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Investing in Growth - Enterprise IT Investment Trends 2014

Indian CIOs to increase their IT budgets upto 20% in 2014, says EY-CIO Klub survey

Social media, enterprise mobility, data analytics, cloud (SMAC) and security are rapidly emerging as disruptive forces for organizations
SMAC replaced by CAMSS (cloud, analytics, enterprise mobility, social media and security) as the new digital acronym in the IT sector
Cloud computing and IT consolidation is high on the trend graph with nearly 56% of respondents indicating it as their number 1 priority for the upcoming year; Business Intelligence, Analytics and Big Data come second at 34% with enterprise mobility at 25%; and social media is lagging behind at 9%
45% of respondents see continuous availability of critical IT resources as their top IT risk
85% of CIOs feel that they will be affected favourably by changing technology and 74% of the CIO's would prefer assuming additional business responsibilities

Mumbai, 25 April 2014 : IT priorities and investments in India have shown a healthy trend and have not been significantly impacted inspite of the uncertainty in the political environment over the outcome of this year's general elections, the instabilities of the market and the changing regulatory landscape. The analysis and insights from the EY-CIO Klub's annual Enterprise IT trends and investment survey titled 'Focusing on the fundamentals', show the ever-increasing confidence of CIOs in enterprise IT tools and disruptive technologies that are shaping products, processes and organisations today.

Samiron Ghoshal, Partner & Leader – IT advisory services, EY adds, "The "winds-of-change" are blowing in 2014 and the CIO of 2014 is optimistic and looking forward to making significant investments for the development of IT and new solutions to achieve business expansion and customer satisfaction."

As indicated by the survey respondents, 74% of the CIO's would prefer assuming additional business responsibilities, 63% obtaining executive education as per the survey findings.

Additionally, evolving digital technologies – including social media, enterprise mobility, data analytics and cloud, commonly known as SMAC — are rapidly emerging as disruptive forces for organizations across all industries. Majority of CIO's are focusing on the fundamentals of SMAC, ascertaining that they get them right before they move on to the fancy futuristic technologies. As per the survey results, there is a marked difference in adoption levels for each one. Cloud computing and IT consolidation are seen as the forerunners in this race with nearly 56% of respondents indicating it as their number 1 priority for the upcoming year; Business intelligence, analytics and big data come second at 34%; enterprise mobility is at 25%; and social media is lagging behind at 9%.

An interesting outlier, which typically gains considerable interest, is information security with a share of 18% respondent votes for top priority in FY14–15. Security has consistently taken CIO's mindshare as one of the key priorities for last six years. The above statics lends us to believe that the true acronym, in line with the adoption scale, should be CAMSS.

Devendra Parulekar, Partner – IT risk and assurance, EY says, "Over the past few years, social media, enterprise mobility, data analytics, cloud (SMAC) and security have been rapidly emerging as disruptive forces for organizations. However, what we see today is that the SMAC is being replaced by CAMSS (cloud, analytics, enterprise mobility, social media and security) as the new digital acronym in the IT sector."

Survey indicates that more than 45% of the respondents feel that security and privacy concerns outweigh their focus on cloud. This is evident from the survey results where 23% respondents shy away from cloud due to their lack of understanding on cloud architecture and deployment models and 25% are deterred due to lack of a global information security standard for cloud service providers.

Mobile applications deployment is expected to gain momentum in 2013-14. 62% of respondents are likely to implement, upgrade or evaluate mobile applications in the coming year. More than 35% of the respondents, who have either implemented or are evaluating enterprise mobility with BYOD, are expected to consider mobile device management (MDM) and network access control (NAC) technologies to protect corporate data and mitigate the risk of unauthorized disclosure.

In such an environment, it was not surprising that while Big Data was attracting lot of attention from the CIOs, there was a clear reluctance in adopting Big Data technologies (only 11% of the respondents indicated Big Data investments). In sharp contrast, 42% respondents have indicated focus on adopting embedded BI techniques and 30% on adopting advanced analytics (predictive and statistical).

As per the survey, it is believed that CIOs need to build a strong strategy around the implementation and roll out of enterprise mobility technology. 25% of the respondents have marked enterprise mobility as their number one IT transformation priority for 2014–15. Amongst these, 50% of the organizations have revenue in excess of INR10 billion and have indicated an increase in the IT budget for the year. On the other hand, majority of respondents (47%) have said that they are either considering or will consider using this technology for management reporting and dash-boarding in the near future.

As seen in the IT transformation agenda, social media is getting a place at the CIO table, but only as a younger brother to its more powerful and hefty bigger brothers in the CAMSS digital technologies. Only 9% of respondents have chosen it as their top priority for the year. However, as seen in survey results, approximately 30% of the respondents plan to introduce and approximately 15% respondents are evaluating introduction of social media platform in their organizations during the next year.

Shirish Gariba, President, CIO KLUB, further adds that "Organizations are focusing on business expansion through consolidation and innovation, resulting in organizational and process change with a keen eye on understanding the regulations that impact their business. As opposed to treating each regulation as a special project, organizations today are working out how they can manage and control compliance issues within each market as part of a "business as usual" model to in order to keep the costs down."

The survey results clearly indicate that respondents have voted business expansion, emerging technologies and internal organizational/process change as the leading influencing factors for IT this year. What this means is, in general, there are positive sentiments in the market and as is typically the case, sentiments drive behaviour. This is clearly seen in the case where majority of the survey respondents have indicated that an increase in the IT spends is on the horizon.

The survey highlights compliance with regulatory requirements, cost savings and risk mitigation amongst the lowest three priorities for the CIOs. However, this varies slightly from industry to industry. The survey indicates that enhanced customer experience and compliance with regulatory requirements is marginally more important for banking and financial services and technology sectors, while infrastructure, industrial and consumer products sectors are leaning toward internal process efficiencies and agility. In technology, media and telecommunications 33% of the CIOs surveyed, voted for enhanced customer experience, 26% for internal process efficiency and agility and 22% elected innovation to drive competitive advantage. Whereas, in financial services sector a majority, 29% voted for innovation to drive competitive advantage, 25% for risk mitigation and 21% believe in enhanced customer experience. CIOs of infrastructure, industrial and consumer products industry valued internal process efficiency and agility as top priority with 26% votes, while 19% selected enhanced customer experience and another 26% voted for innovation to drive competitive advantage.

The survey also observes interesting trends in the IT risk universe of organizations whereby majority of organizations (65%) have chosen continuous availability of critical IT resources as one of the two top risks. Only 39% of respondents think that macroeconomic uncertainties will impact their IT investments and priorities, whereas, 72% of respondents believe business expansion will drive IT investments.

All in all, this year's survey brings good tidings for the Indian CIO with an optimistic outlook, interesting trends and a view towards their evolving role in the future.

About the survey
EY and CIOKLUB's sixth Enterprise IT Trends and Investment Survey gauges current investment patterns, IT priorities and upcoming investment plans of organizations. This year's survey was conducted from 14 February 2014 to 06 March 2014. This survey was conducted through a secure online tool with a specific URL that was mailed to designated members of the CIOKLUB, along with instructions for completing the survey. Key themes from the discussions have been considered for the report. EY downloaded the results of the survey to conduct an analysis and used cross tabs to identify the patterns of various IT domains across specific industries, and the size and type of industry. Responses of 199 out of 211 respondents, who completed the survey, were considered as complete and used for the analysis. Partial responses have been ignored for the purpose of this analysis.

About EY
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