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The pressure is on to navigate economic uncertainty. Gartner’s downward revision of projected worldwide IT spending in 2023 from 5.1% to 2.4% growth underscores how inflation, interest rate fluctuations, and consumer spending are reshaping forecasts, investment portfolios, and the CIO agenda. Regardless of your company’s investment posture during this period of instability, interactions with the CFO have likely increased and become more consequential in the last few months. 

To effectively traverse these interactions, CIOs must start with empathy. Walk in the shoes of the CFO. Acknowledge that they are fighting a battle on multiple fronts, from investors, creditors, board members, regulators, and peers, to name a few. Recognize that if your company’s top line is shrinking, the business is planning to recalibrate, and the CFO needs your help.  

In this moment of need, will the CFO view you as a business-savvy CIO with the chops to take on an expanded role in the C-Suite, or a barrier to visibility into a high-spend function? The answer hinges on your ability to keep tabs on three related topics that will likely surface in conversations with the CFO.  

Keep tabs on the keep the lights on (KTLO) budget 

If you fall on hard times in your personal life, you pay for your mortgage, health insurance, and groceries first to cover the necessities: shelter, security, and food, respectively. What are the necessities in your IT budget to keep the lights on (KTLO)? All things related to maintaining the systems to land, expand, and renew business at forecasted volumes are no brainers. Securing the technical estate from bad actors? Of course. While not an ideal situation, the CFO needs to know what the IT budget could be if the company shifted towards a “KTLO only” posture.  

To get here, we recommend inventorying spend across all categories (labor, projects, technology, etc.) to identify areas that could be paused or removed and estimating financial impact. Solicit input from trusted deputies and document the risks and implications of specific line items. Articulate how the budget could look in terms of operating and capital expenditure over the next 12 months, acknowledging that termination clauses and knowledge transfer may limit the speed of battening down the hatches, and that cancelling some investments are riskier than others. Build multiple budget scenarios with increasing levels of cost reduction to illustrate the plays you could run in response to various market conditions.  

Build compelling (and corroborated) cases for sustained investments 

If there are non-KTLO expenditures that you believe should be sustained, be prepared to explain why. Discuss the risky ones. Explain the tradeoffs. Be forthcoming if you think cutting too deep in the short run will lead to avoidable expenses in the future. In a soft market, initiatives that buoy margins will have the most staying power. 

In a tight financial climate, however, the business case may only go as far as the BU leader’s willingness to corroborate the benefits. Coordinate with your counterparts in the business to make sure you are speaking the same language and that your request isn’t artificially inflated by double-counted technology line items. Separate recurring and non-recurring operating expenses to identify annualization impacts and discover where EBITDA add-backs could help the cause. And remember that while new capital expenditures are spread across several periods on the income statement, it’s all cash going out the door in the eyes of a cost-conscious CFO.  

Deliver multiple views of labor spend 

IT personnel is likely the largest or second largest category in your budget, so prepare accordingly. Be ready to break your labor spend down in several ways: full time employees vs. contractors, operations vs. innovation, fixed vs. variable, and projects vs. KTLO, to name a few. If you have individuals, or teams structured around products, working on KTLO and new capabilities, estimate the breakdown at the individual or team level. Even if the findings only provide directional guidance, you will make inroads with the CFO for proactively thinking this way. If your top line is shrinking, prepare for questions on adjusting your cost structure to sustain margins during the storm. Finally, if your company is in dire straits, or if your CFO has a penchant for zero-based budgeting, be prepared for the resource-by-resource breakdown to explain exactly how each teammate is spending their time.  

Immediate and long-term implications for CIOs 

If this information is a few clicks away, consider yourself ahead of the game. If it feels more like a long putt, consider sharpening your pencil, especially if you see clouds on the horizon. An inability to produce this analysis quickly may create friction with the CFO and lead them to take matters into their own hands (or worse, shift matters to the hands of a third party carrying a blunt instrument and a deadline). Economic conditions aside, developing financial acumen was the leading skill CIOs surveyed at the December 2022 Metis Strategy Digital Symposium were looking to sharpen as they contemplate expanded roles in the C-suite. Now is the time to hone those skills.   

CFO, CIO, IT Leadership

Posted on Posted in Digital transformation, General topics Tagged with , , , , , , ,

Large IT projects are hard to execute, particularly when in-house staff are often pulled into their day jobs and distracted by other priorities. This can be costly for organizations. In fact, McKinsey suggests that early cost and schedule overruns can cause projects to cost twice as much as anticipated. One common resolution to this challenge is for companies to seek outside support to ensure success. 

There are four critical ways that outside support can make a difference.

Rapid talent aggregation

One of the most challenging aspects of software engineering in today’s environment is assembling quality talent. CIO magazine identifies the top 10 most in-demand tech jobs and says that 86% of technology managers say it’s challenging to find skilled professionals. If your current team does not have the capacity or skills to tackle the required project, consider an outsourced partner.

