CIO Survey 2016Energy Sector Findings

The Harvey Nash / KPMG CIO Survey is the largest IT leadership study in the world. Almost 3,400 respondents across 82 countries representing over US$200bn of IT budget spend.

This Energy industry sector snapshot provides survey responses from over 70 Energy companies on some of the key topics and highlights several areas where this sector’s responses were significantly different from those from across all industries.

KEY TOPICS

CLOUD

Looking forward, over the next 12 months, do you expect your IT budget to?

Reflecting the industry’s difficult economic environment, energy companies are much more pessimistic about their IT budgets than other industries. Just 26% of energy respondents expect an increase in their IT budget next year vs. 45% for all industries.

Increase

DecreaseStay the same

What are the key business issues that your management Board are looking for IT to address (top 5)?

Energy companies’ Board priorities for IT reflect a stronger cost focus than other industries. Their top priorities for IT are increasing operational efficiencies (61% vs. 57% for all industries) and saving costs (59% vs. 50%).

What steps are you taking to become more agile and responsive?

To become more agile and responsive, energy companies are more likely to buy rather than build (48% vs.37% for all industries), and less likely to utilize DevOps(19% vs. 28%) and external resources (14% vs. 24%)

How would you characterize your current investment in the following cloud services and how do you expect that to change over time? (Significant investment)

While energy companies plan to spend close to the all industries average on IaaS and SaaS cloud services in the next 1-3 years, they plan to invest less heavily in PaaS (30% vs. 37%).

What are your top three reasons for using cloud technology?

Energy companies are more likely to invest in cloud services to improve agility and responsiveness (48% vs. 40% for all industries), to save money (48% vs 33%) and to support global shared services (28% vs. 13%)

What are your top three biggest challenges when adopting cloud?

Energy companies are much more likely to face cloud adoption challenges over governance over cloud solutions (48% vs. 36% for all industries), picking the right Cloud Services Provider (33% vs. 19%), and choosing the right model (30% vs. 14%)

44%

30%

26%61%

59%

52%

46%

45%

Increasing operationalefficiencies

Saving costs

Delivering consistent andstable IT performance

Cyber security

Improving businessprocesses

56%

48%

32%

24%

19%

14%

5%

Implementing agilemethodologies

Buying rather than building

Strategic partnerships

Multi-mode IT

DevOps

More external resources

Other

48%

30%

36%

18%

7%

20%

SaaS

PaaS

IaaS

Current Year Next 1-3 years

48%

48%

43%

28%

28%

Improve agility andresponsiveness

Save money

Improve availability andresiliency

Accelerate productdevelopment/innovation

Support global sharedservices

50%

48%

43%

33%

30%

Integration with existingarchitecture

Governance over cloudsolutions

Data loss and privacy risks(including cross-border

issues)

Picking the right CloudService Provider (CSP)

Choosing the right model(e.g. IaaS vs PaaS vs SaaS)

All data is sourced from the Harvey Nash / KPMG CIO Survey 2016.

*All-industries average All-industries average

22%*

33%* 45%*

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In your opinion, is the role of CIO / IT Director becoming more or less strategic within your organization?

Energy companies’ difficult economic environment has also impacted the nature of the role of their heads of IT. Only 49% of Energy companies report their head of IT’s role is becoming more strategic, compared to 67% for all industries. .

DIGITAL DISRUPTIONDoes your organization have a clear digital business vision and strategy?

Energy companies are less likely to have a digital business strategy, within business units or enterprise-wide, than the all industries average (51% vs.58% for all industries).

If you are currently experiencing digital disruption, what is the primary source of disruption?

Energy companies are much less likely to face digital disruption from new forms of customer engagement (10% vs. 23% for all industries) and more likely from new operating models (20% vs. 14%).

What is the primary method you use for coping with digital disruption?

Energy companies are more likely to contract outside resources to cope with digital disruption (28% vs. 21% for all industries), and less likely to hire people (15% vs. 26%).

Yes, enterprise-wide

Yes, withinbusiness

units

No, but we are currentlyworking on one

No

SIGNIFICANT DIFFERENCES

What type of IT project is most appealing to your CEO?

Energy company CEOs are much more focused on IT projects that save money rather than make money. 62% of respondents report that IT projects that save money appeal most to their CEOs, compared to 37% for all industries.

62%

37%

38%

63%

Energy

All industries

One that SAVES money One that MAKES money

17%

9%

34%

24%

49%

67%

Energy

All industries

Less Same More

23%26%

25%26%

26%

20%

20%

18%

10%

7%

New innovativeproducts/services

New operating models

Don't know

New business models

New forms of customerengagement

Other

28%

27%

23%

15%

7%

0%

We contract

We partner

We develop our people

We hire people

We acquire

Other

CONCLUSIONS

Volatile industry market dynamics are contributing to Energy CIOs being more pessimistic on their IT budgets compared to other industries. It is therefore not surprising that a strong cost focus, and increasing operational efficiencies are clear priorities for the sector. Similarly, pursuing IT projects that save money in contrast to making money is a key difference for the Energy sector compared to the all-industries average.

Cloud technologies are being pursued to both improve agility and save money, but planned investment is lower than for other sectors.

Energy industry operating models are seriously threatened by digital disruption, with new products and services, and new operating models being the main sources of disruption.

FURTHER INFORMATIONTed SurettePartnerIndustry Leader, Energy & Natural ResourcesKPMG in Australia T: +61 413 766 442E: tsurette@kpmg.com.au

www.kpmginfo.com/cioagenda

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13%*29%*

24%* 34%*

*All-industries average All-industries average

http://www.kpmginfo.com/cioagenda

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