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The nitty-gritty of Malaysia's Digital Business Shift: Gartner interview

AvantiKumar | March 3, 2015
Following the recent unveiling of its top 10 Digital Business predictions for Asia Pacific, Gartner's Poh-Ling Lee and Andy Rowsell-Jones give more insights into the challenges for Malaysian organisations as the relationship between human and machine changes.

 

Poh-Ling Lee, Vice President & Executive Partner, Gartner Inc 

Photo - Poh-Ling Lee, Vice President & Executive Partner, Gartner Inc.


What exactly will Malaysian business leaders face when handling this 'shift to digital'?

  • Business leaders, particularly CIOs will have to re-examine their role and that of the IT organisation. They are challenged to maintain the relevance and effectiveness of the business while shifting their focus to the agility and speed of the nascent digital business initiatives.
  • Pros: By taking advantage of the opportunity the shift to digital brings, CIOs can benefit from these focus areas and the key issues that contribute to them.

Fixing the Foundation, Learning from Leaders, Looking to the Future
    Ø Issue 1: Flipping the CIO role to digital leadership by reducing the control and increasing their visionary leadership. CIOs should take more responsibility in managing a broader scope of information and technology across the enterprise instead of just the IT organisation.
    Ø Issue 2: CIOs to rethink IT value and IT service management as traditional performance metrics are not aligned with the shift to a Bimodal IT organisation.
    Ø     Issue 3: Managing the new normal of IT finances include management across the entire investment cycle - investment candidate identification, prioritization, project execution assessment and documentation of business delivered. This is necessary for CIOs as traditional ROI assessments might not be applicable for certain investments.
    Ø Issue 4: CIOs to renovate core IT management capabilities to ensure that the enterprise will be prepared for disruptions that might occur beyond the usual three year strategy window.

  • Cons: There will be challenges to ensure business as usual activity, managing the IT organisation, achieving operational excellence, fighting operational fires and renewing inflexible legacy applications.



What CIO survey findings and predictions surprised you about Malaysia?

In the findings from Gartner's latest CIO survey, Malaysia CIOs, like their peers in the rest of the world (ROW), see digital as creating new types and levels of risk (a very high 97 percent for Malaysia and 89 percent for ROW. Nearly four out of five Malaysia CIOs agree that risk management techniques are falling behind the reality of digital transformation.

Malaysia CIOs should consider putting risk management as a key improvement area in their performance plan for themselves and their teams for 2015.  The measure of success would be how well they respond to risk (that is, resilience), not how well the team prevents things from happening.

However, 17 percent of CIOs in Malaysia consistently execute sound value-harvesting practices, which is much higher than the average for the rest of the world. CIOs need to make value come alive in their enterprises, becoming the driving force in what the business chooses to do and how it is done.

Benefit tracking is a way to do this. Benefit tracking is a management discipline where value reviews are conducted after a program of works is completed. These reviews typically look to quantify the actual benefits obtained and to identify learning opportunities to improve value delivery in the future. Even though Malaysia CIOs are ahead of their peers in the adoption of benefit-tracking practices, there is always room to improve. Good benefit tracking is central to digital experimentation, just as it is to more conventional IT projects.


Let's talk about 'human and machine': How does the digital economy shift change this relationship?

With the emergence of the digital economy, we are seeing a shift in the age old relationship between human and machine. With all the talk about the digital business opportunities in big data analytics, sensor technology, and smart business process management, it's easy to forget that business moments are human moments.

The emergence of digital business requires that IT leaders shift the balance toward what Gartner is calling "digital humanism". This has three principals:

Put People at the Centre - All design should be human-centred design. It starts with observing people. Don't ask people for their requirements. Everybody, even colleagues in the rest of the business have trouble formulating them. Don't ask people what they want, watch what they do. Observe.

Embrace Unpredictability - While embracing the unexpected is not a new concept, it is particularly relevant for digital business. The moment a company's digital technology is out there, in the hands of the users, it will start to affect their behaviour. What you can do as a leader is, listen, observe, and get out of the way. The business results will be: new products, new brand ambassadors, new markets, and true competitive differentiation.

Protect Personal Space - Let people make their own decisions. A digital humanist adopts what is called "privacy by design". They take privacy into account throughout the whole life cycle of a particular product or service.

Some of Gartner's predictions related to the human machine relationship include:
    Ø By 2018, digital business will require 50 percent less business process workers and 500 percent more key digital business jobs, compared with traditional models.
    Ø By 2017, a significant disruptive digital business will be launched that was conceived by a computer algorithm
    Ø By 2018, smart machines will distribute 10% of human work, acting as intermediaries between the organisation, employees and external workers.
    Ø By 2018, 30 percent of our interactions with technology will be through "conversations" with smart machines.
    Ø By 2018, the total cost of ownership for business operations will be reduced by 30 percent through smart machines and industrialized services
    Ø By 2018, at least one smart machine maker will have settled a liability suit because its product made a negligent or criminal decision.
    Ø By year-end 2016, more than US$2 billion in online shopping will be performed exclusively by mobile digital assistants.
    Ø By 2018, at least one developed nation will have started creating a legal framework governing the rights and responsibilities of smart machines.
    Ø By 2020, four out of 10 high performers will distribute their work across a team of "virtual doppelgangers" to boost their personal productivity.


Can we go into more detail about the opportunities that Malaysia can expect in technology spending in 2015? Also, will the recent Budget 2015 Revision change your initial spending forecast?

In Gartner's 2015 CIO survey, Malaysia CIOs indicated a strong growth in their IT budgets of 8.6 percent on average for 2015. This is significantly higher than the global average budget growth of only one percent.

Although large growth in IT budgets may sound like an unalloyed good thing, there are dangers:

  • This large increase in IT budgets raises concerns over management's ability to earn a satisfactory return on investment from its IT spending this year and the impacts those investments will have on IT operating costs into the future.
  • Having said that, Malaysia CIOs should actively seek opportunities to pilot SMART technologies (like sensor networks/the Internet of Things; maker machines, such as 3D printing; augmentation of humans with devices or smart decision-making systems; robotics; and thinking machines) for competitive and economic development advantage.
  • Malaysia CIOs also need to create an environment where future funds/resources are quarantined for forays into new technologies. This is especially true for regulated businesses that are obliged to set five-year funding plans.
  • At the time of this interview, Gartner forecasts overall technology spending in Malaysia, including consumer and enterprise spending, should reach MYR67,160 [US$18,517] billion in 2015, an increase of 8.5 percent over last year.

 

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