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The world is experiencing an onslaught of economic uncertainty, and the IT industry is facing headwinds just like any other. Gartner recently lowered their expectations for IT budgets to increase by just 2.2% in 2023 on average – lower than the projected 6.5% global inflation rate.

But the economic turmoil doesn’t mean your competitors are going to stop investing in technology – CIOs still need to spend to improve operational excellence. The spending just needs to be more focused on modernizing legacy systems and streamlining tools for higher efficiency and lower redundancy where possible.

Here are tips for making the most of your IT budget in a recession.

Invest in revenue growth edge

If you have on-premises solutions, now is the time to upgrade. Modern edge solutions represent a generational shift, expanding the capabilities of the cloud while reducing the costs of stitching together piecemeal solutions and managing servers.

Let’s take a look back. The first wave of cloud provided flexibility and lower total cost of ownership (TCO). But these offerings were still the same primitives as your on-premise technology. Servers were replaced with cloud servers (like EC2) and network-attached storage with cloud storage (like S3). If you experienced a traffic spike, the cloud provided the flexibility to provision more infrastructure but the work to scale up (and down) was on your team to manage.

New edge solutions abstract this away. Developers can deploy applications, and it’s automatically hosted and delivered as appropriate without having to manage servers. Modern edge platforms are built to unify application tools to lower TCO, increase efficiency and reduce errors. This can double developer velocity.

Many businesses don’t realize updating their legacy technology stacks can be a hidden source of increased revenue. According to McKinsey, developer velocity is an often overlooked issue that can improve business revenue fivefold for all companies.

2. Beware of the tool tax

Nearly half of DevOps use between two and five tools, and 41% use between six and 10 tools. It’s costing companies $2.5 million per year – and, in fact, 69% of development and operation teams want to consolidate their tools due to hidden costs, insufficient agility, and the time maintenance takes away from managing security and compliance.

In other words, businesses are paying an invisible “tool sprawl tax,” which is adding to the TCO and cutting into businesses’ ROI.

While three disjointed tools may somehow be cobbled together – they don’t necessarily play nicely together. To lower your TCO, you need one that actually integrates and manages tools for you. This means investing in a holistic, unified platform rather than having to buy from multiple vendors.

3. Don’t skimp on security

New CVEs and zero-day attacks are being discovered at higher rates year after year. Threats are increasing faster than your headcount. Do not let up on security; others certainly aren’t. In fact, security improvements are the number one reason for tech budgets increasing in 2023.

Learn from others: 71% CIOs rate their internal organizations’ security as good or excellent. Yet 43% feel “somewhat” or “very” unprepared for the future. Why is that?

Invest and spend wisely by asking yourself these questions:

Does your vendor have the network scale to stop increasingly large attacks at the edge, to maintain the highest levels of reliability and performance?

Are you using automation and/or machine learning to help you adapt to constantly evolving threats?

Can you deploy virtual patches and update the WAAP ruleset across your network to mitigate Zero Days threats immediately?

Do you have flexible engagement models, including self-service with simple and predictable pricing?

If the answer to one or more of these is no, it’s time to re-evaluate your current solution and consider one that reduces friction points through automated operations at the edge.

Conclusion

Sometimes, the best starts are born during a recession. Ironically, the smartest investment to your out-of-control technology spending is more technology – but better suited for leaping past your competition and growing revenue. You don’t want to be too busy sawing the tree to take time to sharpen the saw.

Forward-thinking companies need to look for ways to address friction points through scaled, automated operations that only the edge can provide. Find an edge-enabled solution that integrates application security and performance into the development process for efficiency, compliance facilitation, and cost reduction.

Edgio operates a global edge network with vertically integrated edge solutions for web apps and APIs. Click here to learn more.

IT Leadership

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By Milan Shetti, CEO Rocket Software

For several months now, pundits and economists alike have indicated that we are likely to enter, or already have entered, a recession. Regardless, The National Bureau of Economic Research (NBER) has the final say on whether any period of economic decline qualifies as a recession, and that determination might not come for months.

Whether or not the U.S. enters a recession, businesses must have a plan. By recession-proofing tech stacks, businesses can compete and thrive regardless of market conditions. Consider the following tips when planning to recession proof your technology stack. 

