Enterprise IT budgets could take a hit in 2016, if IDC’s latest predictions are anything to go by. With less cash to go around, how can CIOs persuade those holding the purse strings to invest in new technology?
Canada’s ICT sector certainly isn’t in recession. It’s just not likely to grow as quickly as people had hoped. In December, IDC announced a new estimate for ICT growth in 2016, predicting 2.4 per cent growth next year. That was down from the 3.4 per cent it predicted for 2016 at the start of this year. The oil slump isn’t helping.
CIOs may have to work extra hard to extract money from the CFO, CEO, or whichever line of business director holds the purse strings. Michael Murphy, vice-president and country manager for Citrix Canada, has a few pointers to help CIOs maintain or increase their budgets.
Show me the money
As much is possible, the conversation should focus on the financial benefits of the solution, be that operational savings or productivity gains, he argued.
“They want to know that what they’re spending on IT makes them money in a legitimate return such as driving revenue or growth, or saves them money because it can stop me doing something of a capital nature or lower costs of an operational nature,” he said.
That’s all very well, but when it comes to IT projects, the financial benefits aren’t always clear. It may be difficult to demonstrate a return on investment for IT projects in black and white; it can be tricky when it comes to monitoring employee productivity, for example.
“Sometimes the benefits are intangible, meaning that the fruits of their labours aren’t shown to be valid until a cost is offset, or the project is really up and running and showing economies of scale,” admits Murphy.
This is even more true for foundational IT projects that may not even make sense to business users. How do you explain the move to a micro services architecture or the deployment of software-defined storage in a way that business users understand? It’s not impossible, but it takes some thinking.
This year more than ever, CIOs must lead with the business problem that the technology solves, he warns, ditching the technical jargon and speaking to business managers in a language that they understand.
There are several broad approaches that CIOs can take in 2016 to help justify their budgets and create a positive financial environment.
- Tighten up processes
How much money are you hemorrhaging through ill-defined processes? Explore your use of scripting and automation tools, along with templated processes, to ensure that you standardize everyday processes and minimize the manual work involved. Any time and effort that you save can help you move from firefighting to innovation mode.
- Start small
If the project allows it, begin with a small pilot and demonstrate wins before attempting to scale up. Internal project sponsors will be more comfortable if you have proven the concept.
- Work the numbers
While some projects may not lend themselves to immediate financial returns, it pays to find some kind of key performance indicator that makes sense to business people, and run projections on it. The spreadsheet is your friend; treat IT projects as though they were business ventures, and ensure that the projected gains are quantifiable. If this project was a startup, would you invest in it?
- Get allies
How close are you to others in the business? Identify project sponsors and win their ears by encouraging regular, open dialogue. Ask how you can serve them. Look for problems that need solving. This is how business people work, and there is no reason that you can’t operate in the same way.
- Educate project sponsors
Murphy argues that project sponsors may be more willing to invest in technology if you tell them something they don’t already know. This will probably involve researching the market more broadly. “Tell them something that may not provide fruitful returns today, but it’s something they know they need to do because their competitor is doing or the industry is doing it,” he said.
Even though IT investments are growing as quickly, they are still growing. Some business decisions are simply outside the CIOs control, but positioning yourself to take part in the conversations would be a positive step for the coming year.