Australian CIOs struggle with IT budget constraints in 2024
The latest survey by ADAPT highlights a challenging financial landscape for Australian Chief Information Officers (CIOs) as efforts to modernise technology systems are hindered by insufficient IT budgets.
Conducted with 150 CIOs representing companies that contribute to 35% of Australia's GDP, the 2024 CIO Edge survey sheds light on the shifting priorities that are set to influence the 2024-2025 financial year.
Jim Berry, Chief Executive Officer and Founder at ADAPT, noted the significant obstacles facing CIOs in their quest to upgrade technology infrastructure. He stated, "We've found ourselves in an arms-race for computational capability at a time of great scrutiny over IT costs. This is a huge problem as tech budgets are already weighed down by the cost of keeping the lights on, with under-funded CIOs spending most of their time navigating complicated, fragile technology stacks. This huge technical debt means most struggle to find the investment needed for modernisation, which is key to unlocking high-value activity across their organisations."
Berry further emphasized the critical choice confronting organisations, remarking, "This brings us to a fork in the road. Huge potential exists for companies that support modernisation journeys, but the complexity and cost of managing current IT infrastructure will soon overwhelm the organisations who don't. Securing more funding to modernise might be the biggest undertaking this generation of IT execs will ever see, but our research proves the journey, change and effort is well worth it." He pointed out that companies committed to modernisation are likely to outperform, earning significantly more than their peers and experiencing fewer operational difficulties.
The survey indicated that cost optimisation has rapidly become the top priority for investment, marking a stark contrast to its fifth-place ranking in the previous year. A daunting 64% of CIOs reported insufficient resources to implement their digital strategies, with a budget increase averaging 30% deemed necessary.
According to the findings, 68% of CIOs plan to consolidate their vendor relationships in the upcoming financial year, aligning with the goal of simplifying technology frameworks and reducing costs. Berry commented on this trend, saying, "This intense focus on modernisation is now viewed through the lens of cost management as belts tighten. While the number of companies looking to reduce the number of vendors they deal with is pretty steady, the CIOs that seek to consolidate are taking a more aggressive approach to their audits of vendors, figuring out which solutions deliver real value, and which don't."
The survey also uncovered barriers obstructing the adoption of Artificial Intelligence (AI) technologies within organisations. These challenges include inadequate data skills, difficulties in securing AI resources, absent data culture consistency, and poor data quality.
Berry outlined the imperative for greater investments in data infrastructure to harness AI capabilities effectively. "Regardless of the hype, Artificial Intelligence is the largest implied growth curve in the history of IT infrastructure. While it promises to transform the way we work, there's so much investment into our supporting Information Architecture that needs to happen before we're able to realise its benefits." Berry indicated that despite some readiness to adopt AI, the journey starts with investment in data literacy, quality data collection, and adherence to regulatory standards.