The right partner can bring a team of highly skilled engineers together in a matter of days or weeks, allowing you to accelerate development and deliver your key projects in a timely fashion. Key talent can be added and removed from projects as needed. Selected properly, your outsourced provider will have a group of tried and tested experts with deep knowledge of the chosen tech stack and therefore can iterate and compose much faster.  

Developer velocity 

Time to market is critical for the success of any project, particularly when it impacts revenue. Therefore, IT projects must be scoped, ramped, and run expeditiously in order to take advantage of market dynamics. 

In an in-depth study of 440 large enterprises, McKinsey identified the most critical factors that enabled organizations to achieve high developer velocity. Four key areas have the greatest impact on software development performance: tools, culture, product management and talent management. The study revealed those with higher developer velocity outperform competitors by up to five times. 

When selecting an outsourcer, validate what tools and project management structure they will bring to the table; validate past project success in terms of both budget and on-time delivery. Inspect project plans to ensure it includes full and rigorous testing, especially around security, full quality assurance, and performance optimization. 

A project outsourced to an established applications platform provider with dedicated experts, like Edgio, will include rigorous testing and rollout plans, full quality assurance, and performance optimization—ensuring that your investment ultimately delivers peak efficiency for your customers and your business.

Knowledge sharing

Great professional services teams accumulate best practices over time and will bring complementary skill sets into the business they’re partnering with. Shared knowledge helps grow the skillset of your internal team, and enables them to contribute more meaningfully to the success of your business.

Your employee satisfaction can even increase from personal and professional progress felt when learning new technology, frameworks, or languages throughout major IT projects developed in partnership with external experts. 

This aspect cannot be overlooked, given that 91% of employees report being frustrated with inadequate workplace technology and 71% consider looking for a new employer as a consequence. Expert teams have the depth of knowledge on a breadth of tools that help save tremendous time and many headaches by creating ​efficient, automated workflows. 

Ensure that your team gets the opportunity to work directly with your outsourced development team to facilitate knowledge sharing.

4. Faster deployment cadence

Companies integrating software development with IT operations are seeing increased productivity and 83% faster releases. We’ve personally seen deployment cadences double through the use of Edgio’s integrated workflow for web application deployment. 

Leveraging experts who start on day one with automated deployment and testing, standardized processes, and improved development and operations communication can bring releases to market faster. Enable your team to innovate more and wait for code less. 

To outsource or not to outsource?

Large projects can take a significant toll on an organization if they are not managed properly. To be effective and efficient, project teams need a common vision, shared team processes, and a high-performance culture.

If you’re asking yourself the following questions, consider hiring a team of experts: 

What architecture do we need to support a next-generation operating model?How can we rapidly build, scale and sustain a cutting edge customer-centric tech stack?What technologies, frameworks, or API integrations provide a high-quality experience? How do we create the most secure workflow for fast releases and updates?

At first glance, outsourcing can seem an expensive option. However, I advise businesses considering software development outsourcing to think long-term. The right team will minimize costs and bring more value by delivering a better product quicker with a more robust and flexible IT architecture, and will ultimately generate significant ROI.

Edgio accelerates your web development and application performance. Learn more about Edgio and our expert services.

IT Leadership

Posted on Posted in Digital transformation, General topics Tagged with , , , , , , , , ,

Despite its potential for relieving pressure on the workforce, automation in the workplace is often seen negatively, as a cause of job losses or a growing skills gap. Yet, done well, automation can provide critical support that frees people up to focus on more impactful work — and can lead to happier, more motivated and productive employees.

At a time when burnout has become a major issue — with Future Forum data showing 40% of workers globally experience it — automation can also help employees by simplifying work and saving them time.

So, how can IT leaders help reduce the cognitive load and automate common tasks such as creating sales decks using Salesforce data or raising purchase order requests? One way is through the digital headquarters (HQ).

Making automation a reality with the digital HQ

The key to effective workplace automation is keeping it simple and empowering end users. If a system is too complicated to set-up it becomes a burden on the tech team and is not scalable.

With most businesses still navigating the shift to hybrid, the one office that every employee comes into each day is the digital HQ — a single digital space where workflows between your people, systems, partners and customers. In transforming how teams work, communicate and collaborate, the digital HQ sits at the heart of automation initiatives, with free-flowing conversations built around specific projects or teams taking place in channels.

Heading into a tough economic climate, it’s more important than ever for organisations to keep teams motivated and engaged, so they are able to perform and deliver results quickly. Automation within the digital HQ is a major step towards this — empowering employees to liberate their time from manual tasks and helping them breeze through multiple requests that might otherwise perforate their day.   

Offering a no-code solution that everyone can use, Slack’s Workflow Builder hands control back to the team, boosting efficiency in the process. Just ask telecommunications giant Verizon, who used Slack’s digital HQ — alongside automations — to improve output and employee experience.

