“Technology is breaking barriers with technology,” as I was once told, and this has never been more true than in 2024. Every business is now a technology business, whether they are in automotive, manufacturing, retail, financial services, or other sectors. While new solutions are enabling incredible modernization across various industries, we are currently in a position where the amount of technology and data that organizations have to manage is growing exponentially.
This means we need to be more cautious in approaching this very complicated landscape, especially as many companies look to implement even more technology to further streamline processes. The strategic importance and reach of technology leaders has changed dramatically in recent years and it is critical that we all re-evaluate the way we assess and control technology spending.
Technological advances create domino effects
Artificial intelligence (AI) and cloud computing are areas of technology that continue to evolve. In the case of AI, we have seen waves of innovation, most recently with generative AI, leading to a surge in investment. Similarly, the adoption of cloud computing has continued to accelerate, and both modern technologies are energy and resource intensive, requiring significant investments to support associated projects.
But complexity is not limited to software and hardware innovation. Expanding technology diversity increases cybersecurity risk and invites greater consideration of compliance and governance. There is also the issue of moving from capital expenditure to operational expenditure and variable spending models along with decentralized procurement, making spending less predictable.
Cost management is more essential than ever
When you consider all of the above, it’s easy to see how costs can quickly spiral out of control. How can you effectively control such a broad and multifaceted technology footprint? More than half (55%) of business leaders say they lack key insights into their technology spending decisions. Similarly, despite the promise of the cloud – including scalability, security, flexibility and faster innovation cycles – the vast majority (75%) of businesses can’t boast a strong ROI from cloud transformation.
Cost management becomes an absolute imperative, and costs can pile up in a multitude of places. To name just a few, technology leaders must keep a lid on redundant applications, over-provisioned IT infrastructure, underutilized software licenses, technical debt from legacy systems, and contracts with inefficient vendors. The cloud’s variable spending model also introduces a host of new challenges, including the risks of over-provisioning, leaving resources idle or underutilized, and more broadly, navigating the maze of pricing and discounting models among public cloud providers.
While Gartner predicts an 8% increase in IT spending by 2024, rising technology budgets come with some serious strings attached, and business leaders want to see performance—and not just technical performance of the solution, but positive business outcomes. Linking investments to outcomes when operational and financial data is spread across a multitude of systems and business units can seem like a monumental task. It becomes more complicated when trying to connect technology spending to key corporate goals like operational efficiency, agility, resilience, risk reduction, or revenue. No matter how difficult it is, these are the expectations facing technology leaders.
Taking advantage of the growth in technology investment requires a modern approach
In the past, when businesses grew and inevitably became more complex, you could solve complexity through people, hiring more people as a solution to this challenge. However, technology is accelerating too fast and you can’t solve an exponential problem with a linear solution. The spanner no longer works. Modern technology management requires the right tools 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 gather operational and financial data from across the enterprise and, more importantly, translate that data into terms that stakeholders across the company can understand: results.
We have seen the impact of this technology through our work with companies like Unilever. Since adopting more comprehensive solutions, they have been able to align IT capabilities with business strategy through cost transparency, to the point where their IT team has established complete ownership of end-to-end services with clear visibility into costs.
If technology investments are aligned with corporate objectives, technology management can shift from focusing on the basic costs of running a business to focusing on innovation to grow it. This evolution is what allows companies to take control of their technology spending and use it to successfully accelerate their growth into the future.
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