LONDON – September 22 2020
Companies spent the equivalent of around US$15bn extra a week on technology to enable safe and secure home working during COVID-19, reveals the 2020 Harvey Nash/KPMG CIO Survey.
This was one of the biggest surges in technology investment in history – with the world’s IT leaders spending more than their annual budget rise in just three months, as the global crisis hit, and lockdowns began to be enforced.
The largest technology leadership survey in the world of over 4,200 IT leaders, analyzing responses from organizations with a combined technology spend of over US$250bn, also found that despite this huge surge of spending, and security & privacy being the top investment during COVID-19, 4 in 10 IT leaders report that their company has experienced more cyber attacks.
Over three quarters of these attacks were from phishing (83%), and almost two thirds from malware (62%) suggesting that the massive move to home working has increased exposure from employees.
At the same time, organizations have struggled to find skilled cyber security professionals to support this dramatic shift to homeworking – and report that cyber security (35%) is now the most ‘in demand’ technology skill in the world. This is the first time a security related skill has topped the list of global technology skills shortages for over a decade.
Although technology spend has risen dramatically during the pandemic, the survey found that technology budgets will be under more strain over the year ahead. Prior to COVID-19, over half (51%) of IT leaders expected a budget rise in the next 12 months, but during the pandemic this number declined to 43%. This still represents a net increase in budgets and remains almost twice as high as IT spend in 2009 - in the wake of the 2008 Global Financial Crisis.
Other key findings from the world’s largest technology survey include:
Digital companies pull away – Digital Leaders were more likely than non-digital leaders to make additional technology investments as a result of COVID-19 – with 50% more organizations that are ‘very’ or ‘extremely effective’ at using digital technologies spending an additional 21-50%. These investments focused on large-scale implementations of Distributed Cloud (42%) and SaaS (34%). The crisis has served to emphasize a growing divide between organizations driving their strategy through technology, and those that aren’t.
Concerns over mental health - 8 in 10 IT leaders during COVID-19 are concerned about the mental health of their team, which has resulted in 6 in 10 IT leaders (58%) putting programs in place to support their staff.
Cloud investment up – After investment in security and privacy (47%), investment in infrastructure and the cloud was the third most important technology investment during COVID-19, with the number of IT leaders actively considering Distributed Cloud nearly doubling in just 12 months (from 11% to 21%).
Skills shortages – Prior to COVID-19, 2020 skills shortages remained close to an all-time high. Subsequently, shortages in tech talent have remained high, only marginally dropping compared to the 2008 Global Financial Crisis. In addition to cyber security skills (35%), the next three most scarce technology skills are organizational change management (27%), enterprise architecture (23%) and technical architecture and advanced analytics both at 22%.
Bev White, CEO of Harvey Nash Group said:
“This unexpected and unplanned surge in technology investment has also been accompanied by massive changes in how organizations operate – with more organizational change in the last six months than we have seen in the last ten years. Success will largely be about how organizations deal with their culture and engage with their people.
In a world where location has dissolved, where the office now includes the kitchen table, and where over 80% of IT leaders are concerned about the mental health of their teams, organizations will need to reformulate their employee offer to attract and retain the talent they need to support them through the pandemic, and beyond.”
Steve Bates, Principal, KPMG in the US and global leader of KPMG International’s CIO Center of Excellence, said:
“IT in the New Reality will be shaped by economic recovery patterns unique to each sector, location, and company. While every CIO is responding to these forces differently, one thing remains consistent; the urgency to act swiftly and decisively. Technology has never been more important to organizations’ ability to survive and thrive.”
COVID-19: The business issues the board wants IT to address:
Workforce enablement – In previous years, this has tended to be a mid-ranking priority for technology leaders, but it has jumped to the top three after the onset of COVID-19 (from eighth place before the pandemic) driven by the mass move to remote working. Operational efficiency and customer engagement keep their top positions, but the purpose of these have changed in the light of COVID-19.
Digital Transformation – For almost half (47%) of IT leaders COVID-19 has permanently accelerated digital transformation and adoption of emerging technology (AI, ML, blockchain and automation).
