PwC’s David Lee: ‘Impact of Brexit on IT budgets will vary by organisation’

21 Sep 2018

David Lee, PwC Ireland technology partner. Image: Maxwell Photography

Expecting the unexpected is the new norm for CIOs as the impact of Brexit on IT budgets will vary by organisation, says PwC technology partner David Lee.

David Lee is a partner in PwC Ireland’s advisory consulting business, where he is leading the delivery of technology consulting services.

Lee has more than 25 years of experience in the delivery of technology-related services to clients in both the private and public sector in Ireland and internationally. His experience covers the full technology life cycle, from IT and business strategy through to business case development, technology selection, and the subsequent implementation and ongoing operation of business systems.

‘Brexit may see a movement of activity from UK locations to Ireland, which will put increased demands on existing IT infrastructure’

PwC’s recent Digital IQ study of technology in Irish companies found that nearly half (48pc) of Irish executives reported that their strategic digital initiatives failed to deliver to their planned scope, similar to global levels (45pc). Furthermore, Ireland scores poorly (44pc) when it comes to measuring outcomes from digital investments and has deteriorated from 60pc in 2015.

According to the PwC survey, less than two-thirds (64pc) of Irish organisations have the digital skills required for an evolving digital economy, similar to global peers (65pc). At the same time, 46pc of Irish respondents admitted that the lack of properly skilled teams is a barrier when it comes to achieving expected results from digital technology initiatives.

How would you sum up the uncertainties facing CIOs, and how do these uncertainties play on budgets and strategy?

Uncertainty is increasingly becoming the norm for CIOs. The level of change within the field of technology is at an unprecedented high, with the cycle times for new technologies constantly decreasing and the emerging technology of last year being replaced with a newer improved version this year.

This level of change is happening at a time when CIOs are finding it increasingly difficult to attract and retain the IT skills needed to help organisations successfully navigate this uncertainty. Our Digital IQ survey shows that the success rates in the delivery of digital engagements are also disappointing, with about half of all digital projects failing to deliver the expected business outcomes.

However, it is not all doom and gloom for CIOs. After many years trying to get technology on the agenda of business leaders, our research (PwC Global CEO Survey) shows that technology is now very much on the CEO agenda, with CEOs identifying technology as the single biggest factor shaping the future of their businesses. Therefore, it is very much at the forefront of strategy development.

Will Brexit affect IT budgets?

The impact on IT budgets of Brexit is likely to vary by organisation. The best way for CIOs to assess the impact on IT budgets of Brexit is to conduct an operational risk assessment on their existing IT supply chain to highlight areas of possible disruption, which will require remediation and funding.

For example, where services are currently being procured from UK-based organisations, then issues may arise post-Brexit in relation to the ability of data to continue to be transferred to UK locations for SaaS providers and hosting partners. For other organisations, Brexit may see a movement of activity from UK locations to Ireland, which will put increased demands on existing IT infrastructure.

So, making budgetary provisions for such IT-related relocation costs will be important. Clearly, any such relocations will also require IT skills to support both the relocation and ongoing business as usual activities, so IT budgets will need to provide for the salary and recruitment costs associated with these additional resources.

How do CIOs turn these challenges and uncertainties into opportunities?

PwC research highlights two distinct areas where increased focus will help CIOs address some of the key challenges and uncertainties that they are facing.

The first is really about not forgetting some of the basics that have served organisations well over the years in the delivery of technology projects – namely, having formal business cases govern investments with associated tracking of outcomes. In PwC, we talk about adopting a ‘disciplined agile’ approach, which looks to marry the agility enabled by newer technologies with the discipline traditionally associated with investment.

The second is to focus your efforts on the areas that will make a real difference to the overall performance of your business. The PwC Digital IQ Survey highlighted that those organisations that had a better financial performance (measured in terms of their profitability) were those that focused on using technologies that looked to improve the human interaction with the system – whether that human was a customer, a supplier or a member of their own staff.

So, the key consideration for the CIO is less about what the right technology to adopt is and more about which part of the value chain to focus on.

Is automation seen as an uncertainty or an opportunity?

I think it is fair to say that there is a ‘fear factor’ associated with the potential of automation. Much of the media commentary – particularly in the mainstream press – has focused almost exclusively on the number of jobs that may be impacted by the application of robotics.

While robotics undoubtedly has the ability to drive cost efficiencies in organisations, this is to ignore the equally import role that automation has in stimulating demand-side activities. Focusing the capabilities of robotics on customer-facing activities to drive a better customer experience in terms of time to serve and consistency of service, as well as through the increased personalisation of services, will enable organisations to positively address the revenue side of the equation.

What are your thoughts on digital transformation, and how are you addressing it?

A big message coming from both our own global research and our on-the-ground experience in the local marketplace is that the success of digital projects is less to do with the technology than it is to do with driving the user adoption needed to take advantage of the technology.

While change management has always been an important element of successful technology delivery, this is even more pronounced with many digital technologies, where the changes enabled are resulting in fundamental changes to long-established business models and processes.

A practical step that we have seen organisations take to address this is to explicitly plan for an adoption phase in the project post-delivery. This helps to get the focus away from the go-live of the technology and on to the user adoption required to enable realisation of the benefits.

In terms of security, what are your thoughts on how we can better protect data in these uncertain times?

While it is undoubtedly critical to continue to invest in and keep current your security infrastructure, it is equally important to invest resources to build awareness and education among user populations in relation to the security risks we face on a daily basis. GDPR and the associated media coverage has undoubtedly helped to build a more general awareness of the importance of data governance, but we need to go further.

We have worked with a number of organisations recently who have treated this not as a technology challenge but as a real change management project, focused on identifying and changing the behaviours contributing to the organisational risk in relation to the use and storage of data.

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John Kennedy is a journalist who served as editor of Silicon Republic for 17 years