Slack

Personalised problem-solving

Verizon’s Planning and Engineering team were the first to identify the potential of Slack’s Workflow Builder to bring solutions to, not just their own department, but the whole company. This is because Workflow Builder is an easy-to-use tool that requires no coding experience, with over 400,000 people around the world having built workflows so far — 80% of whom are in non-IT roles. It was therefore easy for Verizon to see its potential to give teams autonomy in solving their own pain points.

Verizon launched the Citizen Builder Programme, encouraging staff to leverage automated workflows to create solutions. This level of personalised problem-solving meant issues were resolved with far greater precision than if another team had been tasked with the job. With one impactful example being how Verizon’s Wireline Network Operations team used Slack’s Workflow Builder to coordinate field technicians for last-mile service calls. Automating parts of this process not only reduced the load on the team but also led to more accurate customer appointment times — all without adding any additional pressure to Verizon’s IT team.

With an expansive telecommunications operation, and a reputation for excellent customer service, Verizon faces a huge amount of admin every day. But with Slack’s Workflow Builder, they have ensured it doesn’t take its toll on workforce motivation, and satisfaction isn’t reserved exclusively for its customers.

For more information on how Slack’s Digital HQ can help your business click here.

Application Performance Management, Change Management, Networking, Remote Work

Posted on Posted in Digital transformation, General topics Tagged with , , , , , , , ,

Budget planning during uncertain economic times is never CIOs’ favorite activity. But the next eighteen months aren’t shaping up to be as challenging as some may fear. For the most part, budgets are holding steady or growing in the single digits, with continued investments in security, analytics, and the cloud, among other areas.

Gartner predicts 2023 IT spending will grow 5.1% compared to this year, says John-David Lovelock, distinguished VP analyst at the firm. “We haven’t changed our forecast in three quarters,” he says, noting that the US gross domestic product (GDP) is, technically, already in recession territory and has been for the past six months. He predicts continued GDP softening over the next three years, with minimal, if any, effect on IT spending.

Analyst firm IDC expects more of a moving target on tech budgets due to market volatility, the strength of the US dollar, inflation rates, and continued slow global growth due to economic drag by China and other key countries. If economic factors stay relatively stable, IT spending will grow between 5% and 6% next year, says Stephen Minton, program vice president for customer insights and analysis. He agrees with Lovelock that it will take a major, sustained global recession to cut into that and, even if that happens, Minton says, IT spending will continue to grow, although probably by 3%.

Security tops the list

According to this year’s State of the CIO survey, cybersecurity and risk management are the top investment areas for 45% of IT leader respondents. That’s certainly the case in the corporate technology group at Illinois Tool Works (ITW), a $14.5 billion industrial manufacturing company headquartered in Chicago, says Ron Mathis, corporate IT operations director. ITW is decentralized, Mathis explains, and its hundreds of affiliated companies are treated as entrepreneurial organizations with their own priorities and responsibilities.

Ron Mathis, corporate IT operations director, Illinois Tool Works

Illinois Tool Works

But across ITW at corporate, cybersecurity is the top priority “by far,” he says, and it’s been the top investment for as long as he has been with ITW. His teams spend a “significant portion of their time protecting the company’s assets,” Mathis says. His team also upgrades ITW corporate’s packaged software.

Security is also key for Eduardo Ruiz, CIO at the Association of Schools and Programs of Public Health in Washington. “We’re spending significantly more on security,” he says. “Over the years we’ve relied on being under the radar to justify not having to spend so much, but we can no longer do that.” There are more automated attacks that are increasingly sophisticated, and endpoint protection, single sign-on systems, and more staff training are all areas of spending growth in his shop.

Many IT leaders are realizing that their attack surface is “too big,” Gartner’s Lovelock says. Between gig workers, cloud applications, outsourcing, and industry-specific platforms, how they “secure this massive dynamic is changing. They can’t keep ahead by using traditional approaches to security.” And even though many companies already made significant investments in security in the aftermath of COVID, with remote work requiring new tactics, security is now getting both deeper and broader. Nearly three out of five CIOs (57%) who reported a budget increase this year cited the need for security improvements as the key reason for receiving that increase in spend, according to the State of the CIO survey.

Cloud continues to dominate

Cloud migrations are still happening, with 22% of CIO survey respondents tagging that as a top spending priority. Part of that is due to cloud vendors passing along price increases that they’re justifying by saying they need to continue to upgrade their data centers and to pay their employees, according to analysts. Cloud-related services’ cost has risen by between 5% and 7% this year compared to last, IDC says.

Megan Duty, VP of technology and project delivery, Puritan Life Insurance Company of America

Puritan Life Insurance Company of America

Some of the projected growth is due to new users; not everything is yet on the cloud. “We’re nowhere near the saturation point,” says IDC’s Minton. Some industries, including financial services, are taking cloud migrations very slowly because of the sensitivity of the data involved. “We’re still expecting double-digit growth” in cloud expenditures, but at the same time on-premises gear is not completely going away, though it is declining as a share of overall IT spending, he says.

