How companies can better manage technology spending
“Tech is breaking out of tech,” as I was once told, and this has never been truer than in 2024. Every company is now a technology company, whether it’s in automotive, manufacturing, retail, financial services, or other industries. While new solutions are enabling incredible modernization across industries, we’re currently in a position where the amount of technology and data that organizations need to manage is growing exponentially.
This means we need to be more tactful in how we navigate this challenging landscape, especially as many companies look to implement even more technology to further optimize processes. The strategic importance and scope of technology leaders has changed dramatically in recent years, and it is essential that we all reevaluate how we assess and manage technology spend.
Technological advances create ripple effects
Artificial intelligence (AI) and cloud computing represent areas of technology that continue to evolve. With AI, we have seen waves of innovation, most recently with generative AI, which has led to a flood of investment. Similarly, the adoption of cloud computing has continued to accelerate, and both modern technologies are energy and resource intensive, requiring significant investment to support associated projects.
But the complexity isn’t limited to software and hardware innovation. The expansion of diverse technology footprints increases cybersecurity risk and invites further regulatory compliance and governance considerations. There’s also the issue of the shift from CapEx to OpEx and variable spending models along with decentralized provisioning, making spending less predictable.
Cost management is more important than ever
When you consider all of the above, it’s easy to see how costs can quickly spiral out of control. How do you effectively manage such a vast and diverse technology footprint? More than half (55%) of business leaders say they lack key information about their technology spending decisions. Similarly, despite the promise of the cloud—including scale, security, agility, and faster innovation cycles—the vast majority (75%) of enterprises are unable to demonstrate a solid ROI from cloud transformation.
Cost management is becoming an absolute necessity, and costs can pile up in many places. To name a few, technology leaders must keep tabs on redundant applications, overprovisioned IT infrastructure, underutilized software licenses, the technical debt of outdated systems, and inefficient vendor contracts. The variable spending model of the cloud also introduces a host of new challenges, including the risks of overprovisioning, leaving resources unused or underutilized, and, more generally, navigating the maze of pricing and discounting models offered by public cloud providers.
While Gartner predicts an 8% increase in IT spending through 2024, increased technology budgets come with very serious strings attached—and a company’s leadership wants to see performance, and not just technical performance of the solution, but positive business outcomes. Tying investments to outcomes when operational and financial data is spread across a multitude of systems and business units can feel like a monumental task. It becomes even more challenging when you’re trying to tie technology spending to key business objectives like operational efficiency, agility, resilience, risk reduction, or revenue. As difficult as it may be, these are the expectations that technology leaders must navigate.
Harnessing the growth of technology investments requires a modern approach
In the past, as businesses grew and inevitably became more complex, you could solve complexity through people – by hiring more people as a solution to the challenge. However, technology is accelerating too fast and you can’t solve an exponential problem with a linear solution. The key is no longer useful. Modern technology management requires the right tooling and automation, a single source of truth to monitor and optimize investments. There is no other way to keep pace in this dynamic environment.
But there are new tools that can help. For example, solutions that enable companies to efficiently collect operational and financial data from across the enterprise and, more importantly, translate that data into terms that stakeholders across the enterprise can understand: results.
We have seen the impact of such technology through our work with companies such as Unilever. Since adopting more holistic solutions, it has been able to align IT capabilities with business strategy through cost transparency. To the extent that the IT team has established full end-to-end ownership of services with clear visibility into costs.
With technology investments aligned with business objectives, technology management can shift from a focus on the basic costs of running the business to innovation for growing the business. This evolution is where we see companies taking the reins of their technology spending and using it to successfully navigate the future.
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