2017 CIO Agenda: An India Perspective

Published: 10 January 2017 ID: G00318370

Analyst(s): Partha Iyengar

Gartner's annual survey found that Indian CIOs have moved aggressively
toward digitalization, but this decisiveness creates risks and challenges in
four areas that they will have to manage.

Key Findings
■ Indian CIOs have budget to spend, but not enough skills to buy.
■ Indian companies pursue digital business aggressively.
■ Indian tech priorities sacrifice IT basics for digital future.
■ Indian CIOs need to evolve from bimodal IT to bimodal business.

Recommendations
Successful Indian CIOs:

■ Work with universities to set up programs that teach analytics, digital business and other skills,
and then offer an easy path into your IT organization for qualified graduates.
■ Look ahead to the five phases of digital business development. Eventually, you will have to
scale up and optimize successful digital businesses. Choices you make now may affect your
ability to do so.
■ Review the digital/conventional balance of IT spending quarterly to make sure foundational
systems keep up with where your digital initiatives need to go.
■ Assemble a tiger team of IT leaders to investigate the extent of technical debt built up from
digital initiatives. For example, ask the team to explore the interoperability and back-end
capacity implied by digital business when fully scaled up.

Table of Contents

Survey Objective.................................................................................................................................... 2
Data Insights.......................................................................................................................................... 3
 Finding No. 1: Indian CIOs Have Lots of Money, but Not Enough Skills to Buy..................................3
Recommendations..................................................................................................................... 6
Finding No. 2: Indian Companies Pursue Digital Business Aggressively............................................ 6
Recommendations..................................................................................................................... 8
Finding No. 3: Indian Tech Priorities Sacrifice IT Basics for Digital Future...........................................9
Recommendations................................................................................................................... 11
Finding No. 4: Indian CIOs Need to Shift From Bimodal IT to Bimodal Business............................. 12
Recommendations................................................................................................................... 15
Methodology.................................................................................................................................. 15
Gartner Recommended Reading.......................................................................................................... 15

List of Figures

Figure 1. Indian Revenue and IT Budget Growth, 2016-2017................................................................. 4

Figure 2. IT Talent Gaps..........................................................................................................................5
Figure 3. Top Strategic Business Priorities, 2016-2017........................................................................... 7
Figure 4. What the IT Organization Emphasizes...................................................................................... 8
Figure 5. Budget for Digitalization........................................................................................................... 9
Figure 6. Game-Changing Technologies............................................................................................... 10
Figure 7. Technology Spending Priorities.............................................................................................. 11
Figure 8. The Benefits of Bimodal Operations....................................................................................... 13
Figure 9. The Costs of Bimodal Operations.......................................................................................... 14

Survey Objective
Every year, Gartner surveys CIOs across the globe to expose the key priorities, opportunities and
threats they face. This year's survey includes the views of 2,598 CIOs across 93 countries,
representing $9.4 trillion in revenue or public-sector budgets and $292 billion in IT spending (see
"The 2017 CIO Agenda: Seize the Digital Ecosystem Opportunity").

The data represents all major industry groups. Respondents ranged in size from less than $100
million to $50 billion or more (see the Methodology section for more details).

In addition to a global CIO report, we publish a series of reports that analyze the survey findings
from particular regions or industries. This document focuses on the 65 responses from CIOs in India
— as well as input obtained through Gartner's executive partners and their interaction with CIOs
across the country.

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 This report highlights important differences between the Indian respondents and the overall sample
along with differences between the respondents and businesses that are top performers. The 2017
CIO Agenda divides survey respondents into three categories based on self-reported IT and
enterprise performance:

■ Top performers rated themselves 6 or 7 (out of 7) on: "How effective is your company at
factoring digital considerations into strategy and planning?" These performers answered
"scaling" or "harvesting" (the two top categories) to: "Which of these best describes the stage
of your organization's digital initiative?"
■ Typical performers perform better than trailing performers, yet not well enough to be included
in top performers.
■ Trailing performers self-reported a score of 1 or 2 on: "How effective is your company at
factoring digital considerations into strategy and planning?" They answered "none" or "desired"
(the two bottom categories) to: "Which of these best describes the stage of your organization's
digital initiative?"

