Legacy modernization is slowing innovation for Canadian organizations

By Chris Howard

CIOs in Canada have made conservative progress in digital initiatives over the last year, but they are behind in modernizing legacy environments, preventing innovation at scale. With balanced cost optimization and investment priorities, Canadian organizations can accelerate this progress.

Gartner’s annual survey of more than 2,500 IT leaders worldwide, with 130 responses from CIOs in Canada, showed that innovation is a higher business priority for top performing businesses (where digitalization is “fully baked” into their planning processes and business model) than the rest of the field, whereas cost optimization dominates trailing performers’ (organizations with little to no digital initiatives) goals. Canadian business priorities have a mix of operational improvement (technology initiatives, digitalization) and revenue targets (growth, customer focus).

Cost optimization work was a big focus for respondents worldwide in 2016 and we saw the effect beginning in western Canada two years ago, gradually permeating related industries and government revenues. Although the price of crude is gradually increasing, as of December 2016, it had regained only half the price attained before the downturn.

In Canadian organizations, like the rest of the world, IT cost optimization forms only a small part of the total equation: As will be discussed at the upcoming Gartner CIO & IT Executive Summit in Toronto, most respondents indicated that their priority was actually in business cost optimization. An underlying reason here is that IT departments have been cutting costs aggressively over the past decade, and especially since the Great Recession. There is still technical debt to be reduced, but the real savings are in optimizing the business through the effective use of and investment in IT implementation. Canada, however, is behind the overall average on the balance between running day-to-day IT services and delivering innovation. This is a continuation from last year’s survey where respondents showed a spending bias toward “core renovation” instead of on innovation and digitalization.

When it comes to top technology investments, business intelligence (BI) & analytics persists in the top spot year after year. It is clear that this capability is seen as the key that unlocks the digital value door. Advanced analytics (as in, predictive and prescriptive) are fundamental to customer, citizen and user engagement. Analytics underpin the mediation and value exchange occurring in digital ecosystems.

With respect to other technology investments, Canada is similar to the global total, with the exception of cyber/information security and legacy modernization where planned investment is higher.

Looking out a bit further, Gartner asked respondents to identify the most disruptive technologies over the next five years. Here again, advanced analytics took the top spot with 88 per cent of Canadian respondents, but we see Internet of Things (IoT) and smart machine technologies (machine learning, virtual customer assistants, augmented reality and others) starting to appear. Blockchain appears as slightly more than a “blip on the radar” as Canadian and multinational organizations (primarily in financial services) experiment with use cases for that well-hyped architecture.

Chris Howard is a vice president and distinguished analyst at Gartner, Inc. and chief of research for Gartner’s CIO research group. In that role, Mr. Howard ensures that Gartner meets the general and industry-specific needs of CIOs, with emphasis on both technical and business leadership.

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada
Gartner, Inc. (NYSE: IT) delivers actionable, objective insight to executives and their teams. Our expert guidance and tools enable faster, smarter decisions and stronger performance on an organization’s mission critical priorities. To learn more, visit gartner.com.

Featured Download

IT World Canada in your inbox

Our experienced team of journalists and bloggers bring you engaging in-depth interviews, videos and content targeted to IT professionals and line-of-business executives.

Latest Blogs

Senior Contributor Spotlight