COVID-19 forces historic surge in technology investment
The COVID-19 pandemic has driven one of the biggest surges in technology investment in history, with companies globally spending an extra USD$15bn per week on technology during the first wave.
Security and privacy were the top investment areas according to the 2020 Harvey Nash/KPMG CIO Survey, as companies rushed to enable safe and secure home working during lockdowns. But despite this, 40% of Australian IT leaders still saw a sharp rise in cyber-attacks. Nearly nine in ten (89%) reported an increase in phishing attacks, and over two thirds (77%) saw malware, indicating that the huge shift to employees working from home working has increased the risk exposure of organisations.
At the same time, Australian organisations have struggled to find skilled cyber security professionals to support this dramatic shift to homeworking. 42% of Australian CIOs report that cyber security is now the most “in demand” technology skill. This is the first time a security related skill has topped the list of global technology skills shortages for over a decade.
This huge surge in IT spend isn’t sustainable. With economies going into recession and organisations in many industries struggling to maintain growth and even avoid bankruptcy, 2020-21 technology budgets are coming under increased strain. Prior to COVID-19, over half (55%) of Australian IT leaders expected a budget rise in the next 12 months, but during the pandemic this number declined to 38%. This still represents a net increase in budgets.
The crisis has served to emphasise a growing divide between organisations driving their strategy through technology, and those that aren’t. One key finding was that digital leaders were more likely than non-digital leaders to make additional technology investments as a result of COVID-19. Worldwide, 50% more organisations that are “very” or “extremely effective” at using digital technologies spent an additional 21-50% – in Australia this figure is even greater. Focus areas for these investments included large-scale implementations of distributed cloud and Software-as-a-Service (SaaS).
Cloud investment generally saw a major rise. After investment in security and privacy (58%), investment in infrastructure and the cloud was the third (fifth in Australia) 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%). This has tripled in Australia from 7% in 2019 to 22% during the COVID-19 pandemic.
Perhaps unsurprisingly, technology skills shortages have only intensified on the back of all this technology investment. Prior to COVID-19, 2020 skills shortages were close to an all-time high. Since the pandemic, shortages in technology talent remain high. In addition to cyber security skills (42%), the next four most scarce technology skills are organisational change management (24%), advanced analytics (24%) enterprise architecture (22%) and IT strategy (17%).
Mental health has also become a significant concern. Nine out of ten Australian IT leaders expressed concern about the mental health of their team during COVID-19, resulting in nearly 8 in 10 IT leaders putting specific programs in place to support their staff.
Supporting mental wellbeing will be critical post-pandemic given that remote working, a factor likely to be affecting the mental health of many people, will be part of the work location dynamic in the future.. During the pandemic 85% of Australian IT leaders moved a significant part of their workforce to remote working, and 53% expect half or more of their employees to work from home at least part of the time after the pandemic. Work location and 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 may not longer be a prime consideration.
The work-from-home trend has also had an impact on collaboration and culture. As a result of remote working, 74% of Australian IT leaders report increased collaboration between the business and technology teams and over half (58%) said that it has created a culture of inclusivity in the technology team.
Ultimately, IT has proven its role as a critical enabler throughout the pandemic as organisations have rapidly transitioned to hybrid working. As the “New Reality” continues to be shaped by economic recovery patterns unique to each sector andlocation, digital transformation will become a key driver of recovery and growth. One thing remains consistent; the urgency to act swiftly and decisively. Technology has never been more important to Australian organisations’ ability to survive and thrive in the future.