Data Insights
IT organizations in India are undergoing change at a tremendous pace. India boasts one of the
fastest-growing economies in the world. Business is booming. Indian companies have committed to
digitalization and expect the IT organization to help. Thus, Indian IT organizations are trying to do
what IT departments in top-performing enterprises do. But Indian IT organizations also remain
immature in some respects and lack key resources. How Indian CIOs deal with the stresses caused
by rapid business change and opportunities will help determine the future success of their
enterprises. Gartner's survey uncovered four areas where CIOs should focus their efforts.

Finding No. 1: Indian CIOs Have Lots of Money, but Not Enough Skills to Buy
The Indian CIOs we surveyed reported some eye-popping numbers. We asked how much their
company's revenue will grow in 2017 (see Figure 1). Average revenue growth expected is 12.6%,
compared with 4.0% among overall respondents. We also asked how their IT budgets would
change in 2017. Indian CIOs expect an average growth rate of 10.7%! That's a growth rate almost
five times faster than the overall average (2.2%).

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 Figure 1. Indian Revenue and IT Budget Growth, 2016-2017

Source: Gartner (February 2017)

This rapid growth in the IT budget poses an extra challenge for Indian CIOs, who will have to spend
the money effectively. On the one hand, the leaders have committed to using digital technology for
business advantage. Only 5% of Indian respondents worry about leadership, planning and strategy
as a barrier to achieving the goals of the CIO role. But skills and resources topped the list of worries
(21%), and more Indian CIOs (9%) worry about their organization having the capacity and
willingness to change than their global peers (4%).

Indian CIOs have the money to spend, but availability of talent/skills necessary to implement the
projects remains a significant challenge. The survey uncovered wide gaps in key areas (see Figure
2). 25% of Indian respondents list overall lack of skills as a top-three talent gap, compared with
12% of overall respondents. More particularly, 25% of Indian CIOs reported a talent gap in digital
business and marketing (vs. 13% overall). 19% cited lack of specific technical skills (vs. 8% overall).
35% listed business analytics — a global concern but one that Indian CIOs feel a little bit more.
Meanwhile, hardly any Indian CIOs worry about not finding enough people for traditional IT roles
such as project manager (2%) and business or systems analysts (2%). Indian CIOs will have to be
even more creative than their peers elsewhere in finding the skills they need to pursue digital
transformation.

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 Figure 2. IT Talent Gaps

Source: Gartner (February 2017)

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 Recommendations
■ Work with universities to set up programs that teach analytics, digital business and other skills,
and then offer an easy path — possibly via internship programs — into your IT organization for
qualified graduates.
■ Consider using an external service provider with digital business capabilities. But be careful —
many service providers claim to do digital business even though they lack key capabilities (see
"Market Guide for Digital Business Consulting Services").
■ Offer more money to lure the right skills from other companies — and keep them. With talent
scarce in key areas, generous salaries and a culture of innovation could give you a competitive
advantage.
■ Set up internal training programs or pay to train current staff on new skills — for example, at
universities.
■ Evaluate establishing IT "satellite" centers in Tier 2 and Tier 3 cities — a strategy that has been
adopted by service providers for some time now. This will allow enterprises to access the —
compared to Tier 1 cities — relatively untapped resource pools in those locations.

Finding No. 2: Indian Companies Pursue Digital Business Aggressively

Indian companies have committed to digital business as decisively as the world's top-performing
enterprises. Like their top-performing counterparts, Indian CIOs list digital business and growth or
market share as their enterprises' top strategic business priorities through 2017 (see Figure 3). In
fact, Indian CIOs say it more emphatically. 37% listed digital business as a top priority vs. 28% of
top performers (and 21% of global respondents). 31% of Indian respondents cited growth vs. 28%
of top performers (22% overall).

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 Figure 3. Top Strategic Business Priorities, 2016-2017

Source: Gartner (February 2017)

These business priorities have altered the focus of Indian IT organizations. Indian CIOs look like
global top performers when we ask about what their IT organizations emphasize (see Figure 4). For
example, almost 9 out of 10 Indian CIOs stress support for digital business over optimizing IT costs.
Almost 80% say they emphasize innovation more than daily operations.