Some custom software requires more time to move to the cloud, as do cross-border applications that are more common in Europe than in the US, he explains. Plus, “it’s hard to turn off a cloud system once you turn it on,” Minton says, and the industry continues to move from CapEx to OpEx spending because of the shift to cloud.

Megan Duty, vice president of technology and project delivery for Puritan Life Insurance Company of America in Scottsdale, Ariz., explains that cloud has been a major focus for her company in the past several years. Keeping those systems going requires the lion’s share of her budget, she says, but cybersecurity, automation, and customer experience-related projects are where the new spending is.

Analytics, automation, and customer experience spending on the rise

Some 35% of CIOs named analytics as a top spending priority, and 27% named customer experience technologies as such. For Puritan’s Duty, that means more creating and improving customer portals like the one the company has launched for its Canvas annuity. Another investment area includes tools given to sales agents.

Ken Piddington, vice president and CIO at US Silica in Katy, Texas, says that his key themes are “speed and agility,” so his priorities are data analytics and automation, which he considers “table stakes” to help all employees do their jobs more effectively and more quickly. “We want to help our organization move faster,” and the goal is to “allow smart people to do the things” that only they can do.

Ken Piddington, VP and CIO, US Silica

US Silica

To date, projects including robotic process automation have been mostly taking place within IT, but the plan is to expand RPA more into the field, he says.

Gartner’s Lovelock says that automation efforts in general have been more internally focused, to allow groups outside of IT to become more effective and able to scale without adding new employees. “Companies don’t want to lay off, but they also don’t want to have to hire when they start to grow again,” he explains.

IDC expects that big data and analytics will be one of four key platforms – along with cloud, mobile, and social — driving growth in traditional IT spending over the next five years. “Meanwhile, cost savings generated by cloud and automation will see more spending diverted towards new technologies” such as AI, robotics, augmented and virtual reality, and blockchain, IDC says.

Dealing with inflation, or buying less with more

These days, IT leaders are keeping a closer eye than usual on pricing, and in some cases are buying out their long-term cloud contracts to give themselves more flexibility. “Executive leadership doesn’t want to hear we’re locked in and can’t move,” US Silica’s Piddington says. Vendors “want to true you up but never want to true you down,” he adds, and shorter-term contracts can help incent them to do so.

For maximum flexibility, Gartner’s Lovelock suggests breaking three- or even five-year contracts into six-month terms.

Although the supply-chain shortage and other factors have caused prices to increase for two or three years now, IDC’s Minton says IT buyers have had enough. “There’s pushback now,” he says, and when there was once more tolerance for the reasons behind vendor price increases, IT leaders are now saying they just can’t keep pace and must keep budgets within a narrow range.

Piddington agrees, saying that the situation is forcing IT executives to “be smarter” and understand where the opportunities are within each vendor relationship to “pull the right levers.” Having strong relationships with vendors, and not just engaging in transactional deals, can “give you more potential” to create the flexibility to work with them on pricing. Lovelock agrees, saying “a long-term relationship is worth money to vendors this year.”

Puritan Life’s Duty says she regularly conducts cost reviews. “We don’t have a lot of fat to start with, but every quarter I look at what we will need to do” in the next quarter or two and revise ahead of time. “We review spend constantly and make sure all spend provides value,” she explains.

Paying more for IT labor

Another key item to budget for is IT staff. Of those CIOs reporting an increase in budget this year, 48% said that increase was due to a need to invest in new talent and skills. Still, approximately 20% of all IT jobs are open these days, with a “massive” migration occurring from corporate IT to tech providers, Gartner’s Lovelock says. “We don’t see an end to that for more than five years.”

ITW’s Mathis says acquiring and retaining talent is his second budget priority, only slightly behind security. “It’s just really hard right now — finding and retaining talent and the whole pandemic work arrangement.” He’s lost some staffers to higher-priced offers, even though he felt they were already being paid “very competitively.”

To retain key staffers, IT leaders must be prepared for salary and benefit hikes, and need to become more creative. Just as CIOs have gone from direct control and ownership of all things technology-related to more of an orchestration role, Lovelock says, the talent question revolves around “whether you need to have the skills, or you need to have access to skills. The next wave of labor arbitrage is finding an AI, not finding a new country” for nearshoring or outsourcing, he says.

For the immediate future, Lovelock says, budget issues will be, if not completely stable, at least manageable. Focus on risk management, he advises, and “have a little faith in your CFO and CEO. They recognize the value you provide, and IT budgets won’t be affected in the same way they were in 2009 and 2001.”

