As companies look for budget cuts, IT is in the spotlight because every dollar spent or cut can have a big impact on the bottom line.
According to CIO Dive, two-thirds of executives surveyed plan to cut costs over the next year, according to Deloitte’s “Save-to-Thrive” report. Two-thirds of companies have cost reduction targets that exceed 10%.
“The budget traps that exist now are the same ones that have always been there,” Chris Murphy, CEO of ThoughtWorks’ North American business, told CIO Dive. With a recession, “the consequences of the mistakes now are exposed more than ever.”
Here are four tips for CIOs:
- Avoid Building Tech Debt. Failing to modernize technology can pull down an organization just when it needs to be competing for customers during an economic downturn. Companies accumulate “tech debt” when they keep spending more money to keep legacy operating systems running. Making tech investments now, even when budgets are tight, allows an organization to be more flexible and meet shifting customer demand.
- Know Your IT Cost Structure. This is especially true for companies that make quick transitions to the cloud during the pandemic. Without knowing how the cloud is being used, organizations could pay for things they are not actually using.
- Work Closely with CFOs on Spending. If CIOs are not working hand in hand with CFOs, the CFOs can make decisions that don’t match the reality of how IT works, and that can be detrimental to the company’s future. Murphy told CIO Dive that CFOs using benchmarks are “not necessarily thinking about IT spend in alignment with what value will be generated from a business standpoint.”
- Prioritize Customers. Cutting back on services for customers can make them leave for organizations that are putting more focus on clients right now. Companies that make sure customers can reach them effortlessly, instead of putting them into complicated phone trees or making them wait for hours for help, are more likely to keep those customers.