By Brian Day, Velocity Technology Solutions
As CTO of Velocity Technology Solutions, I have the great pleasure of speaking with many CIOs every month – listening to their challenges, understanding their strategies for meeting them, and learning more about what is working and what isn’t.
With the amount of innovation and disruptive new solution offers hitting the market every quarter, the pressure has never been greater on CIOs to take the reins of leadership in guiding their companies through digital transformation. CIOs are working to balance their “budget reality” with the need to deliver differentiated capabilities enabling their companies to compete and win in their chosen markets.
Optimizing IT Budgets – The Pragmatic Strategies of Successful CIOs
1. Embrace Disruptive Solution Providers
While all CIOs want to reduce costs to make IT budget available to invest in new capabilities and innovation, the successful CIOs are the ones willing to look beyond the big ERP vendors to the disruptive solution providers that are driving the real innovation in the market.
As we’ve seen over the past 15 years, the real innovation moving the market forward has come from startups and disruptive solution providers that must interoperate with the ERP systems incumbent at large enterprises to survive. They have flooded the market with breakthrough capabilities that have driven increasingly higher levels of customer engagement, employee productivity, and operational efficiency.
2. Get Out of the Data Center Business
Remember that business training you took a few years ago where they stressed the need to focus company resources on activities that were “core” to your business, not “context.” Well, very few companies have “running a great data center” as a Top 3 business objective. It should be no surprise that three out of every four CIOs are planning to move some, if not all, of their IT operations to the cloud over the next three years as a way to reduce IT costs.
CIOs are taking a hybrid IT path forward – CIOs are seeking ways to “sweat the assets” by stretching their investments in their ERP/HR/CRM/SCM systems as far as possible, investing selectively in high impact/high return capabilities that drive greater employee productivity, profitability, and customer engagement.
Successful CIOs are evaluating providers not only based on cost savings, but also on how the Hosted Service Provider can help them raise the level of performance, security, and reliability of IT operations. In addition, CIOs are seeking how the provider can help them simplify the addition of new capabilities and services without changing their underlying ERP system via integration with leading cloud/SaaS providers.
3. The Days of Blindly Following the IT Evolution Path of Large ERP Vendors Are Over
One of the largest consumers of IT budget and cause of frustration is support – both software and hardware. Quite simply, the value for your dollar just isn’t there if you’re running systems over three or four years.
With enterprise software, two to three years after implementing your software—having it customized to meet the unique needs of your business and having stabilized performance—the need for support drops at roughly the same time that software updates slow and then cease for the software version you’ve implemented. That said, the value of these updates decreases over time as more CIOs assess the cost and risk of implementing them in a customized environment against the value the updates will deliver. Over the coming years, we will see more decisive action from CIOs than we have seen to date.
The bottom line: this dynamic is only accelerating, and the role of the CIO is becoming more strategic every day. IT cost-saving strategies can make all the difference.
Learn more about optimizing your budget. Watch the on-demand Rimini Street webinar: 5 Ways To Fund Innovation on a Budget. Watch now.