Chinese CIOs must adjust technology agenda to adapt to new business priorities

The 2023 Gartner CIO and technology executive survey shows that China's CIOs believe that digital transformation is still the top priority for enterprises. In conversations with Chinese CIOs, Gartner found that digital transformation is often seen as a move to increase revenue and market share.

Many CIOs in China do not realize that the company's business focus has shifted from revenue growth to profit growth. CIOs should gain a deep understanding of current priorities, identify areas where IT can have a decisive impact, and shift technology investment priorities without compromising future capabilities.

China's CIOs can adjust their technology agenda through the following three steps.

Pay attention to three signals

To understand business priorities, CIOs must consider the perspectives of many business leaders and the business environment. CIOs should pay particular attention to three signals (see Figure 1).

Figure 1: CIOs can use clear executive signals or ideal partners to set priorities

In the current economic environment, if corporate organizations want to achieve these points, most Chinese CIOs may need to suspend digital projects oriented toward revenue growth. When such a change in priorities is detected, the CIO should check with the executive team, including the CEO, to ensure that the entire team is on the same page. CIOs should then prioritize projects that will help the business achieve return on investment in the short term.

Clarify the business focus of the company

Based on these three signals, CIOs can deduce the most important business priorities where IT can have a decisive impact.

In China, however, these priorities may have changed recently. Since digital transformation has been a business focus in recent years, and the COVID-19 pandemic is no exception, CIOs may not have anticipated this change. Through digital transformation, companies hope to drive revenue growth, add channels, launch new products, enter new markets and expand geographic territory. But in the past two years, the goal of Chinese companies has shifted from revenue growth to profit growth. Therefore, 63% of CIOs believe that promoting operational excellence has become the primary goal of digital investment, while 31% of CIOs believe that improving cost effectiveness is also important.

China's CIOs should seize the opportunity to use digital projects to improve operations and reduce business costs. CIOs should not limit their focus to improving IT department productivity, but should continue to focus on its impact on the business and the enterprise as a whole. For example, if a business needs to cut costs, the best approach may be to invest in digital solutions that facilitate automated processes rather than cutting back on IT spending, which accounts for only a small portion of a business's costs.

Aligning the technology agenda

In 2023, China's IT budget is expected to grow by an average of only 0.7%, while gross domestic product (GDP) growth is expected to be approximately 5% (see Figure 2). If you take inflation into account (about 2.1%) and real GDP growth is about 3% (GDP minus inflation), the IT budget will actually fall. CEOs of many companies have asked CIOs to cut IT spending in 2023. CIOs should ensure that their limited capital investments are aligned with business priorities, particularly ensuring that investments in digitalization and IT drive projects aimed at profitable growth.

Figure 2: Chinese enterprise IT budget growth rate