Budgeting, IT Leadership, IT Strategy

Posted on Posted in Digital transformation, General topics Tagged with , , , , , , , ,

Budget planning during uncertain economic times is never CIOs’ favorite activity. But the next eighteen months aren’t shaping up to be as challenging as some may fear. For the most part, budgets are holding steady or growing in the single digits, with continued investments in security, analytics, and the cloud, among other areas.

Gartner predicts 2023 IT spending will grow 5.1% compared to this year, says John-David Lovelock, distinguished VP analyst at the firm. “We haven’t changed our forecast in three quarters,” he says, noting that the US gross domestic product (GDP) is, technically, already in recession territory and has been for the past six months. He predicts continued GDP softening over the next three years, with minimal, if any, effect on IT spending.

Analyst firm IDC expects more of a moving target on tech budgets due to market volatility, the strength of the US dollar, inflation rates, and continued slow global growth due to economic drag by China and other key countries. If economic factors stay relatively stable, IT spending will grow between 5% and 6% next year, says Stephen Minton, program vice president for customer insights and analysis. He agrees with Lovelock that it will take a major, sustained global recession to cut into that and, even if that happens, Minton says, IT spending will continue to grow, although probably by 3%.

Security tops the list

According to this year’s State of the CIO survey, cybersecurity and risk management are the top investment areas for 45% of IT leader respondents. That’s certainly the case in the corporate technology group at Illinois Tool Works (ITW), a $14.5 billion industrial manufacturing company headquartered in Chicago, says Ron Mathis, corporate IT operations director. ITW is decentralized, Mathis explains, and its hundreds of affiliated companies are treated as entrepreneurial organizations with their own priorities and responsibilities.

Ron Mathis, corporate IT operations director, Illinois Tool Works

Illinois Tool Works

But across ITW at corporate, cybersecurity is the top priority “by far,” he says, and it’s been the top investment for as long as he has been with ITW. His teams spend a “significant portion of their time protecting the company’s assets,” Mathis says. His team also upgrades ITW corporate’s packaged software.

Security is also key for Eduardo Ruiz, CIO at the Association of Schools and Programs of Public Health in Washington. “We’re spending significantly more on security,” he says. “Over the years we’ve relied on being under the radar to justify not having to spend so much, but we can no longer do that.” There are more automated attacks that are increasingly sophisticated, and endpoint protection, single sign-on systems, and more staff training are all areas of spending growth in his shop.

Many IT leaders are realizing that their attack surface is “too big,” Gartner’s Lovelock says. Between gig workers, cloud applications, outsourcing, and industry-specific platforms, how they “secure this massive dynamic is changing. They can’t keep ahead by using traditional approaches to security.” And even though many companies already made significant investments in security in the aftermath of COVID, with remote work requiring new tactics, security is now getting both deeper and broader. Nearly three out of five CIOs (57%) who reported a budget increase this year cited the need for security improvements as the key reason for receiving that increase in spend, according to the State of the CIO survey.

Cloud continues to dominate

Cloud migrations are still happening, with 22% of CIO survey respondents tagging that as a top spending priority. Part of that is due to cloud vendors passing along price increases that they’re justifying by saying they need to continue to upgrade their data centers and to pay their employees, according to analysts. Cloud-related services’ cost has risen by between 5% and 7% this year compared to last, IDC says.

Megan Duty, VP of technology and project delivery, Puritan Life Insurance Company of America

Puritan Life Insurance Company of America

Some of the projected growth is due to new users; not everything is yet on the cloud. “We’re nowhere near the saturation point,” says IDC’s Minton. Some industries, including financial services, are taking cloud migrations very slowly because of the sensitivity of the data involved. “We’re still expecting double-digit growth” in cloud expenditures, but at the same time on-premises gear is not completely going away, though it is declining as a share of overall IT spending, he says.

Some custom software requires more time to move to the cloud, as do cross-border applications that are more common in Europe than in the US, he explains. Plus, “it’s hard to turn off a cloud system once you turn it on,” Minton says, and the industry continues to move from CapEx to OpEx spending because of the shift to cloud.

Megan Duty, vice president of technology and project delivery for Puritan Life Insurance Company of America in Scottsdale, Ariz., explains that cloud has been a major focus for her company in the past several years. Keeping those systems going requires the lion’s share of her budget, she says, but cybersecurity, automation, and customer experience-related projects are where the new spending is.

Analytics, automation, and customer experience spending on the rise

Some 35% of CIOs named analytics as a top spending priority, and 27% named customer experience technologies as such. For Puritan’s Duty, that means more creating and improving customer portals like the one the company has launched for its Canvas annuity. Another investment area includes tools given to sales agents.

Ken Piddington, vice president and CIO at US Silica in Katy, Texas, says that his key themes are “speed and agility,” so his priorities are data analytics and automation, which he considers “table stakes” to help all employees do their jobs more effectively and more quickly. “We want to help our organization move faster,” and the goal is to “allow smart people to do the things” that only they can do.

