• Lack of Skills and Slowdown in Budget Growth Hinder Digital Transformation
“Traditional enterprises are losing their competitive advantage of low labor cost. At the same time, they see the success of internet companies such as Baidu, Alibaba and Tencent and are now trying to emulate their business model,” said Mr. Chen. “The government also encourages enterprises to pursue digital business via initiatives such as ‘Internet Plus’ and ‘Made in China 2025.’”
The survey also found that Chinese CIOs are rebalancing their technology portfolio toward digital transformation, with the largest amount of new or additional funding going to data analytics, digital initiatives (including digital marketing) and artificial intelligence / machine learning. The 2019 Gartner CIO Agenda Survey gathered data from more than 3,000 CIO respondents in 89 countries and all major industries, including 77 in China.
Strained budgets
On average, Chinese CIOs expected their IT budget in 2019 to grow by 6.6% – almost double the Asia/Pacific average growth (3.5%) and triple the global average increase (2.1%). However, these numbers need to be treated with caution. The survey was conducted before the main impact of the U.S.-China trade war and slowdown of the Chinese economy, so the actual increase for 2019 may be less than expected.
“As long as the trade war continues, it will have a negative impact on investment in digital initiatives. Chinese CIOs who still want to continue on the digital business journey will need to spend less in traditional IT in order to allocate more money to digital initiatives,” Mr. Chen said.
Digital skills shortage
Another reason for concern is the skills gap. Almost half (49%) of Chinese CIOs report that an insufficient depth and breadth of digital skills is the most significant barrier to achieving their objectives as CIO.
Traditional Chinese enterprises lack the digital skill set thanks to their own role models – the internet giants. The compensation gap between companies such as Baidu, Alibaba and Tencent and the more traditional enterprises is much bigger than in the rest of the world. Accordingly, talented graduates and professionals are more likely to pursue a career at one of the internet giants than joining a traditional enterprise. “Reskilling and training should be a priority for Chinese CIOs. To be successful in digital business, a digital workforce is essential,” Mr. Chen said.
