Spending on information technology is projected to continue to grow going into 2025 as worldwide spending begins to surpass $5 trillion in 2024. Tech leaders are expecting to spend half their budget on cloud and AI over the next two years according to a survey released by the IBM Institute for Business Value.
However, simply allocating a larger portion of the company budget for increasing IT spend may not translate to increased ROI on technology investment. From the same survey, 43% of technology executives say generative AI has increased their infrastructure concerns.
Lack of capacity to pursue innovation
Technology leaders already have their plates full as they attempt to play catch up with the ever-growing rate of technological change.
It’s a fine balance between achieving technological innovation, while balancing smooth internal operations. Splitting IT leaders attention between innovation and resolving IT tickets results in poor performance on both fronts as surveyed C-suite leaders report that IT has become less effective at basic technology services over the last 10 years.
Lack of cross-functional collaboration
One of the top barriers to innovation within an organization are employees who are resistant to change. This issue is further exacerbated when tech leaders are left out of critical conversations on business strategy.
With 61% of technology executives failing to embed tech metrics into business cases, it comes as no surprise that the organizations that fail to align technology to business strategy lag behind their competitors.
“IT as a standalone function is dead.” (IBM)
High-performing IT leaders’ partner with finance to communicate the value of its current tech spend and ensure alignment with business strategy. However, finance must also play an equal role to engage with IT to look beyond the cost of technology, and instead look to understand the role technology plays in operations and innovation.
Increasing tech debt
When technology enables up to 71% of the value derived in business transformation, it’s hard not to justify increased tech spend for the sake of innovation.
However, increasing complexity in technology has resulted in a skyrocketing demand for increased IT services, which comes with a hefty price tag.
Technology debt is part of the issue. When companies pay an additional 10 to 20 percent to address tech debt on the costs of any project, the costs can easily compound as time and resources are taken away.
It’s not necessarily that innovation is slow, it’s the integration complications that hid underneath.
What can tech and business leaders do
There are no short-term fixes or overnight wins for digital transformation initiatives. Organizations that are successful on navigating the issues identified above outperform amongst their peers for the following reasons:
1. Excel at measuring business value from tech investments
High-performing tech leaders partner cross-functionally to communicate tech value and ensure alignment with business strategy. The common language to making technology decisions should no longer be focused on the cost of technology. Rather, technology decisions should be analyzed from a value perspective where technology investments are in alignment with business strategy.
2. Cross-functional collaboration and communication
Collaboration between IT, key business lines and finance are key to ensuring financial stewardship and accountability for technology cost and consumption. Cost of tech consumption is not solely a cost for IT to shoulder, it’s a business cost that should be visible to all business lines to be held accountable for.
3. Transparency and visibility into tech spend
IT as a “black box” should no longer exist in an organization with a digital first mindset. Visibility into technology spend should be decentralized and visible across all lines of businesses and function levels. The inclusion of technology metrics into business cases help improve the quality of future tech investments and maximize the ROI return. Technology metrics aren’t only for tech leaders, they are also metrics for the business.
“Only when the finance-tech relationship evolves from siloed to inseparable will they drive smarter decisions linking technology investments to quantifiable business outcomes and improving ROI.”
Source: IBM – 6 Blind spots tech leaders must reveal
The Trufflow Advantage
Trufflow is a software platform that makes it easy to tie business value to enterprise software, including homegrown applications, commercial SaaS offerings, data, and everything in between. The Trufflow platform provides IT product owners key metrics used across the software industry like active user counts, month-over-month revenue retention, and churn. With Trufflow, you can increase the efficiency of your technology spend and gain unprecedented visibility into your IT value chain.
