Inflation, rising interest rates, tumbling stock prices, pandemic hangovers, changing consumer habits, the Great Resignation, and a pending recession all add to the pressure on IT to cut costs.
But options are limited, and decisions are hard. Take inflation, for example, which is just one of the challenges that chief information officers face right now. According to Robert Naegle, a Gartner analyst, CIOs only have three possible responses:
- Spend the same and do less
- Spend more and do the same
- Or try and optimize in order to spend the same and do the same.
“One of the most immediate effects of inflation felt by CIOs will be vendors implementing, or preparing for, price increases that will impact IT budgets,” Naegle says.
But that’s not the only inflationary impact delivering punishing blows to IT budgets. For one thing, hiring and retaining talent remains an ongoing challenge. “It is becoming an even more complex problem due to the increasingly competitive labor market and higher wage expectations that result from inflation,” Naegle says.
Higher labor costs and ongoing staff shortages are forcing IT to consider buying even more technology.
“With the possibility of an economic downturn looming ahead of us, businesses are looking for ways to optimize operations without adding more people to the equation,” says Eric Ayala, General Manager of North America and senior vice president of Novidea, a cloud-based insurance agency management platform built on Salesforce.
However, cost cutting can only take you so far. To survive and thrive requires IT to do more. So, what’s driving IT spend today and what technologies are companies investing in? Given the gravity of the situation today, will these new investments drive companies across the finish line or off a cliff? Time will tell.
Meanwhile, let’s take a look at what’s driving IT to get off some of their dwindling piles of cash…
