IT budgets, like every other aspect of doing business, changed in 2020-2021. While budgets are largely staying stable, the way organizations spend them is shifting. Organizations, and their CIOs and CTOs, are grappling with the need to update and transform, while showing the value of those investments.
Many organizations coming out of the COVID-19 pandemic and its impacts are watching their finances closely. Profits are down and margins are tight for many organizations. Every dollar spent on IT must be worth it, which means leaders need to achieve buy-in by highlighting exactly why these purchases are critical.
How the Pandemic Impacts IT Budgeting
The Spiceworks State of IT report for 2021 shows that COVID-19 hugely impacted business transformation. More than three-quarters of organizations plan on long-term IT changes, something that drove tech spending in 2020. That impact continues into 2021, with more than a third of this year’s budget increases influenced by the pandemic.
Even though organizations are transforming, IT budgets overall are expected to decline in 2021, year over year. Still, 80 percent of the organizations Spiceworks surveyed expect their IT budgets to grow or stay steady in the next year.
Organizations expect to reduce spending on hardware, while increasing cloud and managed services spending. And, IT buyers are largely avoiding spending on emerging tech, focusing on pressing needs instead of cutting edge features.
Organizations are dealing with pressures resulting from the pandemic and evergreen challenges every organization faces. It’s important to get buy-in any time a budget change is expected, especially in IT, where not everyone understands where the spending goes.
How CIOs and CTOs can Realize Value in IT
For tech experts, the positive impacts and value in IT investment is easy to see. However, not everybody has the digital expertise to understand why these things are worth space in the budget. It’s the CIO or CTO’s job to translate how money spent benefits the business.
Of course, for many CIOs and CTOs, this requires some effort to get the C-suite on board. Innovative projects are thrilling for tech-minded people, but getting executive enthusiasm may take a little more work. There are a few ways CIOs and CTOs can showcase this value.
The first is to ensure you have credibility to start with. Especially coming out of what has been a stressful year for many people, tech leaders need to make sure existing operations are running smoothly and efficiently. If they aren’t, and tech investments are needed to get things in order, that can be a compelling argument.
Every tech investment should come with a roadmap and a business case. This shows the actual monetary benefit of a tech project. Or, in the case of a qualitative effort, it will show an idea of the expected benefits. This is also an opportunity to be clear about the risks of an investment, allowing for a full discussion of cost, benefit, and risk.
When you make this business case, you need to think like someone who is not a tech expert, even though you are. Indicating that a product or technology will generally improve security is compelling to you, but your colleagues might not fully grasp the real-world impacts. Stakeholders are far more likely to understand that a data breach is a problem, which could be solved by increased investment in security.
Finally, as a CIO or CTO you should back up these business cases with demonstrable success. Listen to feedback from staff and stakeholders. Consider smaller-scale pilot projects if need be. And celebrate success. When you start from a strong foundation, make a strong business case, then prove your success, buy-in will be easier to achieve next time.
Let Business Lead IT
As Khalid Kark writes for Deloitte, the business mandate is a good driver of technology investment and budget allocation strategies. This means aligning IT capabilities and priorities with business priorities that are both strategic and operational. CIOs look at business strategy to decide how they will invest in technology to deliver value.
Because the business strategy is at the core of IT decisions, Kark writes, buy-in is encouraged, and accountability is spread through the organization. IT investments are measured not just by their IT performance, but by the value they impart on the organization and its outcomes.
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