Avoid single sourcing

When it comes to recession-proofing a tech stack, leaders should avoid single sourcing. Supply chains are especially vulnerable where single sources can hamstring a business by causing delays in shipments and leading to an increase in prices and generalized inflation. If a company’s entire product portfolio is made in one location and that location becomes overwhelmed, its operations could come to a halt.

The same thing can be said about IT processes. If a business is focused on a single cloud provider that can shut down operations, whether purposefully or accidentally, the outcomes can be catastrophic. As a recession becomes more likely, businesses must choose partners that do not box their customers into a single source cloud solution. A hybrid approach to IT is always best.

Understand the power of automation

Understanding and investing in automation is a powerful tool when fighting the impacts of a recession. In a recession, businesses must do more with less. Automation can help fill the gaps and ease pressure on overworked employees.

But don’t automate just for the sake of automating. Over-automation could ultimately result in a business spending more resources than necessary. Instead, take stock of where employees are spending their most time, evaluate if the work being done is best done by an employee or automation, and adjust accordingly. Automation can help free up resources to allow employees to focus on more value-driven work.

Speaking of automation and technology in general, it’s always important to take stock of which technologies are considered mission critical and which are not. When the economy is on a downswing, this is especially true. If you’re continuously taking stock of which tools and technologies yield the most value, it will make trimming the excess easier.

Always prepare for a recession

Even in times of economic prosperity, business leaders must operate like a recession is never too far away. As the late technology visionary and former chairman and CEO of Intel Andy Grove once said, “Success breeds complacency. Complacency breeds failure. Only the paranoid survive.” A healthy dose of paranoia can help businesses lessen the blow of an economic recession by reducing the urge to overspend on unnecessary technology that does not bring a certain level of value to the company. It’s important to plan not just for the good days, but the days that might not be great, as well.

Businesses should view a recession as an opportunity: a chance to reevaluate what’s important and make sure its tech stack is fueled by technology that brings the highest level of return to the business.

To learn more about recession proofing your tech stack, visit Rocket’s homepage.

Digital Transformation

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When it comes to IT resourcing during tough economic times, cutting costs in the wrong places can be dangerous. Short-term money-saving steps can be counter-productive – actually damaging the brand in the long term. Smart companies, however, are building powerful third-party Technology partnerships to maximise budgets and simplify their IT operations, so they can continue to grow and innovate.

Here are five key reasons why a third-party IT partnership makes sense:

Delivering a hybrid working environment

‘Work from anywhere’ is the new mantra for all forward-thinking organisations, but delivering a hybrid working environment in-house can be risky and expensive. Partnering with a trusted third-party, however, can help you deliver the following benefits safely and without breaking the bank: 

Hybrid working significantly reduces real-estate footprint and costs. Recent research by IWG suggests that firms can save up to £8,100 per employee annually.A recent study by PWC also suggests that hybrid working can boost productivity.Hybrid working models are also an investment in the future, providing resilience against future crises, such as a spike in covid-19 infections and public transport strikes.Retaining talent with slick hybrid cloud experiences

Collaboration, effortless productivity and user-friendly workplace tools are key to ensuring employee satisfaction in the ‘work from anywhere’ era. Get this wrong and your brightest talent is likely to vote with its feet.

Seamless hybrid-cloud experiences, however, ensure staff have the information and apps they need to get their job done with minimum fuss and from any location. Cloud-powered home working can also improve employee work/life balance, save staff as much as £300 a month on travel and ultimately boost employee retention.

Cutting costs and boosting innovation

Organisations with on-prem servers might think they can’t afford cloud migration with a recession on the horizon. The fact is they can’t afford not to. With guidance from a trusted third-party IT partner, organisations can find the most cost-effective mix of private/public/hybrid cloud, simplifying their complex IT systems, delivering significant long-term savings, while also boosting innovation.

That’s because the right cloud mix reduces capital expenditure on hardware as well as ongoing maintenance. It also increases enterprise agility and innovation, because cloud apps are faster and more cost effective to spin up and down, enabling businesses to experiment with new products and services.

