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The last few years have been trying. COVID and its following recession were like a great dragon, and every company was faced with the question: can we survive this, much less slay this beast?
For many companies, the answer was no. As offices closed their doors and corporations declared bankruptcy, we, the survivors, were forced to enter survival mode. CIOs had to be conservative; for several years, we’ve all been in Horizon One mode—maximizing remaining value by improving performance with what we have. Expansion became a distant memory for a time.
Now that the pandemic is over, companies are coming back. Even if the economy is still uncertain, expansion and growth are no longer things of the past. Horizons Two—emerging opportunities—and Three—long-term profit and growth—are back on the menu.
Now, a new question looms: is it time for CIOs to make big bets again? I had a chance to sit down with Eric Tan, the CIO at Flock Safety, to learn more about what he sees in IT’s future for 2024 and whether or not big bets are back in the cards. Continue reading or watch below for insights.
Start with Your Tech Budget
We kicked off the conversation looking at current and changing plans regarding budget. 2023 was an unpredictable year – we all know that. As a result, planning for hiring budgets or procurement plans became nearly impossible. How can you plan something six months out—or God forbid, a year—when every month brings some change with it?
Budgets Feeling the Pinch in 2024
As unpredictability and volatility are in a downturn, budgeting IT spend for the next year is on all our minds. What can we expect, and what should we plan for?
Gartner’s recent IT Symposium was huge for these discussions.
- Their IT projections for 2024 show an overall increase of 8% in IT spending, with a 14% year-over-year growth for SaaS spend.
- Take that in conjunction with Morgan Stanley’s CIO survey showing a budget growth of 3.4% for next year as opposed to 2.7% last year and you begin to see a picture of growth.
There is, of course, some mismatch here. Budgets are increasing much less than IT spend, and we’ve seen a wide trend of SaaS price increases. Salesforce going up 9%, or Google Workspace going up nearly 20%. You need to keep those kinds of changes in mind when you’re planning your budget.
On the bright side, SaaS spend largely remains the same on a per-employee basis. Last year, it was $4,621, on average; this year, $4,649. Not bad. Also, apps are decreasing, but spend remains the same. How do you budget for those kinds of trends?
Align with Your CFO to Plan Your IT Budget
Eric explained how important it is for CIOs and CFOs to work together closely on these budget changes. The last thing you need is to be at your CFO’s throat or have them at yours.
CFOs must think big-picture. As a CIO, you have to help them figure that picture out. How are you going to keep IT spend under control? How are you going to shrink it, even? These are questions you need to be thinking about.
Having the budget for taking risks in 2024 is going to be huge. Eric recommends following a “three-bucket strategy” to ensure you have the funds to do so. Those buckets include:
- Things you need to keep the lights on. First, rationalize this bucket. Sit down and think, “What do we need to have just to do our job, and what are the nice things that we could live without?”
- Strategic projects. Carve out 20-30% for your strategic projects and plans.
- Big bets. Leave 10-15% for your big bets. These could be AI investments, moonshot projects, who knows?
The real key is ensuring you have the budget for innovation. The time for survival has passed; now we can think about thriving again. Ask how you can push your company forward and advance your IT, and leave a budget for those big-bet innovations.
Step up as a Leader, Drive Accountability
As the CIO, are you the Beowulf to your SaaS dragon, or a helpless villager? You’re in a unique position to take a meaningful leadership role and work alongside the CFO to effect long-term, positive change in your company. This CIO-CFO relationship has only grown in importance, especially over the last 12 to 18 months.
Eric emphasized, “I think being able to hold the [IT] team accountable is going to be a key success factor next year. And to be able to do that, you need to have transparency on where the costs are going.”
We’ve talked plenty about the shadow IT problem, but it bears repeating. You need to know your software to keep it under control. You can’t slay the dragon if you can’t see it.
Once you have that visibility, you can hold your team accountable and buckle down on your IT spending. Then, once you’ve locked down any current budget issues, you can free up the budget for big bets in 2024.
Take Cautious Advantage of Generative AI
Generative AI is on everyone’s mind. After ChatGPT took the world by storm last year, AI’s been on the news, at university debates, and in board meetings. After all, there’s a tantalizing amount of power there. Automated content generation and productivity tasks? What’s not to love?
Well, as you probably already know, the AI question doesn’t have a clear answer. The benefits are obvious: productivity gains.
Eric said it best: “I think what it’s really, really good at is summarization. You can take your pick, whether it’s in the sales and marketing team or the finance team, I think the capability of AI to do a lot of summarization, playing back a lot of the analysis, will cut people’s time to do tasks a lot more efficiently.”
But those gains don’t come without risks.
Shadow IT discussions have begun moving toward shadow AI arguments. How do you manage AI features being upsold to you, or employees using AI with company data without your knowledge? These are real risks to keep in mind, and there aren’t easy solutions to them.
AI is a market of big bets right now. If you want to take a risk with a potentially massive reward, then secure some budget for AI. Gartner estimates that 80% of apps will have AI capabilities by 2026, so it’s almost impossible to ignore this market. You have to measure your options as a CIO and lead your company into the great unknown.
Achieve the CIO Trifecta in 2024
In your quest to be a heroic CIO, there’s a trifecta you have to balance: security, savings, and efficiency. We’ve talked a lot about big bets in 2024, and the way you can prepare your company for those big investments is by practicing good SaaS management. SaaS management gives you the visibility to secure your company, save your budget, and optimize your workflows.
Learn how Zylo can help IT leaders like you drive efficiency, save money, and eliminate risk.