Emerging technologies – Small scale implementations of Artificial Intelligence (AI) and Machine Learning (ML) have jumped up from 21% before COVID-19 to 24% now, a significant jump in a period of only a few months.
Marketplace Software as a Service (SaaS) – This is the big winner compared to 2019. Large-scale implementations more than tripled from 7% in 2019 to 23% this year. One in six organizations put one in place in the last 12 months.
Remote working and the new deal for employees:
Remote working is here to stay – 86% of IT leaders moved a significant part of their workforce to remote working, and 43% expect more than half of their employees to work from home after the pandemic.
Collaboration and culture – As a result of remote working, 70% of IT leaders report increased collaboration between the business and technology teams and over half (52%) said that it has created a culture of inclusivity in the technology team.
The new deal for employees – Work location & remote working has risen to become one of the five most important factors for engaging and retaining key technology talent during, and after, COVID-19. Leaders will therefore need to rethink how they attract and engage their employees in a world where physical location is no longer a prime asset.
Influence of the technology leader:
Influence on the rise - Almost two thirds (61%) stated that the pandemic has permanently increased the influence of the technology leader.
Board membership - However, the downward trend for board membership continues from 65% in 2018 to 61% of CIOs, IT Directors and CDOs on the main board in 2020, suggesting technology leaders are finding ways to be relevant and influential without the need for permanent board / ExCo membership.
Women in Tech still an issue - The gender diversity of technology leaders remains broadly unchanged from last year’s survey (11%).
South America is a leader - With 16% of its technology leader’s female, South America has 60% more female IT leaders than the UK (10%). This could be interpreted as the reward for being a growing hub for female STEM entrepreneurs and actively running multiple programs to get women into the world of technology.
Promoting Diversity – 24% of IT leaders feel that their organization is successful at promoting diversity, and this has improved trust and collaboration in the technology team (67%), access to the right skills (56%), and their teams’ ability to innovate (53%).
Notes to editors:1 Over an eight-week period (5th June – 10th August 2020), global IT leaders reported a median additional technology spend of 5% to deal with the COVID-19 crisis as a percentage of the total of their annual IT/technology budget. Data from Forrester, published 3rd February 2020, shows that global IT spending was forecasted to reach US$3.5trillion in 2019 and US$3.59trillion in 2020 (https://go.forrester.com/blogs/new-forrester-forecast-shows-global-tech-market-growth-will-slip-to-3-in-2020-and-2021/).
As global IT leaders report a median additional spend of 5% of their IT budgets on technology to deal with the COVID-19 crisis, this was an additional surge/spike in IT spending of around US$175bn (5% of the US$3.5trillion global IT spend in 2019 forecasted by Forrester) – to deal with the initial impact of COVID-19.
This is equivalent to around US$15bn per week during the first three months of the crisis, when this spend would have undoubtedly taken place to support the sudden move to remote/distributed working.
2 Analysis by Harvey Nash and KPMG of a range of publicly available global data on IT/tech spending shows that annual rises in spend have tracked at 5% and below for more than a decade, reaching a peak of 5% growth in 2018.
For instance, Forrester research, published 3rd February 2020, found that the growth in global spending on tech goods and services dropped from a peak of 5% in 2018 to 3.9% in 2019. (https://go.forrester.com/blogs/new-forrester-forecast-shows-global-tech-market-growth-will-slip-to-3-in-2020-and-2021/).
As global IT leaders report a median additional spend of 5% of their IT budgets on technology to deal with the COVID-19 crisis, this level of spend, in just three months, is more than their annual budget rise. 3Digital leaders are those that have organizations that are ‘very’ or ‘extremely effective’ at using digital technologies to advance their business strategy.
About the Survey
In its 22nd year, the 2020 Harvey Nash/KPMG CIO Survey is the largest IT leadership survey in the world in terms of number of respondents. The survey of over 4,200 CIOs and technology leaders took place in two pulses - one prior to COVID-19 (commencing on 17th December 2019) and one during the pandemic (5th June – 10 August 2020), across 108 countries.
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