Ensuring systems reliability and availability

Whether you’re providing IT services to external customers or internal stakeholders, systems reliability and availability are key to building your brand. Leading public cloud providers generally offer a 99.9% systems uptime guarantee, they maintain three copies of data at all times in different data centres, provide automatic access to backup servers to minimise downtime, and host apps on at least two servers in case of hardware failure. Few, if any on-premise data centres, can offer anywhere near these levels of reliability and availability without incurring huge cost.

Maintaining and increasing cybersecurity

Working with a trusted IT partner will enable you to audit your cyber security, ensure your resources (both in-house and out-sourced) are aligned to the real-world risks and your in-house cyber security team is focused on core risk-management activity.

With a recession looming and budgets being squeezed, IT leaders face a huge challenge, and they can’t do it alone. The answer is to reach out to a third-party IT provider and explore the benefits, cost efficiencies and opportunities that a sensitive mix of out-sourcing can deliver.

Contact Intercity now to find out how they can help your IT function prepare for the recession.

Education Industry, Hybrid Laptops, IT Management

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With an economic slowdown all but inevitable, recession is top of mind for most business leaders. If it happens in the near term, it will be a financial cycle like none other.

“We have record low unemployment, with record high inflation. We have prices for technology and services higher than any CIO, IT leader, or business owner has to deal with,” says Ryan Prindiville, partner-in-charge of consulting at accounting and business consulting firm Armanino. “At the same time, businesses are coming off of record growth over the last couple of years. So you have a dichotomy that business leaders, forecasters, and prognosticators have never seen before.”

Cost cutting ahead of recession is conventional wisdom — and there are certainly some targets for reduction that would have limited negative impact on the business. “But better wisdom is to take the opportunities to accelerate investments to improve efficiency long term,” says Rick Pastore, senior research director and IT advisor at The Hackett Group.

CIOs may want to invest, for example, in migrating systems to the cloud because you want the ability to scale up or down in a recession. “There may be investments that IT leaders and CIOs need to make now to withstand and sustain a prolonged downturn,” agrees Prindiville.

These ventures aren’t necessarily short-term fixes. “IT leaders ought to be planning for a more flexible environment over time, but these are three to six months exercises,” explains Michael Fuller, principal at The Hackett Group. “The goal is to think about how they might change the technology organizations holistically and consistently, making sure those investments are leaning out the base and creating flexibility.”

To get ahead of the pending economic outlook, IT leaders should consider making investments in the following areas, especially where such shifts can reap long-term operational benefits, recession or not.

Enabling better insight into costs and value

“IT leaders should maintain a deep understanding of their cost structure as well as the value that the IT services and investments provide to the organization as a whole,” says Patrick Anderson, director of technology, strategy, and architecture at global consulting firm Protiviti.

If you don’t already have this transparency and clarity, now is the time to invest in creating it, as doing so will enable you to make intelligent moves to free up costs or support additional investments.

Knowing how each aspect of the IT infrastructure supports the business is also critical. “In most organizations, this information is tribal knowledge and is not easy to access or action,” Anderson says.

Going cloud native

Boomi recently made the transition to a cloud-centric stack with investments in cloud-native applications and data integration tools. “We no longer rely on legacy solutions that require large teams and budgets or lots of manual work to implement changes or new integrations,” says Boomi CIO Neil Kole. “Our transformation initiative has resulted in high employee satisfaction scores, lower IT cost as a percentage of revenue, and faster ROI on our investments.”

Getting real with FinOps

CIOs looking to optimize their cloud costs can invest in FinOps to more accurately manage IT asset costs. FinOps is a business management discipline with accompanying analytics software designed to calculate cloud costs to help organizations better plan, budget, and forecast cloud consumption and spend. “This provides the transparency to better align your cloud spend with the business value being delivered and eliminate potential waste or misalignment,” says Protiviti’s Anderson.

Doubling down on agile

If you haven’t already invested in agile approaches, skills, and processes, let this downturn push you toward that change. “Creating an agile toolset can’t happen overnight,” says Kole of Boomi. “If your business hopes to stay resilient through a potential recession, now is the time to begin making that transformation.” 

Embracing agile will enable IT to increase the frequency of business check-ins creating greater alignment with business priorities and direction. “It should be a requirement that an agile methodology is used to ensure effectiveness in a shifting environment,” says Eugene Kuerner, CTO at expense management software provider Center. “Increasing the frequency and depth of agile methodology during challenging times underlines connecting and executing to rapidly shifting business challenges.”