Ken Piddington, VP and CIO, US Silica

US Silica

To date, projects including robotic process automation have been mostly taking place within IT, but the plan is to expand RPA more into the field, he says.

Gartner’s Lovelock says that automation efforts in general have been more internally focused, to allow groups outside of IT to become more effective and able to scale without adding new employees. “Companies don’t want to lay off, but they also don’t want to have to hire when they start to grow again,” he explains.

IDC expects that big data and analytics will be one of four key platforms – along with cloud, mobile, and social — driving growth in traditional IT spending over the next five years. “Meanwhile, cost savings generated by cloud and automation will see more spending diverted towards new technologies” such as AI, robotics, augmented and virtual reality, and blockchain, IDC says.

Dealing with inflation, or buying less with more

These days, IT leaders are keeping a closer eye than usual on pricing, and in some cases are buying out their long-term cloud contracts to give themselves more flexibility. “Executive leadership doesn’t want to hear we’re locked in and can’t move,” US Silica’s Piddington says. Vendors “want to true you up but never want to true you down,” he adds, and shorter-term contracts can help incent them to do so.

For maximum flexibility, Gartner’s Lovelock suggests breaking three- or even five-year contracts into six-month terms.

Although the supply-chain shortage and other factors have caused prices to increase for two or three years now, IDC’s Minton says IT buyers have had enough. “There’s pushback now,” he says, and when there was once more tolerance for the reasons behind vendor price increases, IT leaders are now saying they just can’t keep pace and must keep budgets within a narrow range.

Piddington agrees, saying that the situation is forcing IT executives to “be smarter” and understand where the opportunities are within each vendor relationship to “pull the right levers.” Having strong relationships with vendors, and not just engaging in transactional deals, can “give you more potential” to create the flexibility to work with them on pricing. Lovelock agrees, saying “a long-term relationship is worth money to vendors this year.”

Puritan Life’s Duty says she regularly conducts cost reviews. “We don’t have a lot of fat to start with, but every quarter I look at what we will need to do” in the next quarter or two and revise ahead of time. “We review spend constantly and make sure all spend provides value,” she explains.

Paying more for IT labor

Another key item to budget for is IT staff. Of those CIOs reporting an increase in budget this year, 48% said that increase was due to a need to invest in new talent and skills. Still, approximately 20% of all IT jobs are open these days, with a “massive” migration occurring from corporate IT to tech providers, Gartner’s Lovelock says. “We don’t see an end to that for more than five years.”

ITW’s Mathis says acquiring and retaining talent is his second budget priority, only slightly behind security. “It’s just really hard right now — finding and retaining talent and the whole pandemic work arrangement.” He’s lost some staffers to higher-priced offers, even though he felt they were already being paid “very competitively.”

To retain key staffers, IT leaders must be prepared for salary and benefit hikes, and need to become more creative. Just as CIOs have gone from direct control and ownership of all things technology-related to more of an orchestration role, Lovelock says, the talent question revolves around “whether you need to have the skills, or you need to have access to skills. The next wave of labor arbitrage is finding an AI, not finding a new country” for nearshoring or outsourcing, he says.

For the immediate future, Lovelock says, budget issues will be, if not completely stable, at least manageable. Focus on risk management, he advises, and “have a little faith in your CFO and CEO. They recognize the value you provide, and IT budgets won’t be affected in the same way they were in 2009 and 2001.”

Budgeting, IT Leadership, IT Strategy

Posted on Posted in Digital transformation, General topics Tagged with , , , , , ,

During the opening keynote at the recent Gartner IT Symposium in Barcelona, Gartner analysts said that CIOs should look to its latest moniker, IT for sustainable growth, to drive business transformation by focusing on three key strategies: ‘revolutionary work’ to empower the workforce, ‘responsible investment’ to balance financial and sustainability objectives, and ‘resilient cybersecurity’ to support business outcomes “without constraining them”.

Gartner’s managing VP Mary Mesaglio said she remained optimistic for tech investments, with the latest crisis offering CIOs yet another opportunity to “make the difference”. But released the next day, the 2023 Gartner CIO and Technology Executive Survey revealed that EMEA-based CIOs expect IT budgets to increase 4.4% on average over the next year, somewhat lower than the projected 6.5% global inflation rate.

The report, which surveyed over 2,000 respondents across 81 countries, says that EMEA CIO business priorities for the remainder of 2022 and next year are growth and digital transformation, with the top areas of increased spending in 2023 including cyber and information security (70%), business intelligence and data analytics (53%), and cloud platforms (48%). Approximately 34% are increasing investment in artificial intelligence (AI) and 24% in hyper-automation as well.

