Not long ago, technology leaders everywhere were scrambling to keep pace with the accelerating speed of digital business transformation. Then, Covid-19 came along and everything changed… or did it?

During the height of the crisis, the drivers of IT were clearly reordered: often, it was simply about helping the business survive.

Now, many of the ‘old’ imperatives have returned: efficiency, security, innovation, insights, enabling new ways of working. But as this year’s Harvey Nash/KPMG CIO Survey shows, the landscape is vastly more complex – and accelerated – than before. Our research shows that the global pandemic resulted in one of the biggest surges in technology investment in history.

Covid-19 drives biggest surge in technology investment in history

Covid-19 has caused one of the biggest surges in technology investment in history, according to Harvey Nash/KPMG technology leadership survey. Read here

So where now? As they rebuild, organisations fall into four main recovery patterns. However, it is quite possible for enterprises with multiple geographies or lines of business to find themselves in more than one simultaneously: a mark of the complexity stemming from Covid-19.

Hard Reset

Hard Reset companies (around 7% of all businesses) are in for a protracted challenge, and will likely need cash and new strategies to reposition for the new reality. Companies in this quadrant – many of whom may be in the real estate, leisure, hospitality and transport/travel sectors — struggle to recover from Covid-19 due to permanently lowered demand for offerings, insufficient capital to ride out an extended recession, or poor execution of previous digital transformation attempts. Without a clear strategy that emphasises reduction in cost and elimination of inefficiency, Hard Reset firms will likely struggle to remain viable.

CIO actions:

• For the IT organisation, the immediate driver may be the need to survive through cost cutting and removing fixed capacity, requiring significant changes to the business and IT operating models.
• Beyond this, building a tangible, executable plan to create sustained cost optimisation is essential.
• Hard choices may also need to be made around workforce shaping — what are the optimal roles to retain, what can be automated, and what is best served through outsourcing or buying as a managed service?

Transform to re-emerge

This is undoubtedly the majority recovery pattern, applying to a mass of businesses across sectors and geographies. The nature of their business model is still sound — but the way that customers want to engage with them has changed. This year’s survey finds that improving customer engagement is second only to operational efficiency amongst priorities for tech. There is a renewed urgency to transform operating models accordingly, with a redefinition of expectations in how customers will engage, buy and consume products and services. Significant investment will be needed in enabling technologies such as AI, payments, integrated platforms, and automation.

CIO actions:

• Initiatives need to be prioritised according to critical business and customer outcomes. The IT transformation program must be tuned to connecting the enterprise end-to-end and avoid sub-optimised or incremental investments.
• Creating a modern digital backbone and technical capabilities will be key, utilising cloud and emerging enabling technologies. Almost half of survey respondents say the pandemic has permanently accelerated digital transformation and the adoption of emergent technologies.
• Many organisations are chained to highly customised or legacy IT Ops tools. Modernising the applications stack using low/no code platforms and modern APIs is essential.

Modified Business as Usual

While it is likely no sector, company or region has been left untouched by Covid-19, for some there has been a less dramatic impact. Organisations within Modified Business as Usual are commonly ‘essential’ businesses such as government, utilities or financial services, certainly suffering the effects of the consumer shutdown, but who will recover more quickly as consumer demand returns. Like others, they have seen shifts in how customers want to interact with them and as a result need to accelerate their digital transformation.

CIO actions:

• There has been an explosion in new front office applications, analytics solutions, and cloud platforms — but with little thought to sustainability, supportability, cost, and integration. It is key to understand what are “good costs” and what are legacy investments where hard choices need to be made.
• Understanding changing consumer preferences is critical, but internal datasets alone will not suffice. External facing tools using machine learning and NLP are needed.
• To be responsive to customer expectations and run at market speed, IT needs to mature much faster than in the past with modern delivery solutions, shifting from projects to products, scaling agile ways of working, and committing to automating core IT processes across the technology lifecycle.

The influence of the technology leader is on the rise — Harvey Nash/KPMG survey

Covid-19 has led to a rise in the influence of the technology leader, according to technology leadership survey from Harvey Nash and KPMG. Read here

Surge

Some organisations have been fortunate enough to see an expansion in consumer demand as a result of Covid-19. However, Surge companies need to sustain their growth. One significant challenge is rapidly scaling to meet expanding demand while staying in touch with evolving customer preferences and market conditions. For IT, this means accelerating digital business transformation by delivering the capability to continuously understand consumer preferences and patterns via advanced analytics, automate and remove friction from the supply chain, quickly industrialise modern ways of working, and automate large portions of both IT and the business.

CIO actions:

• Scaling AI capabilities is essential in order to accelerate strategies for intelligent automation, cost management, growth, customer engagement and risk and regulatory policy.
• Decision rights and governance surrounding technology investment need to be streamlined and elevated to expedite the process.
• Sudden growth can be a problem. IT operations may be struggling to keep pace. Sophisticated Service Management capabilities are needed that deliver enterprise ready solutions.

Rising to the challenge

The critical task is to focus ruthlessly on what really matters to business performance and assess how IT can facilitate and enable it. In every scenario, CIOs are faced with tough decisions on how to balance managing cost with increasing performance.

Those with mature tech capabilities – Digital Leaders – will naturally be in a stronger position, and indeed one of the effects of the crisis will be a widening divide between these leader organisations and the rest. We find that Digital Leaders are more likely than the global average to have made additional technology investments, especially in areas like AI, ML, distributed cloud, and automation, as a result of Covid-19.

The good news is that while the urgency has changed, many of the CIO imperatives have not. Understanding your organisation’s specific pathway to recovery is key to emerging more competitive into the New Reality.