Tech’s investment priorities
There are a few surprises, along with the old reliables, among IT’s investment ambitions, reports ALEX MEEHAN
13 March 2019 | 0
Digital transformation, enterprise mobility, big data and analytics? Where will enterprise investment go this year and where will it have the greatest impact? Will security and data protection simply win out due to the perceived risks?
These are the questions that are inspiring most interest in IT departments around Ireland. But the traditional walls between IT and other parts of the business are dissolving and technology is continuing to impact more and more processes outside its traditional bunker.
In particular, many investment decisions are now being driven by C-suite level executives who are getting involved in greater numbers than ever before in understanding how technology underpins every part of the enterprise.
“This is probably the first year where I can say with confidence that that is happening. In the first few years of digital transformation, there was a constant tug of war between the chief marketing officer (CMO) and the chief information officer (CIO),” said Brian Solis, principal analyst with the Altimeter Group in the US.
“The CIO was investing in digital transformation because that was an IT thing. The CMO had a massive charter to essentially modernise marketing and the customer journey, as well as trying to compete on mobile and also in cloud and create a mobile web site and so on.”
This year however, Solis said, he is seeing chief executive officers taking more ownership of digital transformation for the simple reason that they are getting pressure from the board and shareholders to find ways to compete more effectively.
“And if you’re going to innovate, technology is going to be part that. So the CIO’s role is shifting to becoming a business partner to all functions within the organisation that have to modernise and companies are aiming their investment in 2019 at those areas where people have to have a business impact,” he said.
“Likewise, the CMO’s role is also changing and they are taking ownership of the entire customer journey so marketing, for example, is no longer just marketing — it’s about every touch point in the customer journey.”
A recent report by the Altimeter Group came to some interesting conclusions on the factors likely to impact on spending decisions this year. In particular, it noted that budgets are growing and the list of disruptive technologies on the radar of high-level stakeholders is expanding. In addition, customer experience continues to lead digital transformation.
When the same report asked its sample of over 550 companies in the US and Europe what their top priorities were in terms of technology investments for 2019, the top 10 answers were cloud, cyber security, artificial intelligence, big data, Internet of things, real-time analytics, mobile solutions, ecommerce platforms, social media and cross-functional collaboration platforms.
“When you look at the top investments areas, it gives you an idea where that technology is going to be applied. Even though we didn’t specifically ask the companies that took part to tell us how they’re going to invest in cloud, you can at least make a correlation that a lot of these things are going to be not just for infrastructure modernisation but also for enabling them to pursue growth markets and opportunities and to accelerate customer experience investments,” said Solis.
According to Catherine Doyle, regional sales director for enterprise with Dell EMC, there are three distinct areas where she expects to see spending happening in 2019 — multi-cloud, security and next generation appliances.
“From an infrastructure point of view we think that multi-cloud will be big. Companies are doing hybrid cloud environments — on-premises, off-premises etc but really what people are doing is they’re going multi-cloud. They’re doing software-as-a-service, infrastructure-as-a-service and other things as-a-service,” she said.
“Companies have realised that everything cannot go to the cloud and they have to keep an element on-site and they’ve accepted that now. We’re no longer hearing so much about cloud-first or cloud-only strategies.”
The reasons for this are manifold, in Doyle’s estimation, but include the old favourites of needing to reduce cost, improve service and shift the investment nearer to the customer in order to take cost out of the back-end. At the same time, Doyle suggested that security will continue to be a big issue for Irish enterprises.
“As companies increase the number of services they make use of, end to end security will be a priority. It will always be an issue but for many CIOs, CFOs and CEOs, the top level agenda is about looking at how security has evolved and how to secure data as it moves about in cloud environments. Security has always attracted big investment, but the message is you won’t see that decreasing, only increasing,” she said.
The third area likely to attract investment in 2019 according to Doyle is that of next generation applications.
“This is being driven by the push towards digital transformation. Companies have started modernising their back-end applications. In the past they’ve focused on putting pretty front ends on things but now they’re getting more into modernising their applications,” she said.
While there was a period when companies weren’t investing in this kind of thing, Doyle suggests that a lot of the customer and user facing work has been done, and attentions are now turning to the behind the scenes mechanics of how things work. This is presenting an opportunity for enterprises to streamline their operations and gain efficiencies in the process.