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 Figure 4. What the IT Organization Emphasizes

Source: Gartner (February 2017)

Recommendations
■ Look ahead to the five phases of digital business development (see "2016 Strategic Roadmap
for Digital Business Transformation"). Eventually you will have to scale up and optimize
successful digital businesses. Choices you make now may affect your ability to do so.
■ Incorporate security and risk management in digital business designs. Security is easy to defer
in the rush to stand up a new digital business. But customers and partners will not participate in
your digital ecosystem if it increases their exposure.
■ Focus relentlessly on business-outcome-centric metrics (revenue, profitability, customer
experience and market share) as measures of digital business success.

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 Finding No. 3: Indian Tech Priorities Sacrifice IT Basics for Digital Future
Indian CIOs have made a financial commitment to digitalization, but that commitment involves
trade-offs and risks. Today, digitalization accounts for 23% of the IT budget, on average, in Indian IT
organizations — more than typical performers but significantly below top performers (see Figure 5).
Indian CIOs plan to accelerate their funding of digitalization by 2018 (35% of total IT budget vs.
43% among top performers).

Figure 5. Budget for Digitalization

Source: Gartner (February 2017)

The specific technologies that Indian CIOs expect to power digital transformation reveal a bias
toward solutions that offer a personalized experience rather than empowering individuals
themselves (see Figure 6). Indian CIOs share this tendency with their global counterparts but favor it
a little more:

■ Advanced analytics and business algorithms can help understand the customer's specific
context and customize a response at scale. Everyone stresses these.
■ Indian CIOs place much greater emphasis on the Internet of Things than the overall survey
sample and above-average emphasis on machine learning. These technologies create an
intelligent digital/physical environment that learns and responds to changing conditions.
■ Indian CIOs show only average interest or less in virtual assistants, augmented reality and
autonomous vehicles, all of which increase the capabilities of individuals.

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 ■ Indian CIOs focus less than overall peers on security and blockchain — technologies that
underpin trust between parties in a digital world.
Figure 6. Game-Changing Technologies

Source: Gartner (February 2017)

When Indians CIOs get new money to spend — and they're getting a lot of it — they spend it on
digitalization and technologies that support it (see Figure 7). Thus, 32% cite digitalization as a top-
three spending priority, far outpacing even top-performing organizations (20%). Business analytics
(48%), cloud services (48%) and mobile (35%) also feature prominently among Indian IT spending
priorities. These more general technologies can nevertheless support digital business, digital
marketing and customer experience initiatives.

In terms of new/discretionary spending, there is a strong emphasis on digitalization at the expense

of more conventional technologies. Only 14% of Indian CIOs consider ERP a top priority, but it is a
major preoccupation for CIOs in many countries. Infrastructure, data centers, information security
and networking rank much lower among Indian CIOs than even the top performers. This is likely an
indication of the fact that Indian CIOs have focused on establishing the foundational capabilities
over the past decade or so. India has had the highest or among the highest IT budget growth for
more than 5 years now. Indian business leaders are now focused on addressing the competitive
challenges by aggressively investing in digital business.

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 Figure 7. Technology Spending Priorities

Source: Gartner (February 2017)

Nevertheless, digital initiatives cannot defy gravity. Digital business still requires IT infrastructure. If
an enterprise scales up its digital business 10 or 100 times, its networks and data management
system must be robust enough to handle the transaction and customer data. Indian CIOs are smart
to shift the emphasis from conventional IT to digitalization, but they must be careful not to let digital
initiatives outrun support systems.

Recommendations
■ Review the digital/conventional balance of IT spending quarterly to make sure fundamental
systems keep up with where your digital initiatives need to go.
■ Include risk management in all digital business planning. It should consider business risk, not
just information security risks. For example, a low-probability cyberattack may damage the
company's brand and therefore be worth more attention than a higher-probability data breach
(see "Ten Critical Elements for Successful Risk Management Programs").
■ Do not ignore "digital workplace" investments to ensure the enterprise has a digital savvy
workforce.

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 Finding No. 4: Indian CIOs Need to Shift From Bimodal IT to Bimodal Business
Many Indian IT organizations have adopted bimodal operations — a structured, process-oriented
approach for routine work (Mode 1) and rapid iterations for innovation (Mode 2). 49% of Indian
respondents say their organizations have bimodal capability. That's higher than the overall rate,
though still well below the use of bimodal by top performers (68%). Indian CIOs need to build on the
initial success of their bimodal efforts.

