Analysts Advise Public Sector CIOs to Benchmark Against Top Performers in Other Service Industries
Top-performing organizations in the private and public sectors, on average, spend a greater proportion of their IT budgets on digital initiatives (33 percent) than government organizations (21 percent), according to a global survey of CIOs by Gartner, Inc. Looking forward to 2018, top-performing organizations anticipate spending 43 percent of their IT budgets on digitalization, compared with 28 percent for government CIOs.
Gartner’s 2017 CIO Agenda survey includes the views of 2,598 CIOs from 93 countries, representing US$9.4 trillion in revenue or public sector budgets and $292 billion in IT spending, including 377 government CIOs in 38 countries. Government respondents are segmented into national or federal, state or province (regional) and local jurisdictions, to identify trends specific to each tier. For the purposes of the survey, respondents were also categorized as top, typical and trailing performers in digitalization.
Rick Howard, research vice president at Gartner, said that 2016 proved to be a watershed year in which frustration with the status quo of government was widely expressed by citizens at the voting booth and in the streets, accompanied by low levels of confidence and trust about the performance of public institutions.
“This has to be addressed head on,” said Howard. “Government CIOs in 2017 have an urgent obligation to look beyond their own organizations and benchmark themselves against top-performing peers within the public sector and from other service industries. They must commit to pursuing actions that result in immediate and measurable improvements that citizens recognize and appreciate.”
Government CIOs as a group anticipate a 1.4 percent average increase in their IT budgets, compared with an average 2.2 percent increase across all industries. Local government CIOs fare better, averaging 3.5 percent growth, which is still more than 1 percent less on average than IT budget growth among top-performing organizations overall (4.6 percent).
The data is directionally consistent with Gartner’s benchmark analytics, which indicate that average IT spending for state and local governments in 2016 represented 4 percent of operating expenses, up from 3.6 percent in 2015. For national and international government organizations, average IT spending as a percentage of operating expenses in 2016 was 9.4 percent, up from 8.6 percent in 2015.
“Whatever the financial outlook may be, government CIOs who aspire to join the group of top performers must justify growth in the IT budget by clearly connecting all investments to lowering the business costs of government and improving the performance of government programs,” Mr. Howard said.
Looking beyond 2017, Gartner asked respondents to identify technologies with the most potential to change their organizations over the next five years. Advanced analytics takes the top spot across all levels of government (79 percent). Digital security remains a critical investment for all levels of government (57 percent), particularly in defense and intelligence (74 percent).
The Internet of Things will clearly drive transformative change for local governments (68 percent), whereas interest in business algorithms is highest among national governments (41 percent). All levels of government presently see less opportunity in machine learning or blockchain than top performers do. Local governments are slightly more bullish than the rest of government and top performers when it comes to autonomous vehicles (9 percent) and smart robots (6 percent).
The top three barriers that government CIOs report they must overcome to achieve their objectives are skills or resources (26 percent), funding or budgets (19 percent), and culture or structure of the organization (12 percent).
Drilling down into the areas in which workforce skills are lacking, the government sector is vulnerable in the domain of data analytics (30 percent), which includes information, analytics, data science and business intelligence. Security and risk is ranked second for government overall (23 percent).
“Bridge the skills gap by extending your networks of experts outside the agency,” Howard said. “Compared with CIOs in other industries, government CIOs tend not to partner with startups and midsize companies, missing out on new ideas, skills and technologies.”
The concept of a digital ecosystem is not new to government CIOs. Government organizations participate in digital ecosystems at rates higher than other industries, but they do so as a matter of necessity and without planned design, according to Gartner. Overall, 58 percent of government CIOs report that they participate in digital ecosystems, compared with 49 percent across all industries.
As digitalization gains momentum across all industries, the need for government to join digital ecosystems — interdependent, scalable networks of enterprises, people and things — also increases. “The digital ecosystem becomes the means by which government can truly become more effective and efficient in the delivery of public services,” Howard said.