Revolutionise work

Gartner has identified three ‘force multipliers’ that CIOs should focus on to help make their organisation an employer of choice, and to create sustainable performance in the workplace:

Take the friction out of work: Friction is when work is unnecessarily hard and degrades employee performance and staff retention. By removing it and investing in digital skills, analysts believe organisations can create a more engaged workforce that’s better equipped to sustain future performance.Invest in AI augmentation: Employees require tools and technologies that empower them and increase the impact of their work. Analysts say AI can increase the impact of employees by extending their reach, range and capabilities.Experiment with the “highly visible and highly hyped”: Gartner repeatedly pointed out that organisations that innovate during tough economic times “stay ahead of the pack”, with Mesaglio in particular calling for such experimentation to be public and visible. Gartner believes one such area for innovation is in the fusion between remote and office working, with the ‘intraverse’ representing a virtual office incorporating emerging metaverse technologies to bring employees together in immersive meetings. Highlighting perhaps the nascency of such technologies, Gartner predicts that immersive meeting technologies will not plateau on its renowned Hype Cycle chart for up to 10 years.

Citing its own research, which found that only 31% of employees have the technology they need to do their jobs properly, Gartner analysts also believe that a greater collaboration between IT and HR, and better technology in the workplace, could lead to an improved employee experience that would, in-turn, benefit staff retention.

“This provides a tremendous opportunity for CIOs to make the difference,” said Mesaglio. “Employers who revolutionise the work and empower their workers with technology will become the employers of choice.”

Responsible investment

Gartner’s latest data from its board of directors survey shows that its top focus area is the economy, but IT for sustainable growth does at least hint at CEOs, boardrooms and CIOs being in unison about marrying financial performance with environmental impact.

“Sustainable growth in traditional financial terms means growth that is repeatable without taking on financial debt,” said Daniel Sanchez-Reina, VP analyst at Gartner. “But sustainable growth is more than just financial results. It also includes ethical and environmentally sustainable growth. Now, let’s add IT into the mix. IT for sustainable growth is a set of digital investments that delivers repeatable financial results in an efficient and responsible way.”

Gartner identified three more force multipliers that will create both financial and sustainability returns:

Intelligent connected infrastructure (ICI): Equating intelligent connected infrastructure to an air traffic control system for smart city infrastructure, Gartner says ICI combines mesh fabric, AI, IoT, cloud, analytics and edge computing to share data among otherwise ‘silent’ infrastructure, such as bridges, roads and ports. Investing in ICI would supposedly increase growth for cities and businesses, and improve the lives of citizens.Leverage autonomous sourcing: In a bid to drive more value from the vendor ecosystem, and seemingly move away from laborious RFPs, Gartner says that autonomous sourcing would use AI, machine learning (ML) and natural language processing (NLP) to give organisations access to a much wider range of suppliers – and purchase in a “more sustainable, profitable way.” Sanchez-Reina suggested this was putting procurement in a shaker to find the best supplier and service.Digitally reduce energy usage: Gartner believes that CIOs should use cloud, data and analytics to establish a “base load” – an overview of how much energy the organisation has consumed. The company also calls on IT leaders to implement an energy and optimisation system (EMOS) to reduce energy usage by making proactive, data-led decisions in near real-time, with EMOS able to reduce energy use by up to 15%, and for IT leaders to sell energy back to the grid when combining microgrids with advances in ML and AI.

Sanchez-Reina also described such investment as a two-for-one strategy, bringing together financial performance with an organisation’s environmental and social values, thereby appeasing customers, employees and investors. But a timeline for when this concept will become an everyday reality for most organisations remains to be seen when today most CIOs are struggling to get on top of sustainability.

Resilient cybersecurity

Despite the clamour for new digital investments, Gartner’s analysts did recognise that this would represent a new cybersecurity risk, with some attributing the increased spending in security over the next year down to ongoing uncertainty regarding Russia’s invasion of Ukraine.

A 2022 Gartner survey of board directors found that 88% of boards now view security as a business risk, not just a technical one, meaning that “organisations need to start treating resilient, sustainable cybersecurity as a business risk that needs new types of investment,” said Ed Gabrys, VP analyst at Gartner.

Three more force multipliers identify competitive advantages for organisations in the long term:

Manage the attack surface: Gartner says external attack surface management (EASM) can discover vulnerable external-facing assets. The firm also calls on CIOs to implement software composition analysis to get visibility into software supply chain vulnerabilities, and leverage maturing threat intelligence platforms to prioritise and fix them.Protect business outcomes and customers: Organisations should prioritise their most important business outcomes by identifying technology dependencies that have a direct line of sight to their most important business or mission outcomes.Use outcome-driven metrics and protection-level agreements: Outcome-driven metrics attempt to align security concerns with business impact, so the organisation can decide its risk appetite and how much it wants to invest to solve the problem, like patch management, for instance. Gartner is benchmarking 16 ODMs that organisations can use to compare their protection levels to their peers. This creates an outcome-based priorities and investments roadmap. “Organisations should invest in achieving protection-level outcomes, not the implementation of tools,” says Gartner.Artificial Intelligence, Digital Transformation, Innovation, Machine Learning

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Workflow automation provider ServiceNow on Wednesday said it remained optimistic about growth for the rest of the year, despite the uncertain macroeconomic environment, hoping the situation will in fact boost demand for its offerings.