“They’re really putting the foot down on digital transformation and modernising applications to get to that better and more competitive customer experience. This is also an opportunity to deploy a lot more next-generation technologies, such as artificial intelligence into their system,” she said.
“It’s possible to automate a lot more and make things a lot more efficient with bots, for example. So, I think those three areas of back-end infrastructure, securing the data and infrastructure, and then driving that front-end digital transformation with new applications and the introduction of things like bots – that’s where we’re seeing investment right now happening for this year.”
John Ward leads EY’s emerging technology team in Ireland and is a director of the consultancy. He believes that disruptive technologies such as cloud, Internet of Things, artificial intelligence, cognitive computing, mobility, artificial reality and virtual reality are where investment is likely to go in 2019.
“These are areas of huge growth for a number of different reasons. One is that technology is now disrupting every process that companies operate in. When people talk about digital, previously they meant doing digital, but now it’s about being digital and everything is digital first and customer first,” said Ward.
“The other area that I have under my responsibility is robotics process automation and that’s an area that I’m seeing huge growth in. It exists in the space between process optimisation and IT, but it has nothing to do with physical robots — it’s basically software that acts and mimics human behaviour to do straight, simple processing that previously required a person.”
An example of how this might work can be seen in a company that might have a payroll system, a HR system for doing timesheets, another system for salary scales and then a banking system. Most companies in this position will rely on people to join these systems together – they won’t have them fully integrated.
“These are sometimes known as swivel chair operations. Typically, you have a person or a call centre or a shared services capability that are going into one system, downloading timesheets in Excel, importing that into the salary system and then pushing a file into the banking system to do payroll,” said Ward.
“It’s just sitting there, logging into the system, taking the file, analysing it, putting it into the salary system and then pushing that file into the banking platform for salary. Robotics process automation is another way of doing IT which is not traditional, it’s about resolving those use cases that never seem quite worth putting into a strategic IT system because it’s too much time and effort or because it’s just quicker to get a person to deal with it.”
EY is a global organisation with around 250,000 employees and it has applied its knowledge of robotic process automation to its own systems before rolling it out to customers.
“We have a huge amount of back-office functions in finance and invoicing and we have automated a significant portion of our back-office functions. We have 2,700 bots operating at a global scale across processes and what we’re doing now is we’re using that experience in working with our clients and we’re doing that around the world,” said Ward.
“It’s easy to confuse this with artificial intelligence, but they’re actually quite different. The difference between this and AI is that there’s no decision making involved — it’s straight through processing without the need for a decision that requires a person.”
For the point of view of Irish tech consultancy Singlepoint, investment in 2019 is likely to go primarily into the development of mobile apps, with security and the opening up of cloud channels coming a close second.
“From our perspective working primarily with customers in the insurance, banking and financial services space, we’re seeing a lot of growth in digital solutions geared around customer propositions. Basically, giving customers the ability to sell services through digital channels, whether that be over phone, over interactive voice response (IVR) systems and delivering that kind of omni-channel experience,” said Brian Seery, chief technology officer with Singlepoint.
“At the same time, we are seeing a lot of money going into initiatives around security. The reason for this is that more and more of the bigger institutions out there are working with smaller providers, whether that be companies like ourselves as an SME or cloud providers.”
The challenge this presents for large companies is that illustrated by the chain analogy – a chain is only as strong as its weakest link – and this is particularly true when it comes to moving data around between the various stakeholders that can be involved in facilitating hybrid cloud type environments.
“How they manage security in those solutions and how they actually expose some of their data to those types of third-party advisors requires a lot of thought and it also requires huge investments in terms of infrastructure and security to support,” said Seery.
“You can’t really start to enable some of the other solutions that enterprise companies want to use until they’ve done that foundational work. That’s a key step which sometimes gets overlooked but when you’re looking to deploy those solutions, you’ll only get so far until that’s in place.”
Seery believes that what is driving initial investment around growth strategies is the need for companies to find new propositions and create fundamentally different types of apps or experiences to bring to customers and to market.
“What we are seeing is particularly a play around AI and a lot of activity around predictive analytics in order to offer personalised types of experiences to customers. But in order to do that effectively, you are into a whole piece of making sure your data is actually fit for purpose and acceptable,” he said.
“One of the big challenges that we see when customers want to embark on that type of journey is that the data itself isn’t in the right kind of state so that it can be used effectively. There’s often a lot of remedial work and cleansing of data that needs to happen upfront before you can really start to get value from an AI perspective.”