As a CIO in Australia or New Zealand, you’re the one charged with undertaking innovation initiatives for the board. But do you know that you are doing much more heavy lifting in this regard compared to your peers in other countries? Do you feel you’re often whistling in the wind trying to get initiatives off the ground in the first place?
Well, this isn’t paranoia, it’s fact. Rimini Street commissioned a survey of 900 technology and financial decision makers from industries in North and South America, Europe, the Middle East and Africa, and across the Asia-Pacific region and asked about their priorities and issues they face when it comes to funding innovative tech projects.
Our corner of the world stood out for reasons you’re probably acutely aware of. The research found that A/NZ enterprises plan to spend the second-least amount on technology-led innovations in the next 12 months. Australia beat only Israel and we plan to increase its IT innovation spend by just 6.31 per cent in the next year, well below the global average of 10.94 per cent.
Further, A/NZ respondents believe their organisations need to increase their spend to just 11.4 per cent, well below those in organisations across the globe which believe the spend, on average, should be increased to nearly 16 per cent.
If you’re struggling to get the budgets you need to get certain initiatives off the ground, you clearly aren’t alone. This could be due to a number of factors: weak wages growth and a slower economy than we’re used to often leads to tighter wallets at the boardroom level, and during tough economic times boards frequently default to maintaining the status quo at the cost of innovating for the future.
Recent industry research also suggests cyber-security concerns are holding back digital transformation initiatives across the globe.
But there’s more to it than simply a bottom line argument, and that’s a lack of understanding of the benefits of technology-led innovation. There is also often a lack of initiatives driven from the CEO, at least compared to the rest of the world.
The report found that innovation initiatives are being led in 34 per cent of organisations in Australia and New Zealand by the CIO, while the CEO is taking the lead in only 6 per cent of organisations. This probably doesn’t sound too shocking to you; after all, innovation is widely within your ambit.
Well, you’re an outlier compared to your global peers: on average, CIOs across the world are leading the way 20 per cent of the time, but CEOs are leading initiatives on 18 per cent of occasions.
Further, enterprises across the world largely think spending on innovation will result in faster time to market (47 per cent of respondents) and greater competitiveness (45 per cent), just 26 per cent of A/NZ enterprises think innovation spend will lead to faster time to market, and 36 per cent believe it will lead to greater competitiveness.
If it feels like you have the weight of the world on your shoulders, we can’t blame you because while your board doesn’t understand the benefits of innovation, nor support it, it’s you that stands to answer to them when the business falls behind in a global market where innovation is a priority.
The CIOs of this region are clearly doing too much of the heavy lifting and a lack of boardroom involvement is leading to innovation paralysis.
So, what can we do to get innovation back on board with the boards? How can we get our CEOs leading these initiatives more to get us back in line with the rest of the world?
Ultimately, the boards and the CEO are driven by the stock price or the bottom line – that’s their scope and they’re ultimately answerable to the shareholders. Therefore, it comes down to educating boards on the true return on investment for innovation initiatives.
There needs to be more discussion that goes beyond the need to digitally transform so you can compete. Boards need proof that technology innovation can improve time-to-market, operational efficiency and differentiation.
The research shows this to be true – even in a market such as Australia with its weak wages growth and a slower economy.
The survey discovered that businesses funding innovative projects reported a 14 per cent increase in revenue, with A/NZ organisations citing a close 13.4 per cent increase.
Further, A/NZ organisations that invested in innovative projects reported a decrease in operating costs of 12 per cent on average. This is ahead of the global average of 11.8 per cent.
The evidence is clear that A/NZ organisations can see a substantial return on investment when they spend on innovation. But as it stands at the moment, our boards are not on board with the power of tech-led innovation to benefit their businesses.
If organisations can begin to understand the costs and benefits, CEOs will be more willing to not just support these initiatives but to champion them at board-level too.
Andrew Powell is general manager, Asia-Pacific at Rimini Street.