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Thursday, March 30, 2017

More Chinese Companies Now Invest in Digital Growth

While China has been viewed as a nation that's focused on economic growth via manufacturing, the forward-looking view is evolving -- digital growth is key to their ongoing success. Moreover, China has a limited amount of legacy IT infrastructure, so much of their current capabilities are very modern.

CIOs in China are investing their fast-growing IT budgets in digital technologies, according to the latest market study by Gartner. Their survey of CIOs found that success of the leading internet commerce companies in China is encouraging more enterprises to build or participate in digital ecosystems.

Digital Growth Investment within China

"The survey results show that Chinese CIOs are firmly focused on digital priorities, rather than on traditional IT, and want their businesses to reap the benefits of digitalization," said Owen Chen, research director at Gartner.

Chinese enterprises currently spend, on average, 28 percent of their IT budget on digitalization, which is expected to rise to 39 percent in 2018 -- in comparison, that's 10 percent higher than the global average.

Chinese enterprises expect their IT budget increase to be 10.2 percent, on average -- that's also much higher than the 2.2 percent global average increase.

That being said, as more Chinese enterprises join digital ecosystems, Chinese CIOs are facing new challenges in developing their technology, organization and leadership, according to the Gartner survey.

"Although security, safety and risk rank among the top 10 business priorities of global enterprises, they do not feature in the top 10 priorities of Chinese enterprises," said Mr. Chen. "Chinese CIOs should allocate more spending to security management."

Furthermore, Chinese CIOs rank access to available talent and IT staff skills as the biggest barrier to their ongoing success. Joining the Chinese internet giants -- such as Baidu, Alibaba and Tencent -- has appealed to qualified technical talent in the market.

This situation has resulted in a shortage of skilled people for the other growing enterprises in the market, and a major challenge for the CIOs that must hire, retain and develop digital-savvy talent.

Opportunities for Chinese CIOs to Improve

Digital business, digital marketing, data science, innovation and creativity skills are the biggest talent gaps. That's why Chinese CIOs now look to startups as a source for new talent. In fact, that's also why more Chinese CIOs engage with, buy or invest in startup companies -- to gain access to their talent pool.

Besides, 20 percent of CIO survey respondents indicate that partnering with management is the biggest barrier to successfully achieving their objectives. According to the Gartner assessment, this suggests that Chinese CIOs should make more efforts to improve on their relationship with their business leaders.

In addition, few CIO respondents indicate that growth or market share is a priority for them. Since this finding does not align with Gartner's discussions with Chinese business leaders, it may indicate that CIOs need to shift from a back-office to a front-office mindset, especially where business priorities are concerned.