As digitalization intensifies, CIOs in Canada are continuing their journey toward digital business, but are facing difficult funding choices in the near future.
Gartner’s annual survey of more than 2,900 IT leaders worldwide reveals that Canadian CIOs are on par with their global peers regarding budget expectations, with 85 percent anticipating flat or modest increases. However, we are already seeing signs of revised forecasts as the Canadian economy is dragged down by depressed crude prices and devaluation of the dollar.
CIOs in Canada are prioritizing investment in ERP, legacy modernization and technical delivery — the elements that shore up the foundations of digital business. This is coupled with a strong emphasis on cost reduction. There is less emphasis on the talent and leadership platforms, but growing acknowledgment of the need to deliver business value through new channels and processes.
CIOs were asked to indicate their top three expected outcomes or impacts of digital on their enterprise. The responses from CIOs in Canada varied from those of the rest of the world. Increased operational efficiency and cost reduction is a major priority for CIOs in Canada, a reflection of continued cost pressures and technology consolidation in both public and private sectors. In industry, this is driven by manufacturing competition, the decreasing value of the Canadian dollar, reduced demand from China, and the deep implications of depressed crude and other mineral resource markets
The declining Canadian dollar value translates to higher operational costs across the board — but particularly for IT, where most materials, equipment and contracts are based on U.S. dollars. Given budgets are expected to be more or less the same, CIOs are under more pressure to manage operating costs.
The drop in oil prices has had a ripple effect on support services in the surrounding economy, due to reduced production activity, and is being felt countrywide, but acutely in Western Canada. Some manufacturers will actually benefit from both lower energy costs and a lower dollar, with reduced production costs and better positioning of exports on the world market.
In the public sector — especially federal government — the major priority is consolidation: of data centres, telecom and email systems. Whereas CIOs outside Canada see the creation of new markets as a significant digital business outcome, Canadian CIOs are more focused on improving operational outcomes.
As will be discussed at the upcoming Gartner CIO & IT Executive Summit in Toronto, the broad focus on “doing the same things in a digital way” is common around the world: most CIOs have not pushed into true digital transformation yet, nor are they taking full advantage of digital business and innovation techniques.
Pushing into digital requires investment in new skills and technologies that Canadian businesses and government approach slowly. The declining economic situation has made the normally reserved Canadian business environment even more cautious financially. That said, shoring up the digital foundations is a reasonable start, but there is room to do so much more.
Chris Howard is a vice president and distinguished analyst at Gartner.