Few CIOs could have predicted a crisis like the Covid-19 pandemic, yet they are playing a central role in navigating the global disruption that has followed, working closely with CEOs and boards to help right-size their organisations and set them up for future success. Even organisations that haven’t experienced market disruption had to scramble to accommodate remote work and adjust business models. During any period of economic uncertainty and global disruption, organisations will likely be operating in one or more of three modes: survive, stabilise or thrive.
In survive mode, an organisation is focused on putting out fires to protect the business and preserve cash. CIOs will need to take drastic measures to slash costs across the board to stay alive. Stabilise mode is where an organisation focuses on optimising core systems and applications and restarts derailed plans. In this mode, the CIO is shifting from crisis response to optimising the must-haves (remote communication, security), and deprioritising the nice-to-haves (transformation, modernisation). Thrive mode is where a company is focused on accelerating growth.
Along the continuum, an organisation may move between stages or could be in multiple stages at the same time. The key is knowing where the organisation is now and preparing for what’s next. Today, most organisations spend an average of 90 per cent of their IT budget on ongoing maintenance and operations costs. Ideally, the IT budget allocation goal should be to invest 60 per cent in operations and 40 per cent in innovation. To achieve this rebalancing, IT leaders need to free up people, time and funds to embark on a business-driven roadmap based on business priorities that support the CEO’s goals and vision for the organisation.
The power of prioritisation
With proper prioritisation, the CIO has the power to shift the budget equation and steer their organisation into a thriving future. However, reacting without evaluating the entire picture could leave the organisation bleeding cash.
The CIO should be asking the tough questions – both of their team and of executives – to be able to come back to their CEO and the board with a proactive plan of attack. These questions provide a guide for prioritisation decisions:
- What will be the organisational impact of this initiative?
- Does this initiative drive competitive advantage and/or business growth?
- Are there more important initiatives to tackle right now to help us right-size?
- Can this initiative be deferred?
- Are there alternative strategies to eliminate the need for this initiative?
As the CIO evaluates IT initiatives, they need to be ruthless. If it doesn’t increase revenue, decrease costs or gain market share, they should not waste resources on it.
Prioritisation framework for the business-driven roadmap
Digital dominance is poised to separate the winners from the losers in the new normal. However, today’s CIOs struggle to find ways to fund both operations and growth. It’s more important than ever that CIOs bring their prioritisation superpowers to the table to gain alignment with their CEO.
Using this framework, CIOs can optimise IT investments and shift more budget towards following a prioritised business-driven roadmap. This approach can help CIOs narrow their strategic focus and fund what’s important.
- Reduce software support and operating costs
Use third-party support and AMS providers to reduce support costs. Avoid or delay expensive, low-value application upgrades. By replacing overpriced vendor support, organisations can dramatically cut costs and reallocate funds to strategic initiatives.
- Improve application management outcomes
Take a unified approach to application management and support, consolidating providers and reducing complexity. With a single-provider source, CIOs can reduce operational disruptions, finger pointing and support gaps between vendors.
- Leverage public cloud
CIOs generally shouldn’t be in the data centre business. Instead of managing infrastructure, vendor-agnostic public cloud providers such as AWS, Azure or GCP allow CIOs to focus resources on business value, not operations. Employing a pure public cloud or hybrid model can help CIOs achieve strategic flexibility, avoid vendor lock-in and take control of their IT roadmap based on the business objectives of the organisation.
- Manage public cloud usage
Once the infrastructure is on the cloud, don’t treat it like it’s just another data centre. Concentrate on continually improving performance, scalability and security using cloud-native tools to drive down spend and extend functionality.
- Optimise software licences
Review software licences for underutilisation and compliance to improve ROI and reduce risk. By avoiding potential compliance issues and optimising licence positions, CIOs can get more value out of vendor agreements, be better prepared for audits and help avoid hefty penalties.
As the current crisis lingers, knowing where the budget priorities lie, and keeping in lockstep with the CEO and other key stakeholders, will be essential to staying afloat. Employing these strategies now will help the CIO proactively manage volatile conditions and emerge stronger on the other side of turbulent times.
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