Regardless of their products and services, all organisations can be considered technology or technology-enabled businesses in this era of digitisation. From using new software or hardware to support with security strategies, managing financial decisions or maintaining a competitive edge, it’s clear that the number of technologies an organisation now has to manage is continuing to grow.
As a result, we must all be more intentional in how we navigate this challenging landscape, especially as the appetite to be more efficient and productive shows no signs of decreasing. To master the art of managing tech spend, it’s essential that technology leaders take the time to re-evaluate and adopt a fresh approach to cost management.
The pace of innovation
While technologies like cloud computing and artificial intelligence (AI) might have seen initial wariness for business-wide adoption, we have seen this rapidly shift as companies are embracing new technology at pace. In 2024, the integration of AI has exploded, enabling organisations to push the boundaries of innovation. Similarly, the adoption of cloud computing has continued to accelerate, and both of these technologies can be energy and resource-intensive, requiring significant budget to help support projects.
In addition to the complexity that stand alone projects bring, we can’t forget that the exploration of technologies also increases cybersecurity risks and invites further regulatory compliance and oversight. These are all factors that require further thought, attention and money. There is also the matter of shifting from CapEx to OpEx and variable spend models along with decentralised provisioning, making spend less predictable. In the race to out-innovate their competition, organisations may find themselves over-spending or losing visibility of their spend.
How to balance costs without scrimping on innovation
Considering the need to balance factors like growth and speed, it’s easy to see how costs can quickly spiral out of control. In response, organisations need to take steps to understand how their tech investments are supporting the business. According to Apptio research, over half (55%) of business leaders say they lack essential information relating to their organisation’s tech spend choices. Equally, despite the promise of cloud, including scale, security, flexibility and faster innovation cycles, the vast majority (75%) of enterprises still don’t have a solid ROI from cloud transformation – and this must change.
However, while managing costs is an absolute imperative, it can be difficult to get full transparency in a world where decentralised teams can purchase or configure tech before a central team is aware. To name just a few, technology leaders cannot ignore the problems associated with redundant software, overprovisioned infrastructure, underutilised software licenses, legacy systems left unattended or inefficient vendor contracts. Addressing these areas goes hand in hand with facing some of the newer challenges cloud brings into the equation. For example, risks of overprovisioning, leaving resources idle or underutilised and, more generally, navigating the labyrinth of pricing and discount models across public cloud providers.
Gartner predicts an 8% increase in IT spending in 2024, and while this will allow businesses to try new approaches and accelerate the development of existing projects, it puts additional pressure on IT teams to justify existing spend. This includes being able to tie costs to core business values, including increased resilience, higher levels of productivity or more diverse revenue streams. This can seem like an impossible task when operational and financial data is spread across a multitude of systems and business units, but this is the current landscape we must conquer.
How to bring your tech investment strategy into 2024
The current pace of technology means that this complexity cannot be met by just recruiting more employees. It’s moving too fast, meaning you can’t fix the problem with one solution, so it requires a multi-pronged approach to get to the root of it and businesses must be agile. Modern technology management requires proper tooling and automation to build a single source of truth for monitoring and optimising investments. Without these tools, organisations will not be able to remain competitive in these demanding climates.
Fortunately, there are solutions that allow companies to efficiently collect operational and financial data from across an entire network and translate this information into terms that stakeholders understand – true business outcomes.
At Apptio we have worked with many organisations to help them through this journey, for example, Unilever. Since adopting more holistic solutions it has been able to align IT capabilities to enterprise strategy via cost transparency. Its IT team has established complete end-to-end ownership of services with clear visibility into costs to enable conversations about business value.
By bringing technology spend in line with business objectives, companies can evolve their approach from a simple “run-the-business cost” to “grow-the-business innovation”. This evolution is where we see companies take the reins of their technology spend and use it to successfully accelerate into the future.
