A changing perspective...Augmented / virtual reality 21.00% 16.00% Quantum computing 8.00% 5.00% Managing data Data privacy, protection, and management are central considerations for

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A changing perspective Harvey Nash / KPMG CIO Survey

2019 – Canadian Results

We have captured the insights, ambitions, anxieties, and strategies shared by today’s Canadian IT leaders in the Harvey Nash / KPMG CIO Survey 2019 – Canadian Results.

Now in its 21st year, this survey includes feedback collected from 130 Canadian leaders in IT during a time of significant change and opportunity. Between changing budgets, cyber concerns, data management planning, and the push for more exceptional IT performance, our findings reveal several topics keeping technology specialists and their colleagues on their toes.

Join us as we examine what’s driving Canada’s CIOs and IT leaders, where they’re headed, and how they compare to both their global and domestic peers. Where do you land and where do you want to be?

© 2019 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

2 | A changing perspective Harvey Nash / KPMG CIO Survey 2019 – Canadian Results

Study participantsThis report is comprised of feedback from 130 Canadian IT leaders across multiple industries who took part in the 2019 Harvey Nash / KPMG CIO Survey alongside 3,500 global respondents. A breakdown of the Canadian respondents is as follows:

Member of operational board/executive management

70%

Yes30%No

Demographics

CEO

Other C Level

Other (<5%)

VP / Director / Senior Manager IT

CFO / Financial Director

44% 12% 12% 8% 7% 17%

CIO / IT Director

Total IT budget

25%

37.5%

15%

10.8%8.3%

3.2%

<$1M $1M-$9M $10M - $24M $25M - $49M $50M - $99M >$100M



Last year’s study revealed a growing emphasis on digital transformation and, by extension, a more significant role for CIOs and tech leaders at the executive table. That trend continues in our 2019 study, wherein a majority of respondents (70%) report they are an active member of the operational board or executive management team (v. 58% Global) and that, in most cases, their technology budgets have increased at a rate higher than any other time in the last 15 years. Equally promising is the fact that over two-thirds believe their budgets will continue growing over the next 12 months.

This healthy appetite for digital transformation bodes well for Canada’s competitiveness, especially since one-third of Canadian CIOs anticipate either major changes or radical transformations to their organization’s business activity over the next three years. The question then, is: Where is that money going?

75% 56% 70% 64% 68% 62%

64% 63% 62% 52% 54% 57%

Top 6 Business issues that your management is looking for IT to address

Improving cyber security

Improving business performances

Delivering consistent and stable IT performance to the business

Delivering business intelligence / analytics

Improving operational efficiencies

Enhancing the customer experience

For the most part, organizations are focusing their IT investments on initiatives and activities that will generate savings through operational enhancements, security upgrades, and technology upgrades (e.g., automation, data analytics, artificial intelligence). Even still, nearly half of IT leaders are pursuing IT upgrades that will help generate revenue, mainly through enhancing the customer experience (e.g., omni-channel experiences, apps, personalization, etc.).

Across the board, Canadian organizations are more interested in using tech to drive internal enhancements than their global peers. This follows the previous year’s trends that indicate Canadian companies are still somewhat behind its North American peers in terms of cyber maturity and adopting new technologies, but are quickly closing the gap.

Board priorities and investment



of Canadian IT leaders believe the role of CIO / IT director is becoming more strategic in their organization (20% same / 5% less).

75%

Outside IT wallsOver the years, the CIO Survey has tracked the rise of technology expenditure outside of the IT department. While the apparent erosion of power and influence was not something IT departments traditionally supported, the atmosphere is changing. This year, 50% of Canadian organizations now allow control of technology expenditures to exist outside IT, and 6% actively encourage it. Moreover, technology leaders are more open to collaborating with their business peers to adopt connected technologies. Nevertheless, this requires a willingness to move beyond traditional silos, and a supportive CEO who understands that both budget and influence are necessary requirements.

