TechBeat: Keeping up with digital change
The impact of digital technologies on enterprise is not only deep but accelerating. TechBeat asks how Irish organisations are coping, writes PAUL HEARNS
19 September 2019 | 0
No one is under any illusions as to the impact of digital change on enterprise in Ireland. However, what has been observed is that the pace of that change is accelerating relentlessly.
TechBeat, in association with Expleo, set out to explore how Irish organisations perceive and cope with digital change. From skills and outsourcing to artificial intelligence (AI) and automation, 143 Irish IT professionals gave their insights to build a picture of the impact of digital change in Ireland.
The survey asked how a lack of in-house IT skills, or the ability to hire skilled IT professionals, affected the organisation. While a quarter said that it has not materially affected the business, in a multi choice response, nearly half (47%) said it has hampered digital transformation efforts, with 41% saying the business was not scaling at the desired pace, and a third said they cannot get new products to market quickly enough. Almost a quarter (24%) said that it left them at greater risk from cyber threats.
In terms of addressing the skills shortage, more than half (52%) said they were outsourcing some IT work, while 39% said they were hiring contractors on a per project basis, and nearly a third (30%) said they were hiring from outside Ireland.
When asked to quantify the impact of IT skills shortages, almost a quarter (24%) said it had not cost the organisation monetarily, but 8% said costs were in the range up to €10,000, with 13% saying €10,001 to €50,000, 14% saying €50,001 to €100,000, and 17% saying €100,001 to €500,000. There were single digit percentages in the €1 million plus range. All told, some three quarters of respondents were of the opinion that IT skills shortages had cost the organisation money, more than half (55%) said it cost €50,000 or more.
Perhaps unsurprisingly, the majority of respondents (56%) said that they outsource the management or support of any of your digital transformation processes to an external service provider.
“This research shows that the IT skills shortage isn’t just something that affects the IT department; it impacts all aspects of a business,” said Phil Codd, managing director Ireland, Expleo. “If you are short on IT expertise, that means you’re not innovating or keeping pace with technological change — and in today’s business world, that is everything. When you take into account lost business opportunities, the cost of upskilling and so on, the amount enterprises are investing may seem like a lot, but it’s actually not surprising.”
“What’s really worrying,” said Codd, “is that it’s not just organisations themselves that are suffering from the inability to hire the right IT staff. One-in-four have found themselves at greater risk of cybersecurity incidents because of the skills shortage. In the age of IoT and connected everything, so many organisations gather sensitive and personal data to improve the user experience. The fact that something as addressable as the IT skills gap is making that data vulnerable is a concern and it carries risk.”
When it comes to barriers to implementing new technologies, the top three were a lack of in-house knowledge and skills (68%), budget constraints (54%) and lack of innovative thinking (37%), however, a lack of buy-in from senior executives or board members was a very close fourth (36%). Other notables were 15% who specified uncertainty due to the Brexit situation.
“Many of these barriers could be surmounted with more IT knowledge and understanding on our boards,” said Codd. “It’s not often that you will see CIOs on the board of an Irish company, which can have a detrimental effect on a company’s digital transformation. Innovative ideas can get shut down very quickly, or they won’t get budgetary approval. The skills shortage can also be exacerbated, as there isn’t enough value placed in the development of the IT department. And this is at a time when every company has digital transformation on the agenda. So, on the one hand, you have all of these organisations looking to do business in a digital way, but on the other they aren’t listening to their IT department when it comes to implementing technological change. Why would you constrain your company like that?”
Among the new technologies that is impacting enterprise is automation. Respondents were asked to estimate the contribution of automation to company revenues. Just over a third (35%) said that although such technologies were in use, they did not contribute directly to revenues, while 14% said they do not use automated technologies. This left a majority (51%) for whom automated technologies have contributed to revenues. The largest proportions, almost 10% apiece, were €150,001 to €500,000 and €500,001 to €1 million, though 6% said up to €2 million.
The topic of automation can rarely be mentioned without thinking of staffing. When asked if employee numbers been affected as a direct result of automation, almost half (48%) of respondents said that although in use, automated technologies had not affected employee numbers, while roughly the same proportion as previously said they did not use them. This left a fairly even split between those that had reduced employee numbers as a result of automated technologies (18%) and those who had increased staff numbers (17%) for the same reason. Some 12% had reduced staff numbers by 1 to 50, while 14% had increased staff numbers by 1-50.
When asked to look out over a three-year time frame, in a multichoice option, the top expectations were that automated technologies would help employees focus on business-critical tasks (73%), would speed up processes (73%), and would reduce costs (59%). Interestingly, almost a third (30%) believe it will help improve cyber security, while more than a quarter (28%) thought automated technologies would help in making business decisions. Just 7% said they do not think automation will be a focus in the time frame.
