According to Gartner, 90% of CIOs have suffered at least one major turn that upset operations in the last four years and 2020 was unlikely to be any different. The health, economic, and political fallout from Covid-19 will make 2020 the most challenging business environment for CIOs since the Great Recession.
Over the past weeks, CIOs have had to answer a wide range of questions, quickly. Discussions about remote workers and understanding if the organization has the appropriate (and secure) collaboration and communication tools have been frequent, as have questions about reformatting events. The tradeoffs associated with having face-to-face meetings, customer conferences, sales meetings, and workshops virtually extend beyond the requirements for “social distances” and into legal ramifications for the organization.
CIOs have two roles to play in managing 2020 uncertainty—leading the technology adoption discussion and providing spend from the existing IT budget to fund them.
The key to thriving in 2020 is speed—get insight into your IT spend, reach agreement on the next steps, and then act. Fast. The right action delivered too late can mean the difference between getting through the disruption or coming out better despite it.
Always have the right insights available to cut down the time to act. An exercise in understanding application costs to identify areas of savings begins in a defensive posture if the first response to disruption is to hire analysts to work through spreadsheets for a couple of weeks to calculate application total cost of ownership (TCO). These are the right insights, but the timing is all wrong. You don’t have time to wait for the right insights before taking action—you need the insights always available.
Take control of what you can mitigate for the rest
CIOs must present the business with options. As budgets are reset to account for the disruption, CIOs need better views into the IT budget to make informed decisions around which projects can be halted, where hiring can be deferred, and which areas need additional investment. As uncertainty is flowing through everything, CIOs must control what they can and mitigate what they cannot.
The ability to develop multiple plan scenarios to execute the IT strategy fit for any given moment will empower CIOs to meet the demands for compelling options to weather the storm.
Agility and cost optimization
CIOs will succeed in 2020 by delivering choices and a deliberate cost optimization strategy, instead of slash-and-burn cost-cutting.
This requires a mindset where change is an opportunity, not a threat. This is hard to do at any time. A challenging business environment makes it harder. When you are feeling threatened, you retreat. It’s a natural reaction. CIOs counter this by getting themselves, and their organizations, ready for the challenge by building up their abilities to react to change.
Organizations that react quickly thrive in disruptive times. A level of organizational fitness lets the IT organization align to business needs, adapts to changing conditions, and anticipates changing conditions. This isn’t an operational value prop. This is about being a key contributor to an organization’s ability to thrive.
Organizations that react slowly will be challenged to deliver value to their customers and ultimately struggle to recover if they recover at all. This isn’t just a short-term hit to revenue and profits. It will erode the fundamentals of running a business—hiring will be harder; innovation will be slower; investments will be smaller.
Scenario #1: The business asks how to shift dollars to fund new requirements.
Organization A can’t see the impact of their decisions on future deliverables. Their planning process is a governance exercise locked to last year’s priorities, and they don’t have a view on how to adapt to new priorities. They have an all-up financial view of IT spend, and do not know how to repurpose variable spend for new initiatives.
Organization B sees the drivers of IT spend and the levers to pull to control them. High variable IT spend gives fit organizations options to cut back IT services to fund new priorities. Fit organizations use an IT cost model to show the impact of funding changes on existing IT services.
Scenario #2: The business says we need every department to cut costs 20%, including IT
Organization A cuts with no context into the impact on services, capabilities, or SLAs. Without application and service TCO, fragile organizations cannot make tradeoffs between IT services that deliver the most effective, least impactful, cost-cutting.
Organization B cuts cut fat—not muscle or tissue. Business partners and IT leaders work together to prioritize applications and services for cost-cutting and negotiate changes to SLAs and capabilities to maintain core services on a smaller budget.
Which IT organization are you, and is it the organization your business partners need?
Technology Business Management Automation Framework
Meet the challenges of 2020 with an automated approach to Technology Business Management (TBM). Apptio, the technical advisor to the TBM Council, offers solutions to serve the most pressing needs of CIO and IT leaders in 2020.
Establish IT financial management best practices around IT budgeting, variance analysis, and forecasting. Automate forecasting to surfaces spend insights for labors, assets, vendors and cloud, and analyze scenarios to improve spend decisions.
Optimize cloud and hybrid resources with on-premises infra to cloud migration. Manage workload migration and modernization and influence consumption with showback and chargeback.
Continuously optimize spend across the vendor portfolio with a single solution. Classify and consolidate vendors and contracts, control vendor commitments, and allocate invoices to business consumers.
Measure application portfolio TCO and deliver better visibility of costs to optimize the portfolio. Identify and prioritize resource investments jointly and measure consumption by business unit.
Maximize planning for new investments across projects and products, and understand the cost and value of their portfolio. Prioritize investments with visibility of the resources invested in your projects and products.
Link technology investments to business value by influencing business consumption of services. Track consumption by business unit, expose costs and value levers to the business, and recover costs through chargeback.