Certainly, successful enterprises realize they need a different perspective on what IT and technology leadership means to them. Structure is being replaced by fluidity, and control is being swapped for influence as business and technologists are finding new ways to collaborate and deliver business value – all at a rate that is faster, safer, and more cost effective than ever before.

19%

37%

17%

10%18%

0% 1-10% 11-25% 26-50% >50%

Proportion of IT spend managed outside of the IT organization



How effective has your organization been in using digital technologies to advance its business strategy?

Do you agree that the IT function delivers the value it promises to the business?

Extremely effective Very effective Moderately effective

Slightly effective Not effective

Strongly agree Agree Somewhat agree

Disagree Strongly disagree

1% 21% 38% 24% 7%

11% 39% 41% 6% 3%

Managing technologyImplementing technologies or digital capabilities requires more than “plug and play”. The good news, is that Canadian IT leaders are confident in both their department’s ability to deliver on the value it promises to their business and their organization’s ability to take advantage of technologies across critical functions.

Organizations are demonstrating success with technology across numerous functions. According to 2019 respondents, they are most effective (e.g., moderately or extremely) when using digital solutions to enhance and expedite project delivery, integrate business solutions, and generate key metrics and reports.



Efficiency with digital technologies Moderately — extremely effective

Not — slightly effective

Using methodologies that speed up project delivery (e.g., agile and DevOps enterprise-wide)

52.00% 48.00%

Employing automation in software development and maintenance 39.00% 61.00%

Integrating core business systems with newer digital solutions 58.00% 42.00%

Reporting business outcome-based metrics for technology projects 55.00% 45.00%

Ensuring experiments are quickly scaled up if successful, or stopped if not

50.00% 50.00%

Innovation & digitalThere is no shortage of new and emerging technologies on IT leaders’ radars. Top among today’s CIOs and tech leaders, however, are cloud-based technologies which can drive both internal enhancements and customer-facing services. Ninety-seven percent of Canadian organizations are actively considering cloud computing, piloting such systems, or in the process of implementing cloud on a small-to-large scale. This aligns with global interest in cloud computing and represents an uptick in awareness for cloud-based technologies over previous CIO surveys.

Canada’s IT leaders are also showing a healthy interest in artificial intelligence (AI)/ machine learning (ML), Internet of Things (IoT) , robotic process automation (RPA), and on-demand marketplace platforms. Alternatively, attitudes are tepid when it comes to exploring augmented reality / virtual reality (AR / VR), blockchain, and quantum computing — technologies which are seeing greater adoption elsewhere in the world.

Are you more confident in increasing your organization’s use of cloud technologies now than you were three years ago?

87%

Agree

Disagree

13%



Usage and active interest in technology Actively considering

Not — slightly effective

Cloud 18.00% 69.00%

Artificial intelligence / Machine learning 30.00% 29.00%

Internet of Things 25.00% 37.00%

Robotic process automation 28.00% 20.00%

On-demand marketplace platforms 21.00% 31.00%

Blockchain / distributed ledger 28.00% 7.00%

Augmented / virtual reality 21.00% 16.00%

Quantum computing 8.00% 5.00%

Managing dataData privacy, protection, and management are central considerations for Canadian CIOs, especially as more and more organizations seek to take advantage of their data to drive internal efficiencies, generate market insights, and learn more about their customers.

Much like their global counterparts, a vast majority of Canadian CIOs believe their organization’s ability to manage and use customer data will become just as important as the quality of their products and services when it comes to attracting and retaining customers. At the same time, Canadian CIOs are slightly less confident in their ability to safeguard that data against cyber attacks. This can be attributed in some part to the fact that Canadian organizations have had less exposure to cyber attacks than other countries; only 19% have experienced a major IT security or cyber attack in the last two years

compared to nearly double (32%) of global respondents. It can also come down to the fact that Canadian firms have traditionally lagged behind their international peers when it comes to adopting the tools and capabilities to fend modern cyber threats (both external and internal).

