The CIO’s Dilemma: Innovate AND Cut Costs

“Digital technologies have significantly impacted most enterprises, and IT is on the front line of change,” writes Martha Rounds in CIO.com’s Spring 2018 Digital Magazine.¹

“In a recent IDC survey, 45% of CIOs and senior IT executives said that one of the top three objectives they’ve been given by their companies is to ‘create competitive advantage for the business’,” she continues. “Charged, as always, with delivering technology with reliability, responsiveness and flexibility, IT today is being asked to deliver even more — leveraging digital transformation to change and disrupt the business, customers, markets and competitors. And because of the stakes involved, there is a growing need to be able to evaluate the business and financial impact of every new IT initiative.”

But that’s not all. In many cases, these same IT leaders tasked with spearheading transformation efforts are also under a heavy mandate to cut costs. They now find themselves in a peculiar bind: How do they preserve their organization’s ability to innovate in the face of budget cuts?

That’s the question we also posed to members of the IDG Influencer Network, a community of journalists, industry analysts, and IT professionals who contribute their knowledge and expertise to IDG clients.

Their responses point the way to some very up-to-the-minute strategies for grappling with this complex moment in enterprise IT. Among the recommendations: collaborate better, query your data, and optimize costs and IT operations.

‘A view of the frontiers of our knowledge’

“To work in any complex field, we have to be connected to loose social networks that provide us with a view of the frontiers of our knowledge, says Harold Jarche (@hjarche), a partner at Internet Time Alliance. “We then need to actively engage in communities of practice to develop shared understanding among our peers. Then we can truly contribute as members of teams working on complex problems. None of this costs additional money, only time and attention.”

Austere budgets necessitate creative thinking and assuming smart risks, asserts Chuck Brooks (@ChuckDBrooks), principal market growth strategist for General Dynamics Mission Systems.

“To help address lack of funds, innovation also requires better collaboration,” he says. “Public/private cooperation can catalyze the development of cutting-edge technologies. Also, digital connectivity has changed the landscape by increasing information-sharing and crowd-funding opportunities.”

A number of the Influencers noted that today’s organizations increasingly seek to drive business value and create competitive advantage via deeper data insights.

“Not all innovation is expensive,” says technology writer David Geer (@geercom). “Query your data, looking for hidden value in existing products and services. Prioritize results based on couplings of high potential returns with minimal risk and investment.”

It’s a viewpoint that Fred McClimans (@fredmcclimans), an analyst at Futurum Research + Analysis, finds appealing.

“The key to enabling innovation in this (or any) type of environment lies in having the right data-oriented corporate mindset and preserving and encouraging agility at all costs,” he says. “Innovations focused on streamlining processes and reducing costs can work, including looking to consumption-based IT services, but only with the right data to inform decisions and the ability to rapidly execute.”

“Crowd-sourcing is a perfect opportunity to leverage the wisdom of the public,” states Ben Rothke (@benrothke), principal security consultant at Nettitude. But Rothke also offered this caveat: “Effective crowd-sourcing works only when there is a detailed plan and strategy. Don’t expect the public to do that for you.”

Use budget cuts to focus on efficiencies

Influencers also said IT leaders should seize the opportunity to review risks and look for greater efficiencies.

“The best and most cost-efficient steps you can take are to make sure your current actions are properly aligned with your company’s mission and current risks,” says Jacob Calbillo (@jakecalbillo116), ISSE at Intellidyne. “You must review the risks your business has, measure the likelihood and impact these risks can have on your operations and customers, and then prioritize and monetize your key risks. After taking these steps, you can make more informed decisions [about] where you can and cannot afford to make budget cuts and continue to meet your business needs.”

“Budget cuts provide an opportunity to focus efforts in on efficiencies,” adds Nicole Scalese (@nicolescalese), senior manager, partner development, at Intermedia. “Cleaning up process management, building leaner teams, and increasing the efficacy of elements like data storage can lead to a better product at lower cost.”

Theodore May (@theodoremay), an independent consultant who focuses on executive communication strategies, maintains that organizations all too often overlook “the roles of simple curiosity and observation in gaining insight and their value as sources of intellectual capital.” May calls this “the soil in which the seeds of new ideas take root.”

“Most organizations still rely too much on manual processes—hands on keyboards,” says Chris Rouland (@chris_rouland), Chief Security Officer at Waratek. “There are newer, commercially available technologies that automate processes and reduce the time required to perform routine tasks.

Will Kelly (@willkelly), a technical writer and content strategist, takes a humbler approach: “I recommend never throwing anything away!” he says. “A technology organization can often find innovation by revisiting old projects, false starts, and work that died on the vine with fresh eyes and new goals. Nobody ever said that innovation means starting from scratch.”

Kevin Jackson (@Kevin_Jackson), advanced technologist and founder of the GovCloud network, says executive decisions should be driven by service delivery metrics and their impact on key business metrics. “Evaluation of these linkages is foundational to any strategy focused on the discovery, development, and delivery of innovative business offerings,” he says. “This is even more important when budgets are tight.”

“These are the times that try men’s souls” is a saying that many in IT might be tempted to use today. And what’s needed especially at these times is effective leadership, suggests Jessica Marie (@jessicamariemba), senior product marketing manager at WhiteHat Security.

“At the end of the day, a company’s ability to innovate is related to its ability to foster a high-performance culture, and that starts with leadership,” she explains. “When there is great leadership in place, employees are supported and resources are allocated properly. Ultimately, effective strategies can then be executed with much less friction.”

Optimize, optimize

Dave Rowe (@davewrowe), CMO at Rimini Street, stresses the need for every organization to focus on continuously optimizing costs and ongoing IT operations.

“IT leaders want to trim wherever they can and maximize the utilization of core systems,” he says. “Most CIOs I speak with are taking advantage of cloud opportunities and targeted applications that extend their core systems and capabilities. They’re gunning for faster time to innovation, greater customer engagement—and ultimately competitive advantage.”

It’s a view that Dean Alms (linkedin), Rimini Street’s global vice president for product strategy, can endorse.

“With the support of legacy systems consuming up to 90% of the IT budget (according to Gartner), the imperative is to lower these costs through IT optimization,” he says. “The use of third-party support, shifting data center to cloud environments, and application rationalization are just a few of the many optimization initiatives taking place at companies of all sizes.  Innovation will take funding and resources, and IT optimization frees up both.”

Join Dave Rowe, CMO of Rimini Street, and Fred McClimans, an analyst at Futurum Research and a member of the Influencer Network, as they discuss this article and offer their own insights about innovating and cost-cutting. 

Register for the webinar, Is Your IT Team Built for Innovation (and Cost-Cutting)?, today.

^{1“Good business metrics drive responsive IT,” Martha Rounds, Spring 2018 Digital Magazine, CIO.com, April 4, 2018}