And they have achieved considerable success already, even if danger signs also appear (see Figure
8). Indian CIOs far outpace their global peers in reporting improved business perception of IT, more
innovation and faster time to market. Clearly, the business loves what the IT organization has done
with bimodal already. The IT organization has permission to go further.

However, bimodal is a new practice, and it hasn't pervaded the IT organization yet. Indian CIOs are
more likely to report achieving no benefits from bimodal than their global peers, and far fewer Indian
CIOs notice a difference in the IT organization's culture (33% vs. 47% overall). To succeed with
initiatives such as digital business and customer experience, CIOs will have to extend bimodal
throughout the IT organization. More importantly, CIOs must help the whole enterprise to operate
bimodally because these initiatives require cooperation across corporate functions.

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 Figure 8. The Benefits of Bimodal Operations

Source: Gartner (February 2017)

Our survey uncovered other danger signs as well (see Figure 9). For organizations that have rapidly
adopted bimodal, suspiciously few Indian CIOs (26%) report costs of technical debt as a cost (vs. a
global average of 45%), and only 7% cite organizational chaos (vs. 24% overall). Digitalization and
bimodal operations have created problems for the future, which Indian CIOs have not fully realized
yet. They will need to do more within the IT organization to manage the stresses caused by bimodal
— for example:

■ The resentment of Mode 1 staff who don't get to work on exciting projects.

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 ■ Friction between Mode 1 and Mode 2 approaches, both of which are needed at different times
in digital initiatives.

Indian CIOs will also struggle to connect fancy user interfaces and Internet of Things sensors and
devices to back-end systems and to create open platforms that enable new ecosystem partners to
interoperate quickly. Indian CIOs may be getting early indications of these challenges as more of
them (19%) worry about project failure rates than their counterparts around the globe (12%).

With rapid budget growth, Indian CIOs can afford the chief cost they report (far more than global
peers): additional head count.

Figure 9. The Costs of Bimodal Operations

Source: Gartner (February 2017)

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 Recommendations
■ Assemble a tiger team of IT leaders to investigate the extent of technical debt built up from
Mode 2 digital initiatives. For example, ask the team to explore the interoperability and back-
end capacity implied by digital business when fully scaled up.
■ Strive for "prestige" parity between Mode 1 and Mode 2 operations. Publish the skills needed
for both, and allow all staff to apply for roles in whichever mode they prefer. Reward those who
excel in Mode 1 as much as those who do in Mode 2.
■ Ensure that the implementation methodology avoids the risk of having disjointed/disconnected
(from Mode 1) Mode 2 initiatives. The success of bimodal hinges on having an effective
"connection" between Mode 2 and Mode 1 via a formal process to refactor into Mode 1 the
technical debt created by every Mode 2 initiative.

Methodology
The CIO survey was conducted during 2016, based on hypotheses developed by the Gartner CIO
research community (see "The 2017 CIO Agenda: Seize the Digital Ecosystem Opportunity"). This
report examines the responses from Indian CIOs to learn about their particular challenges and to
find insights that will help CIOs address them.

Gartner Recommended Reading

Some documents may not be available as part of your current Gartner subscription.

"Toolkit: Taxonomy of Gartner Digital Business Research"

"Get Your IT Service Model Right by Optimizing IT's Operations and Outcomes"

"Organizing for Effective Data Management in Digital Business"

"How to Reduce Network Downtime in the Era of Digital Business"

"Introducing Digital Connectivism: A New Philosophy for the Digital Society"

"Hype Cycle for ICT in India, 2016"

Evidence
This research is based on the 2017 Gartner CIO Survey conducted between 8 May 2016 and 9 July
2016 when 65 CIOs from India responded to the 2017 Gartner CIO Survey out of the global total of
2,598. The respondents were members of Gartner Executive Programs and other IT leaders.

More on This Topic

This is part of an in-depth collection of research. See the collection:

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 ■ 2017 CIO Agenda: Global Perspectives on Seizing the Digital Ecosystem Opportunity

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