Collaborating and getting clarity

“The smartest step an organization can take is viewing it as an opportunity to embrace the downturn wave, and intentionally emerge from the recession stronger,” says Stanley Huang, co-founder and CTO at Moxo. “Organizations should take a step back and outline an overview of their organization’s current business situation — identifying cash-flow trends, and cost structure layout in as much detail as possible.”

Working closely with the executive team to map out that overview enables IT leaders to focus not just on blindly cutting costs but shifting spending. “Without a clarified company overview strategy, IT managers are more inclined to make ad-hoc decisions, whereas they should be spending the time on aligning IT goals with the overall business goals,” Huang says.

Upping the analytics ante

Want to make your finance organization happy? One of the better investments IT organizations can make now is in advanced business analytics and intelligence, giving the organization better tools to understand their own spend.

“Investing in more analytical capabilities, smarter reporting tools, and greater transparency around what’s being spent and why will enable smart CFOs to make better decisions,” says Pastore of the Hackett Group.

Accelerating efficiency plays

Getting ahead of the potential economic fallout is beneficial, and CIOs should push for and protect those projects that will increase efficiency and productivity. “Accelerating initiatives that would otherwise be at risk should be seriously considered,” says Erik Bailey, CIO at IP software and services company Anaqua. “Any initiative implemented now that reduces cost or increases efficiency will result in a better overall position if a downturn does impact the organization.”

The Hackett Group found that the highest performing 10% of IT functions automate 2.1 times more business processes than their peers. As a result, they achieve a 47% greater reduction in the cost to run and manage technology. Some functions ripe for greater automation ahead of recession include HR, finance, and IT itself.

“Any IT leaders concerned about a possible financial fallout due to recession should focus on implementing automation and low-code technologies to enable citizen developers and integrators within their organizations in order to free up their IT team members’ time for more impactful work,” says Boomi’s Kole.

Pursuing promising new technologies

Now is not the time to go into heads-down, defensive mode. CIOs and their teams should keep their eyes out for opportunities to invest in emerging technologies. “Pay close attention to emerging technologies,” advises Huang of Moxo, “keeping a pulse on technologies that can benefit your organization from an internal and external perspective.”

Reallocating operating savings

In a recession, IT’s operating costs may naturally go down. Smart CIOs will divert some of those idle operating costs to new initiatives rather than losing that money to another part of the business or banking it. “Divert that into infrastructure efficiency projects to accelerate existing projects,” says Pastore.

Budgeting, IT Leadership, IT Strategy

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If IT leaders aren’t already thinking about the impact of an economic recession, their CEOs certainly are. In fact, nearly 8 in 10 business leaders expect a recession in their primary region of operation within the next 12 to 18 months — or believe one is already under way, according to the Conference Board’s C-Suite Outlook Mid-Year. Among CEOs surveyed globally, 15% believe recession has already taken hold while another 61% expect a recession will arrive before the end of 2023.

“While recessions are inevitable, we never know when they will hit,” says Dan Roberts, president at Oullette & Associates and host of the CIO Whisperers podcast. “There is a tricky balancing act at play. C-suite leaders can’t hit the brakes and risk missing market opportunities. But on the flipside, if they continue to invest at the same levels and the economy tanks, they run the risk of spending getting out ahead of revenue.”

A decade on from the last recession, many CIOs have never had to lead their organizations through such economic challenges, Roberts points out. But they’ll be charged with cutting costs and building efficiencies to sustain their businesses through the cycle.

Companies underinvested in technology will be in the worst position. “They’ll have few choices but going into survival mode scavenging coins out of the sofa to save money,” says Peter Pisciotta, managing director and senior consultant at Fine Line Partners. “It’s not pretty.”

IT costs can account for a significant portion of operating expenses (SG&A) and capital investments, so when cost reduction is needed, IT can be at the top of the list for cuts.

“It is essential for IT leaders to have a plan,” says Patrick Anderson, director of technology, strategy, and architecture at global consulting firm Protiviti. “Without a plan from the IT leader, other leaders will step in and that could have devastating consequences.”

Budgeting, IT Leadership