With the ongoing impact of the coronavirus pandemic, supply chain issues, war in Ukraine, and historic inflation, a strong economic headwind is forcing technology leaders to rethink their technology investments. In a survey we conducted among TBM Council members, 58.2% of respondents said they were concerned about an upcoming recession impacting their business. And a recent Gartner report showed that overall IT spending growth in 2022 has been reduced to 3.0% from 4.0%.
IT budgets approved at the start of the year aren’t delivering what your business needs now. But while you need to move with urgency, don’t make rash choices – intentional, data-driven decisions ensure everyone understands a replan’s scope and goal.
Undoubtedly, there is a need to cut costs, but cuts must happen in the right places and not at the expense of funding innovation. When the economic winds change again, as they inevitably will, organizations that continuously invest in innovation will outpace competitors who stopped investments when the economy was reeling.
Here are three steps Apptio customers are taking to rethink their IT budgets through 2022.
1. Proactively replanning their tech budgets now
A replan needs to be completed quickly and present general ledger detail in an IT context. Apptio customers optimize IT spend by identifying actionable opportunities to immediately reduce costs—whether that’s by rethinking vendors, reducing business unit consumption, or adjusting your infrastructure and application portfolio footprints. Your organization needs granular visibility into your IT spend by vendor, initiatives, and projects; run vs. change costs; and consumption by business unit to identify what spend can be reduced or eliminated and protect the investments that deliver the most value.
Our customers have reduced cloud costs by 25% within days with rightsizing recommendations, reduced vendor and SaaS spend by 10%, and altered overall consumption by 3 to 5% with our Cloudability suite of solutions. They also analyze tradeoffs to different planning scenarios up to 75% faster, enabling rapid responses to changing market conditions with ApptioOne. Apptio’s solutions give you trusted, data-driven insights so you can determine the ROI of your digital initiatives and make smart cost-cutting decisionsApptio’s solutions give you trusted, data-driven insights so you can determine the ROI of your digital initiatives and make smart cost-cutting decisions
2. Altering consumption by partnering with the business
Many organizations apply across-the-board spending cuts to meet cost-savings mandates. This is a quick and simple approach, but it isn’t a strategic move. Across-the-board cuts ignore how the business uses IT, and the distinction between run-the-business (RTB) and grow-the-business (GTB) spend.
Suppose you have visibility into how business units across your organization consume IT. In that case, you can make smart, strategic decisions to eliminate waste and invest in initiatives that will mitigate the impact of economic uncertainty. Cut RTB to maintain — or increase — GTB spend.
Our customers need a single source of truth based on common data and shared insights that financial, technology, and business leaders can all understand. With a unified view of hybrid IT investments — on-premises or in the cloud — and consumption across business units, organizations can optimize tech spend to innovate and make cloud their competitive advantage. With trusted data from Apptio, our customers collaborate across their organizations to identify excess or duplicative consumption and optimize their investments.
Our customers also need a unified cost model that leverages machine learning to automate data ingestion and analytics, providing data-driven insights in minutes. By turning raw data into powerful, actionable insights, Apptio allows CIOs and CFOs to communicate with other business leaders and alter consumption by turning raw data into powerful, actionable insights. With Apptio, business leaders collaborate better and make defensible technology investment decisions they can trust and feel confident about.
3. Making fast, informed technology investment decisions
Cutting costs is important, but preserving investments is still crucial. The key to funding innovation is reducing portfolio clutter to redirect resources to opportunities with the highest returns. SaaS has democratized access to IT solutions and made it easier for the enterprise to pay for multiple solutions offering the same business capability. All while hiding the opportunity to leverage volume use discounts. When you cut the clutter by rationalizing your portfolio, more spend can be redirected toward your digital transformation journey and create new revenue streams while ensuring your foundation stays intact.
Apptio helps you capture ideas and prioritize work, track value and ROI for your digital initiatives, enable informed collaboration across business units, and optimize your technology investments based on a clear set of business objectives. With data-driven insights from Apptio, you can steer investments to higher-value efforts to ensure durable growth in the future.
Apptio was founded during the Great Recession to help customers replan and refocus their technology budgets. Now, 15 years later, our customers still rely on our solutions to gain comprehensive visibility into their technology investments for planning, billing, benchmarking, and optimization across assets, vendors, clouds, and labor. As the IT operating model has evolved with cloud solutions and product-led development, Apptio solutions have also evolved, enabling you to make smart decisions about your technology investments today to deliver immediate and long-term value.
Keep an eye on the Apptio blog for an upcoming post that will dig deeper into changing IT spend data, TBM leaders’ views on replanning, and what all of the above means for your organization.