CIOs in China reveal a higher business focus on growth and innovation than their global counterparts, and strong budget increases to support it, according to an annual global survey of CIOs by Gartner.
The survey found that IT budgets in China are expected to increase by 13%, which is much higher than the global average of 0.2%. However, the rise comes from a low base. Gartner research shows IT budgets in Chinese enterprises are significantly lower than global averages, with Chinese IT spending typically accounting for only 1.5% of a company’s revenue, compared to 3.5% globally. Even with a 13% increase, IT spending in China is still less than half what the rest of the world is spending.
In addition, at least 45% of IT spending is outside of IT organizations, compared with just 26% internationally. This shows Chinese CIOs have less influence on the business than their global peers. Moving forward, this could see IT integration, information security, and business agility suffering as a result.
The survey also found that 38.8% of Chinese enterprises already have roles to lead digital initiatives in place, compared with just 6.6% globally.
Despite this number being five times higher than the global average, Gartner found anecdotal evidence that suggests few are strategic CDOs who advise senior business leadership on how to respond to the rapidly digitalising economy. Chinese enterprises are more likely to view the digital leader ship role as the head of e-commerce instead of the all-encompassing strategist.
Gartner research, director Owen Chen believes Chinese enterprises need to clearly understand the role of digital leadership and investigate the possibility of having CDO roles in addition to CIO roles.
"The term digital refers to a deeper opportunity to transform the business based on the broad array of information and technology available, rather than simply referring to online sales and services," said Chen.
CIOs in China focus on cloud, infrastructure and data centres, ERP and networking, and voice and data communications to ensure basic IT functions are fit for purpose. They also focus on mobile, big data, digital marketing, and social to engage customers and employees. China has a high priority for cloud, which is probably a reflection of the drive for growth and the need to support larger transaction volumes.
Sixty-one percent of Chinese enterprises claim to have made significant cloud investments, compared to just 25% globally. However, Gartner believes China has not spent any more on public cloud than the rest of the world. The reason for the discrepancy is a difference in understanding of the term ‘significant investments’.
While globally the driving factor behind choosing public cloud remains agility, in China cost is a critical factor.
"CIOs need to focus more on bringing value from public cloud to the business, rather than merely seeking to use public cloud to drive down cost," said Chen.
IT leaders in China have long embraced strategic sourcing, mixing in-house with sourcing from offshore captive units, contractors and fully-fledged outsourcers. The survey data shows 11% of Chinese enterprises were mainly or wholly insourced, 7% were mainly or wholly outsourced, while 83% used mixed sourcing, a significantly higher number than the global average of 63%.
However, anecdotal evidence suggests Chinese CIOs have historically approached sourcing from a tactical perspective and would benefit from a more dedicated sourcing strategy.
Gartner recommends IT leaders in China make sourcing decisions based on a clear, strategic basis, rather than tactically on a case-by-case basis.
In China, 62% of enterprises have adopted this model (compared to just 45% worldwide). Based on Gartner’s research, business management in China is more demanding, meaning its requirements need to be filled much faster than in other markets. On the other hand, Chinese CIOs must ensure they are not simply running unsustainably fast nonlinear teams but instead, must put in place appropriate expectations, measures, culture and talent.
"Develop fully bimodal capability, and avoid trying to run faster and faster as a response to the need for speed in China," said Chen.