“As you know, they (enterprises) are either not hiring, they’re laying people off, and they have to do more with less. We’re built for that,” said Bill McDermott, CEO of ServiceNow, during a call with analysts to discuss the company’s third-quarter earnings.

“They need the computers and the platforms to do the work so that people have a more pleasant experience on the employee side … we take care of that,” McDermott said, according to a Motley Fool transcript

Though the company is not immune to the macroeconomic environment, its sales team is preparing for uncertainties by doubling down on staying closer to the customer to understand their needs, added company CFO Gina Mastantuono.

In fact, Mastantuono said the company will continue to keep hiring for the rest of year, in contrast with several large technology companies—such as Google, Oracle and Microsoft—that have been laying off large number of employees.

“ServiceNow is hiring and will continue to hire and we are investing for growth. So, we are absolutely committed to continuing to build up our world-class, go-to-market organization,” Mastantuono said, adding that ServiceNow will also hire critical engineering staff.

ServiceNow reports robust Q3 results

ServiceNow reported strong quarterly results Wednesday, with 25% year-on-year growth in revenue backed by at least 69 deals that were worth over $1 million each.

The company reported total revenue of $1.83 billion for the quarter, with subscription revenues accounting for $1.74 billon, an increase of 28.5% year-on-year, without considering the effect of currency fluctuations.

Multiple products including IT service management (ITSM), IT operations management (ITOM), Customer and Employee Workflows and Creator Workflows were included in the top 20 deals signed by the company, McDermott added, pointing out the diversification of the company’s products portfolio and increasing customer awareness.

“In Q3, both ITSM and ITOM were in 17 of our top 20 deals, with six deals each over $1 million. Security and risk were in 15 of the top 20 with five deals over $1 million,” McDermott said.

Customer and Employee Workflows were also a part of 12 of the top 20 deals signed during the quarter in question, along with Creator Workflows, which featured in all the top 20 deals, the CEO added.

The company reported that it had a total of 1,530 customers with more than $1 million in annual contract value by the end of September.

The number of customers paying over $10 million in annual contract value grew 60% year‑over‑year by the end of September.

ServiceNow announces new training program

ServiceNow has also introduced the RiseUp with ServiceNow program, aimed at training  one million ServiceNow certified professionals by 2024.

As part of the program, the company will offer 600 free courses along with 18 job-related certification paths.

Service Management Software, ServiceNow, Technology Industry

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Plummeting sales of printers and PCs and a growing inflation crisis aside, IT spending will remain strong through 2022, rising 3% year-over-year to a total of $4.5 trillion, according to projections released by Gartner Research.

The 3% increase in total IT spending represents slower growth than in 2021, as the economy as a whole and the IT sector in particular began to recover from the effects of the pandemic, and growth will largely be driven by cloud services and the data center, Gartner said.

According to John-David Lovelock, research vice president at Gartner, inflationary pressures are top-of-mind for most IT decision-makers at the moment, which creates a degree of uncertainty—high prices today could become even higher tomorrow.

“Organizations that do not invest in the short term will likely fall behind in the medium term and risk not being around in the long term,” warned Lovelock in a statement. “The current levels of volatility seen in both inflation and currency exchange rates is not expected to deter CIOs’ investment plans for 2022.”

Inflation is making itself felt in another way, as well, in combination with economic uncertainty driven by the Russian invasion of Ukraine—enterprises are moving heavily away from an ownership model of IT to a service-based one, with cloud spending expected to rise by 22.1% in 2022, according to Gartner.

It’s not all doom-and-gloom for the hardware sector, either, however, as this increased demand for cloud services will push hyperscalers like Amazon, Microsoft and Google to build out capacity. An annual growth rate of 16.6% for server spending will go some way to offset the projected 5% drop in PC, tablet and printer sales, Gartner’s predictions indicated.

Managed services on the rise

The IT talent crunch, as well, has complicated IT spending analysis, Gartner noted. Service providers have been forced to increase prices in order to offer more competitive compensation, which is another factor pushing CIOs toward managed services and the cloud, as hiring in-house IT staff becomes more and more expensive.

These market trends could put small and medium-size businesses, in particular, in a difficult position, according to Gartner senior principal analyst Linglan Wang. Higher prices, combined with a sharper motivation to invest in IT sooner rather than later, is likely to be much less of a financial headache for large enterprises than it is for SMBs.

“Polarization is certainly seen across all IT markets, with a ‘big becoming bigger, winner takes all’ situation,” she said. “We forecast this trend is going to continue over the next couple of years.”

Cloud Computing, Data Center, Technology Industry