turn that data into actions and ultimately impact customers.”

Examples of financially successful algorithms include recommendations on services such as Amazon, Netflix or YouTube.

The rise of digital business is prompting companies to take steps to adapt to the new economy, including creating innovation units and initiatives that run in parallel with traditional analog businesses.

“Organisations are creating separate business units, focusing on digital, separate from their traditional businesses,” Sondergaard said. “They are trying new ways of reaching the customer, of running operations, of driving diverse innovation. They are acquiring and investing in digital technology companies, not waiting on existing suppliers to build capabilities because they have to start in a different place.”

Gartner research shows that the CIO is the leader of digital transformation at 52% of ANZ enterprises — significantly higher than the global average of 40%. Likewise, the CIO is the innovation leader at more than 40% of ANZ enterprises, compared to 30% worldwide.

Businesses worldwide are meanwhile increasingly migrating to a bimodal IT model, with 40% of CIOs in the process of doing so and the majority of the remainder planning to follow in the next three years.

But these bold plans could be compromised by the looming talent shortage. Gartner’s survey shows that 49% of ANZ CIOs believe there is a talent crisis — but surprisingly few IT leaders are taking steps to address this, Gartner vice president Graham Waller said.

“It is time to think of talent as a platform and innovate with it. CIOs must look at digital talent beyond the boundaries of the IT organisation and, indeed, beyond the boundaries of the enterprise,” he said.

“Innovative talent management opportunities abound and include getting closer to universities by helping define and deliver courses and projects, performing reverse mentoring and implementing job rotations. CIOs should also think of their partners as extensions of the talent pool."

Image courtesy of Washington State House Republicans under CC