Business units driving IT spend in Australia

By Dylan Bushell-Embling
Wednesday, 10 April, 2019

Business units driving IT spend in Australia

Business units are now driving technology spending among organisations in Australia and New Zealand, putting pressure on IT departments to reinvent themselves and embrace new technology.

Research commissioned by TechnologyOne and conducted by Intelligent Business Research Services (IBRS) found that the IT function now ranks behind finance, human resources, customer service and operations in terms of controlling IT budget spend.

TechnologyOne CEO Ed Chung said the results demonstrate that business units are no longer happy to wait for IT to catch up with new technologies, and that if they feel outdated or change-resistant IT teams are standing in the way of a department's digital transformation, they will go around IT.

“IT departments need to be reinventing themselves as a strategic, value-adding function, so they can empower line of business departments to drive digital transformation in line with the organisation’s integration strategy,” he said.

“Gone are the days when IT could take months, possibly years to gather requirements, plan, select and implement enterprise software, and then expect immediate uptake and employee satisfaction.”

Another major driver of the shifting dynamics involves growing adoption of cloud-based enterprise solutions.

But while units taking control of IT may allow them to be more agile, the ease of acquisition and deployment of software-as-a-service solutions also means that many organisations are unintentionally creating silots of information and processes.

Integration of these silos is proving to be a significant challenge in organisations where business units have procured cloud-based applications with minimal involvement from the IT department.

The research also found that 68% of organisations in the two markets are planning to spend heavily on overhauling their ageing enterprise solutions over the next two years.

Upgrade and replacement plans vary greatly based on the relative maturity of the industry.

Within the utilities, water, ports and airports segment, 92% of companies are planning to replace ageing enterprise solutions or adopt new ones within the next two years, but only 58% of local councils are planning to do the same. In other industries, the majority are not planning any new procurements or upgrades because their enterprise solutions are already up to date.

Business leaders are also facing difficulties facilitating adoption of new enterprise solutions. Over 40% report that encouraging staff adoption of these solutions is a major challenge, with a further 45% stating that it is a minor challenge.

Organisations’ cloud adoption ambitions are also being threatened by what TechnologyOne characterised as “cloud myths”, such as unfounded concerns about security, cost and integration challenges.

Security concerns are particularly poor excuses for inhibiting cloud adoption, Chung said. “Given that Australian Signals Directory recognised protected [status] cloud services are available (in Australia at least), and that the federal government is moving to cloud-delivered enterprise solutions aggressively, the security excuse is thin at best,” he said.

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