Indian companies to spend more on disruptive technology :EY

Nitin Mehta

Indian enterprises are experiencing considerable technology transformation across infrastructure, applications and end-user computing. The next-generation digital trends - Social, Mobility, Analytics and Cloud (SMAC) – are transforming the way businesses are run.

CIOs are increasingly being challenged to provide business value, in the face of an ever evolving technology landscape. No discussion with CIOs is complete without evaluating the impact of SMAC technologies on the business.The EY-CIO KLUB partnership has been tracking the Information Technology (IT) and Enterprise IT investment trends for seven years. The latest survey report of 2015 traces the evolution and adoption of SMAC technologies and provides a futuristic perspective of the ever-increasing role of IT in the organization.

Enterprise IT spending on the rise with a growing focus on new technologiesThe Enterprise IT trends and investments 2015 survey finds that 64% of Indian CIOs plan to increase their IT spending over 2014 and three in 10 CIOs expecting spending to increase by over 10%. More importantly, 25% of the IT budget is planned to be allocated for SMAC technologies.

An interesting observation is that the CIO’s IT agenda is mainly driven by internal factors, such as maturity and organization size, whereas macroeconomic fluctuations and political uncertainties seem to have very little bearing on the IT agenda.

Social media – emerging as a transformative force for enterprisesSocial media is becoming an integral part of enterprises’ marketing and communication strategies. The spontaneity and pervasive influence of social media is transforming the relationship between companies and their customers, employees, suppliers and regulators.

More than 50% of the CIOs surveyed in the Enterprise IT trends and investments 2015 study acknowledged that social media has been effective in engaging with customers and another third of the CIOs expect to accrue benefits from social media in the future.

As social media becomes pervasive in enterprises, CIOs will have to be mindful of a few accompanying risks such as employee misuse, reputational and brand risks, intellectual property and cyber-security threats.

Mobility – creating a demand for 'anytime/anywhere' data accessEnterprise mobility indicates a paradigm shift in the work habits of employees, where employees bring their own mobile device (BYOD), with corporate data available to them at any time and at any place. One in two CIOs surveyed in the study have reported that they consider mobile as a platform to enhance portability and assist frontline workers.

Enterprise mobility also exposes organizations to certain risks such as exposure of corporate networks to unauthorised mobile apps, uncontrolled data sharing through file-sharing tools.

Analytics - helping enterprises glean better customer insightsThe increasing usage of social media, proliferation of internet and smartphones is contributing to the exponential growth of digital data. The key asset in this age is data and the ability to capture billions of these raw data points and transforming it into actionable intelligence is making analytics relevant for organizations today. This is validated by the fact that 38% of the respondents to the Enterprise IT trends and investments survey have categorized analytics as “very important.”

Analytics has been around for quite some time and most organizations had tools and applications to carry out standard analytical functions. This has matured into use of analytics for predictive modelling. Going forward prescriptive analytics will a game-changer as it will allow enterprises to understand customer requirements even before they have made a decision.

Cloud computing – a radical shift in technology deliveryDue to the lack of upfront spending, cloud computing reduces the cost of running enterprise applications. 57% of the respondents agreed that cloud-based technologies have given them significant benefits such as lower overall cost, greater agility, reduced complexity and better security.

The adoption of cloud will also shift the cost allocation in the technology lifecycle compared to the traditional delivery. The post-cloud migration environment will be more agile/ iterative and will allow for reduced project management with more focus on service management. The resultant shift in costs would be more proportion spent in designing (40%) and building (40%) the cloud delivery model rather than running it (5%).

Internet of Things (IoT) – enterprises to follow a cautious approachGlobally, the number of connected devices is poised to surpass 25 billion by 2020. The growth will be driven by growth in the number of tablets/smartphones and increasing wireless connectivity.

According to the survey, 39% of Indian enterprises have plans to adopt IoT in the coming years. Further, companies with revenues between INR 10 billion and INR 50 billion are expected to lead IoT adoption in India.

However, adaptation of IoT by Indian organizations in the coming years is still in the balance. Security and privacy concerns seem to weigh heavily on enterprises as evident by 30% of the companies who have highlighted that as a concern area. Another 30% of the enterprises seem to be undecided on adoption of IoT.

Cybersecurity, however, poses a major threat to most organizationsAfter land, sea, air and space, warfare has entered the fifth domain, cyberspace. The mouse and keyboard are the new weapons of conflict. The question is not if your company will be breached, or even when, it has already happened.

Cyberattacks have become more sophisticated and harder to defeat over time. It is becoming difficult to predict the nature of threats that will emerge in the next 5 or 10 years. As a result, more than 70% of respondents to the survey believe that a mix of preventive and detective solutions is required to tackle cyber-threats.

Dynamics of technology consumption will change in the near futureThe convergence of SMAC technologies will impact the manner in which technology is consumed. This will lead to a shift in the way CIOs manage internal users and third-party vendors.

One must bear in mind that these SMAC technologies by themselves will provide little value to businesses. Cloud will become a delivery vehicle for other emerging technologies such as mobility, analytics and M2M. Close to 70% of respondents who consider analytics “very important” for their organizations plan to invest more in cloud-based technologies. Similarly, among all the respondents who considered data analytics to be important for the organization, 56% agree that social media will be a major contributor to the success of its implementation.

Companies will be able to derive the optimal benefits from these technologies by using a mix of these technologies. Shifting the focus from individual technologies to integrated solutions can deliver new digital experiences to the customer. The customer experiences that meet customer needs and feel personally relevant will ensure success of the business.

Author is the director of technology practice at EY