Australian organisations have shown a willingness to invest in new technologies. However, this appetite is being moderated by a heightened sense of accountability and strategic alignment, given the current economic climate.
Apptio, a year after its acquisition for almost $5 billion by IBM, shared its observations with TechRepublic about where Australian companies’ priorities lie. Factors such as accountability, risk management, and labor challenges influence how enterprises are investing their limited resources.
The sophistication of the Australian market
Apptio recognizes the growing sophistication in how Australian businesses understand and manage their technology costs. They’re willing to pay for IT services, but they’re then looking to hold those involved accountable for the results.
Pete Wilson, vice president for Apptio Business and general manager, APAC at Apptio, said that among Australian companies there is “a powerful understanding that technology is not just free.”
He added, “Someone has to pay for it, and if there is the commitment to say, ‘I’m going to grow revenue by X per cent, and I need some additional investments that result in additional costs,’ then the trend we’re seeing is that there is a much more mature conversation here about not just adopting technology on a whim but doing so with a clear demonstration of value back to the business.”
Economic pressure as a catalyst
With the cost of capital and funds on the rise, businesses and particularly the CIOs are under increasing pressure to justify IT expenditures. This is being compounded by another critical issue facing Australian businesses: the shortage of skilled talent, particularly in emerging areas like AI and data science.
“You hear this often: even if we have the money, we’re not always able to find the talent,” Ajay Patel, general manager at Apptio and IBM IT Automation, said. “There’s a growing focus on how to take the skills and talent available and map them to the most strategic projects with the highest ROI.”
This scarcity of talent is not just a local issue — it’s a global one. The Australian market is acutely feeling the impact as businesses struggle to balance the cost of hiring with the need to drive strategic projects forward.
“Specific skills, such as AI expertise, are in high demand, and businesses are finding it challenging to bring together domain experts who understand the data with data scientists who can make the necessary technology shifts,” Patel said.
FinOps: A growing discipline in Australia
Apptio has seen significant growth in the Australian market in the adoption of FinOps and cloud optimization practices.
“The APAC region, and Australia in particular, has shown a strong appetite for rigorous cloud optimization and management,” Wilson said. “This trend has really picked up pace in the last 12 months.”
In the FinOps line of business, it’s not just about managing cloud costs, he added. It’s also about applying the same principles of financial accountability to other areas of IT. But talent availability continues to be a concern.
“We’re seeing a significant adoption shift for FinOps, with businesses wanting to bring these disciplines into traditional on-premise environments as well,” Wilson added. “The market for talented FinOps professionals is extremely tight right now, especially at the top end of town, where large organisations are really starting to adopt these practices.”
The role of cyber security in IT spending
Cyber security has become a top priority for Australian businesses, driven in part by the government’s active push for a stronger cybersecurity agenda.
“More funding is being directed into the cybersecurity space, and this trend is likely to continue,” Wilson noted. “When it comes to prioritization, cyber investments are still hard to beat. Boards are far more aware now of the potential consequences of a breach, including not just reputational damage but also regulatory fines and legal proceedings.”
In Australia, there is also the consequence of forcing organisations to allocate significant portions of their IT budgets to ensure compliance with new regulations. According to Wilson, “Cyber is taking a larger chunk of the budgets, and it’s going to continue that way until we get on top of these regulatory changes and trend shifts.”
Justifying IT spending in an uncertain economy
Overall, the current economic climate is characterized by uncertainty — and this is making it more challenging for CIOs and other IT leaders to justify their technology spending.
“The outlook is uncertain, and the bar for justifying a business case or making a change is pretty high,” Patel said. “CIOs are under pressure to prove that their existing IT operations are optimized before they can secure additional funding. This is a significant shift from the past when technology spending was often seen as a given.”
In addition to optimizing their current operations, CIOs are now expected to demonstrate how new investments will deliver tangible business value.
“There’s a lot more pressure on CIOs now to justify what they’re going to return to the business in terms of value for that additional investment,” Patel added. “This is particularly relevant as the economic climate continues to bite.”