Confidence levels also vary in regards to how organizations are managing data. On one hand, a majority of Canadian CIOs believe their organizations are moderately, very, or extremely useful in building customer trust through the services delivered to customers and end-users (72%) and in identifying and managing vital security and privacy issues across technology departments and ops (80%). Reversely, they are less confident when it comes their organization’s ability to maximize value from the data it holds (54%) or manage an enterprise-wide data management strategy (39%).

How prepared is your organization to defend against a cyber attack? CANADA GLOBAL

Very well positioned – Confident that all risks are covered 15.00% 26.00%

Quite well-positioned – Most reasonable risks covered, exposed in some specific areas

69.00% 63.00%

Not well – Exposed in multiple areas 16.00% 11.00%



People & skillsDigital transformation may be high on the Canadian CIO’s agenda, but many cite a lack of human talent as the main reason they are falling behind on their digital ambitions. Nearly two-thirds of survey respondents said a skills shortage is impacting their ability to keep pace with change, as well as manage critical functions such as cyber security, big data / analytics, business analysis, or AI.

Talent struggles aside, a majority of Canadian CIOs believe their IT / Technology headcount will increase over the next year, while 50% believe their organization has been successful in retaining the IT tech individuals they currently employ for the full period they are needed.

These workforce challenges are reflected among all CIOs, with equal numbers of global respondents reporting difficulties finding and retaining the IT and technology professionals they need to stay current with customer demands and remain competitive.

Functions impacted by skill shortage

Top Canada Top global

Cyber security Big data/analytics

Big data/analytics Cyber security

Business analysis Artificial intelligence

of Canadian CIOs believe data security and consumer trust have significantly or moderately limited their organization’s ability to innovate (48% global)

42%

18%

9%

24%

22%

10% 11%

7%

0% 1% 5% 10% 15% 20% >20%

What percentage of your workforce could be replaced by AI in the next five years?



Outsourcing & offshoringThe need to stay current with customers and competitors is driving many organizations to seek IT support from beyond their offices. Nearly half of Canadian organizations (45%) currently outsource or offshore IT functions, with 56% of those who do planning to increase their spend. Nevertheless, outsourcing activity is more substantial among global organizations, 65% of which are currently engaging outside help.

of Canadian CEOs (86% global) believe their organization has been moderately (55%) or very (35%) successful in promoting inclusion and diversity within their teams.

90%Top reasons for outsourcing CANADA GLOBAL

Provides access to skills not available

in-house

Adds scale to the IT organization

65%

37%

74%

35% Frees resources to focus on core

businesses34% 33% Saves money

36% 22% Improves flexibility and use of

resources30% 15% Enhances the ability to innovate

10% 6%



The rising tideThe momentum is building for Canada’s IT professionals. With a stronger voice at the table, and an upswell of technological investments and initiatives on their radar, this year’s study finds tech specialists taking the lead on technological initiatives to enhance internal efficiencies, expand customer channels, and extract greater value from the data in their possession.

Digital transformation is a boardroom priority, but it’s easier said than done. Canadian IT leaders, in particular, are still moderately confident in their organization’s ability to unlock the full benefits of their digital investments, and many are anxious over their ability to defend against intensifying cyber threats. The fact that our global peers demonstrate a higher level of confidence speaks more to the reality that Canada has not faced the same threats or impetus for change. Nevertheless, we are quickly closing the gaps.

Faced with talent shortages, evolving market expectations, and mounting data management obligations, IT leaders have their work cut out for them. With cross-functional support and engagement from all levels, however, Canada’s leaders are up for the challenge.



Contact usLydia Lee Partner and National LeaderCIO Advisory Services and Digital Health KPMG in Canada [email protected]

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


The KPMG name and logo are registered trademarks or trademarks of KPMG International.

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A changing perspective...Augmented / virtual reality 21.00% 16.00% Quantum computing 8.00% 5.00% Managing data Data privacy, protection, and management are central considerations for