China CIOs Need to Change to Grasp Digital Break

Estimated reading time: 5 minutes

Chief information officers (CIOs) in China are less aware than their global counterparts that they will need to change in order to succeed in digital business, according to a new report from Gartner, Inc.

In its annual survey of more than 2,810 CIOs worldwide, representing more than $397 billion in CIO IT budgets in 84 countries, Gartner asked how CIOs should adapt their leadership to ensure their enterprises survive and thrive in an increasingly digital world. The survey included responses from 82 CIOs in China.

While 75 percent of global CIOs believe that they need to change their leadership style in the next three years, only 46 percent of CIOs in China do so.

Speaking at the Gartner Predicts 2015 client briefing in Beijing last week, Gartner research director Owen Chen said that to thrive in this digital era, CIOs must flip to digital leadership.

"Commanding leadership maybe worked well in the industrial era, but it does not fit in the digital world," said Mr. Chen. "In fact, it is an obstacle. CIOs should assess their own leadership style and build a visionary leadership style as it is the most powerful style in the digital world."

While globally 47 percent of CIOs believe they have the digital leadership responsibility for their business, only 33 percent of CIOs in China do. This indicates that most CIOs in China are still seeing themselves as traditional CIOs taking care of traditional IT responsibilities.

"CIOs in China should be more proactive and devote themselves to the digital world, so that they can demonstrate their value to the business," said Mr. Chen.

China's High IT Budget Growth Is Coming From a Very Low Base

Although China's GDP growth rate will slow down to around 7 percent, the IT budget at enterprises in China will increase by 8.5 percent in 2015 — one of the highest IT budget increases in the world. The global average IT budget increase in 2015 is only 1 percent, while the IT budget at enterprises in China will increase 8.5 percent. Sixty-one percent of enterprises in China will increase their IT budget, while globally, the number is 46 percent. Only 1 percent of enterprises in China will decrease their IT budget, while globally, the number is 16 percent. Historical data shows that the IT budget at enterprises in China is much lower than the global average, so the high increase of IT budget is coming from a very low base.

According to the Gartner survey, the majority of Chinese enterprises are using IT cost to measure the performance of IT. Only 3 percent of enterprises do not. In China, since the IT cost is typically only 1.5 percent of revenue, trying to reduce the cost does not actually contribute much to profit. CIOs should focus on using IT to help the enterprise increase the revenue, rather than to cut the IT cost.

CIOs in China Allocate More Effort to Long-Term IT Planning

Survey result shows that global CIOs allocate 51 percent of effort on one-year IT planning, while CIOs in China allocate 36 percent of effort to this. This indicates that Chinese CIOs in China do more long-term IT planning, probably because more enterprises in China — especially state-owned enterprises — are required to have a five-year plan.

"While it is good to have a long-term plan, CIOs in China should also make sure their IT is agile enough to meet the challenge of a rapidly changing digital world," Mr. Chen said.

Technology Priorities for 2015

CIOs in China have the same top five technology investment priorities as their global peers with a slightly different order (see table 1). Cloud, mobile and analytics are continuously ranked in the top five IT spending priorities among CIOs in China. A very high number have set up a "mobile first" strategy while developing both customer-facing and employee-facing solutions.

Cloud Has Become Reality

When looking at building new infrastructure capability, 17 percent of Chinese enterprises consider cloud first and 50 percent consider cloud as an option (slightly higher than the global average). For applications, 18 percent of Chinese enterprises consider cloud (SaaS) first, and 46 percent consider cloud as an option. This indicates that cloud is no longer just a concept; it has become a reality.

Historical data shows that the main reason CIOs in China chose cloud is cost reduction.

"Besides cost reductions, cloud can bring other benefits to the organizations — for example, agility, innovation and so on," said Mr. Chen. "CIOs in China should consider the whole picture when making a decision to go cloud."

CIOs in China Spend More Time With Boards of Directors But Less Time With Customers

Survey results indicate that Chinese CIOs spend 10 percent of their time with the board of directors, compared with the global average of 6 percent. Spending time with the board of directors helps to increase understanding of technology in the organization. The survey also showed that CIOs in China spend 6 percent of their time with the customers, compared with the global average of 11 percent.

"This indicates that CIOs in China are more internally-focused," said Mr. Chen. "They should focus more externally, because in the digital world, customer engagement is becoming more important in IT as it shifts from a back office to front office function."

More detailed analysis is available in the Gartner report "2015 CIO Agenda: A China Perspective." The report is available on Gartner's website at http://www.gartner.com/doc/2974450

This report forms part of the 2015 CIO Agenda Special Report research, a collection of research documents based on the 2015 Gartner CIO Agenda Survey in order to contextualize and clarify the behaviors and decisions facing CIOs in a diverse range of industries and geographies worldwide.

The Special Report is available on Gartner's website.

About Gartner

Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. We deliver the technology-related insight necessary for our clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, we are the valuable partner to clients in over 9,000 distinct enterprises worldwide. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, USA, and has 6,400 associates, including more than 1,480 research analysts and consultants, and clients in 85 countries. For more information, visit www.gartner.com.