Do more with less is the reality for many IT departments. The 2017 State of IT report from Spiceworks predicts that the tight IT budgets trend will continue—but IT pros may want to look at this austerity as an opportunity to deliver value to the business.
Research shows that most IT budgets will be flat in 2017, with some even taking a 5 percent hit. However, two-thirds of respondents reported they don’t expect staffing changes in 2017, which means IT pros will need to be strategic without additional players in the game, while utilizing the same or less budget.
To compound the problem, IT pros are coming off a year of downward pressures on their IT budgets. For example, CEB’s annual global IT budget benchmark forecasts that budgets were only expected to grow by 2.2 percent in 2016, the slowest projected growth since 2012. The year appeared to bear out that prediction, and the flat growth for IT budgets were emphasized at last year’s OpenWorld.
In his keynote at the annual Oracle conference, the company’s co-CEO Mark Hurd noted that enterprise IT budgets have been static, with growth in spending basically at zero, even as consumer spending on IT has quadrupled in the past decade. Enterprises essentially have little room for innovation.
Where does this leave IT pros?
One strategy is to shift to becoming a service broker for IT. Lines of business are already selecting and deploying the tools they need thanks to cloud computing and Software-as-a-Service (SaaS) offerings. This means IT expenditures are coming from their budgets, and while the danger lies in the potential proliferation of shadow IT, it also presents an opportunity for IT to be an advisor and broker, rather than owning the delivery of all IT.
An IT service broker approach motivates stakeholders in the organization who require IT to truly justify the need, as they must pay for it from their own budgets. In addition, letting lines of business seek out SaaS options enables the organization to deepen its overall cloud investment—almost all CIOs are allocating some budget to the cloud, according to CEB’s annual benchmark, and the Spiceworks report also found that cloud services remain a priority for IT pros.
The advent of cloud created the opportunity for IT pros to look at what infrastructure they need to operate internally and what they can outsource, and the data centre is an obvious example. According to The State of the Canadian Data Centres by IDC, leading companies in the banking, transportation, and retail sectors are holding back on new data centre construction.
Over the past five years, workloads have shifted to third-party facilities as corporate data centres have aged, while in the past year, there’s been a great deal of activity in the commercial data centre segment across the country, with large, global cloud players, such as Amazon, Microsoft, and Oracle, expanding their footprint in Canada and meeting data residency concerns in the process, which is spurring adoption of cloud services.
Accept your reality
All of these activities are concrete courses of action IT pros can take to do more with less, allowing them to focus on strategic initiatives while supporting the needs of the business. However, they need to accept that the “do more with less” reality is not going away, and make sure they’re the architects of their future. This means playing a role in rationalizing technology spending, particularly if they’re serious about digital transformation. IT must take charge of cost-cutting initiatives as part of a long-term strategy to shift budgets to innovation.
Rationalizing spending is an important role IT plays in a broader digital transformation strategy. Most of all, it needs to be a multiyear, strategic project, not led by the CIO, and should have staff development as a key component, in part to coach potential replacements who can take on a complex organization. Everything should be on the table, including applications, data, assets, skills, and facilities, being mindful of interdependencies at the same time. While letting lines of business bear the brunt of costs by allowing them to embrace their SaaS solution of choice is one way to shift funds to innovation, they, too, need to be rationalized in cooperation with business units.
Ultimately, IT pros need to look the age of austerity in the eye and see it as an opportunity to demonstrate value and be the instigator of the foundational change underlying digital transformation.