“Ever since people started talking about automation, the big fear has been job losses,” said Codd. “But most organisations using automation haven’t seen an impact on their job numbers and that is the norm. Businesses use it as a means of increasing output but keeping their staff numbers the same. It allows valued employees to concentrate their efforts on more challenging tasks, while automated technologies take care of some of the more mundane tasks, which may be important, but are also time-consuming. This, in turn, enables organisations to build capacity to drive future growth, while also building resilience to deal with future unknowns.”
“The fact that almost one quarter say automation is helping their organisation to create jobs is very promising. Automation is becoming an essential component of the digital transformation process, but it requires skills and knowledge to manage. Key to moving forward with this technology is ensuring that our human and digital workforces work closely together. ‘Co-bots’ – the idea of robots and AI technologies being our co-workers – is going to become the new normal. As organisations continue to move through an age of disruption, they must redefine how they work,” said Codd.
Of the other emerging technologies, almost a quarter (24%) do not know the value of artificial intelligence (AI) and machine learning (ML) for their business, with slightly more (25%) do not think senior management have a long-term commitment such. Nearly half (45%) said they plan to increase the use of AI/ML projects in the next three years. Almost a third (32%) are already implementing AI and ML in their business, and for nearly 1 in 5 (19%), the technologies are already fundamental to business success. In-house skills again were an issue, with 42% believing they were insufficient manage such projects. Some 17% believed that AI and ML were just about saving money.
For more than a third (36%) of respondents, blockchain is not important to their organisation right now, with 14% thinking it will never be relevant. Almost a quarter (24%) view blockchain as important, but say that there is not enough understanding within their organisation to implement. Around the same (22%) are already using blockchain or running a pilot. Some 18% plan to investigate the benefits of next year, but just 6% will begin a blockchain project in the next 12 months.
“Blockchain is still not very well understood across the industries, with the exception of financial services,” said Codd. “That is where its value has been the most obvious, particularly now with the rise in cryptocurrency transactions. But the technology is still in its infancy – despite being 10 years old – and its efficacy is still unfolding. As it matures, more organisations will start to incorporate blockchain into their core operations. We are already seeing how it might support Industry 4.0. For instance, it will allow manufacturers to ensure products within their supply chain have been made through the right processes with the right materials. As we build increasingly intelligent machines, that kind of authentication capability will be essential for the future.
Blockchain Ireland is a joint government and Irish commercial initiative to help promote and share information on blockchain.
“This is hugely encouraging and a necessary step to helping Irish businesses unlock the power of blockchain,” said Codd. “The European Commission sees the value in wider adoption of blockchain technology, too. It recently launched its International Association of Trusted Blockchain Applications, which brings together all of the key stakeholders who can encourage and support blockchain adoption for businesses, government and society.”
The effects of hard Brexit were gauged as increased IT costs (40%), moving data/data centres out of the UK (26%) and deploying new data infrastructure in the UK to remain compliant with data residency laws (23%).
With the heavy focus on sustainability and carbon footprint, the survey asked how much companies were likely to spend on making IT infrastructure and services more environmentally sustainable in the next 12 months. Almost a quarter (24%) said nothing, and 38% said up to €50,000. The €50,001 to €500,000 range was 15%, while 9% said between €500,001 to €1 million. A significant 15% said €1.1 to million plus. This compares with 38% who said they spent nothing last year, 30% who said up to €50,000, and 15% in the €50,001 to €500,000 range. Significantly, 7% said they spent more than €5 million on the issue last year.
However, when asked if their opinion of whether their company was doing enough to make IT infrastructure and projects more environmentally friendly, a strong majority (62%) said no.
“One major way in which businesses can become more environmentally sustainable is by exploiting cloud technology,” said Codd. “Organisations tend not to view cloud as a means of addressing environmental issues, but when you think about the energy required to run a cloud service versus all of the energy wasted by businesses running their systems on-premise, it is a no-brainer. I don’t think the benefits of cloud technology have been fully realised in Ireland yet. When they are, perhaps we will then see businesses become greener – whether they know it or not.”
Finally, there was a speculative question on aspects of technological developments here by 2024. Nearly two thirds (61%) agreed that Ireland will lag other European countries in ‘smart city’ solutions, while the majority (55%) think 5G will be fully operational here, and 44% think bank customers will be able to withdraw money through facial recognition. Notably, 39% agreed that all companies will be regulated to operate in a carbon neutral manner.
The overall picture that emerges is that IT skills shortages and a lack of in-house skills are proving to be a significant barrier to the adoption and full exploitation of new and emerging technologies. Within this context, automation is in widespread use, growing, and contributing to revenues. Far from the employment killer many had predicted, it is thus far neutral in this regard. AI and ML are already aiding business decision making and likely to do more so in the near future.
As author William Gibson said, the future is already here, it is just unevenly distributed, Irish enterprises seem to be a mix of those at the forefront and those lagging. This may become more exaggerated as those who employ automation, AI and other emerging technologies effectively gain such competitive advantage as to hasten the time when such measures become base requirements.