Bye bye IT procurement, business departments have the power
Councils coming together
Brisbane, 10 April 2019 – Business units are now the major drivers behind technology spend in Australia and New Zealand, causing business-wide integration challenges at unprecedented levels, according to an IBRS study released today, and commissioned by TechnologyOne (ASX:TNE), titled The 2019 State of Enterprise Software.
The IT Team/Function now sits behind Finance, Human Resources, Customer Service and Operations, when it comes to IT budget spend. The research also revealed 68 per cent of organisations plan to spend a considerable amount on overhauling their ageing enterprise solutions in 2019-2020 to take advantage of new technologies.
TechnologyOne’s CEO Ed Chung said: “The industry has reached a tipping point as we enter the cloud maturity era, and organisations are no longer comfortable to wait for legacy software vendors to ‘catch up’ to new technologies.
“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,” Mr Chung said.
“If outdated technology or resistant-to-change IT teams are standing in the way of a department’s digital transformation aspirations, they will go around them.
“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.”
Dr Joe Sweeney, principal analyst at IBRS, said ease-of-use was the common theme among executives' view of an ideal enterprise solution.
“Ease doesn’t just refer to the interface, but rather the entire experience of working with the software, the ability of the solution to solve immediate problems and automate industry-specific processes.”
The three-month study, undertaken October through December 2018, captured both qualitative and quantitative data and examined the impact of cloud infrastructure services and Software as a Service (SaaS) on 261 Australian and New Zealand senior executives’ attitudes, expectations and plans for enterprise software.
Below are the five key findings of The 2019 State of Enterprise Software study.
1. Pendulum swing away from ICT leading technology procurement
One of the most significant findings of this study is that cloud-delivered enterprise solutions are breaking down the traditional dynamic between business and ICT. ICT must stop being solely focused on operational system uptime and instead focus more on improvement and innovation. If they don’t, business units will work around them. The clearest evidence of change is this study indicating that ICT now sits behind Finance, Human Resources, Customer Service and Operations, when it comes to ICT budget spend. Marketing came in at sixth place after ICT, followed by Sales.
2. Integration is becoming an unseen pitfall of business-led IT
While SaaS has enabled business units to easily acquire and run enterprise-grade business solutions that are specific to their needs, the ease of acquisition and deployment also means that many organisations are now creating silos of information and processes. As such, integration is proving to be a challenge for the growing number of organisations where business units have procured cloud-based applications with only superficial ICT involvement.
3. A tidal wave of new enterprise software solution spend expected in 2019
Many organisations have held back enterprise solution upgrades or replacements, either adopting a ‘wait and see’ approach to cloud, or delaying until their existing vendors catch up with technology.
But IBRS’ research found that most businesses agree they can’t wait any longer; 2019 - 2020 is set to be the year for enterprise software upgrades and replacements. However, upgrade and replacement plans vary greatly between different industries:
- Utilities, Water, Ports & Airports: A staggering 92% are planning to replace ageing or buy new enterprise solutions within the next two years, though they have the lowest ratio of projects already underway among all industries (just 13%)
- Aged care, disabilities and social services: These organisations are undergoing significant structural change due to recent legislation and a competitive market model. 74% of organisations in this category will replace or adopt entirely new enterprise solutions in 2019. A further 11% are upgrading existing solutions. This represents a tidal wave of change for organisations in this industry sector in 2019
- Education: Nearly three-quarters (72%) of educational institutions (higher education, vocational training, colleges) are planning to replace or adopt new enterprise solutions in 2019. 31% of educational institutions are also upgrading existing solutions.
- Local Government: 58% of councils are looking to upgrade existing enterprise solutions this year, with nearly half looking to procure entirely new solutions. Local Government executives saw cloud services as being essential for the delivery of greater citizen engagement
- State and Federal Government: State and Federal Government agencies have a greater proportion of up-to-date enterprise solutions, compared to their Local Government counterparts. As a result, they have a lower - though still significant - investment profile for 2019 with approximately 31% of State and Federal Government organisations planning to adopt new enterprise solutions, while a further 33% will be upgrading existing solutions
- Financial Services: A majority of financial institutions interviewed report that their enterprise solutions are up-to-date so are not planning significant upgrades or replacements in the coming year
- Property and Infrastructure: Property and infrastructure organisations are least willing to adopt cloud delivery and have comparatively lacklustre plans for upgrading or procuring new enterprise solutions
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