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The pandemic has sparked global economic downturn, and two years later companies around the world continue to feel the squeeze.
According to the World Bank, the fragile economic recovery and elevated inflation compounded by the Ukraine invasion are raising the risk of ‘stagflation1’ – a toxic mix of slow growth, high prices and rising unemployment – that could prolong the situation for years to come.
Facing soaring fuel and energy costs, along with worsening resource and component scarcity, small and medium-sized businesses around the world are preparing for imminent recession. But just at the time businesses must reassess their strategy and operations to protect their bottom line, their capital is critically needed for investment in digital transformation – what 60% of senior executives believe will power growth2 in 2022.
Between the two objectives is the CIO, and their indispensable role in balancing the books while spearheading technological innovation to propel performance. Below we explore some cost cutting and revenue boosting strategies CIOs are implementing to help their businesses not only survive but thrive through the ongoing economic hardship.
With future economic disruption on the horizon, intelligent cost management is becoming increasingly necessary to ensure businesses can weather the economic crises of today and tomorrow. And in our increasingly digital world, it is essential to free up resources for investment in technology with which to devise and implement revenue boosting strategies.
Adopting a ‘plan ahead’ approach
Throughout the crisis, top CIOs have been able to reduce their IT spend by taking a holistic and proactive ‘plan ahead’ approach to identify the opportunities for cost reduction and action strategies at the optimal moment. In practice, once areas of the IT budget that can be streamlined have been identified, this involves CIOs using data to consider the practicality, speed, necessity, and scale of the reductions to maximize potential savings.
Taking advantage of flexibility
One of the fastest and most effective ways to cut costs is to take advantage of the flexibility built into the IT department’s cost base. By identifying areas with reduced demand and subsequently scaling down support for these IT systems, while limiting demand for services and applications, CIOs are cutting their IT spend by as much as 30%3. Taking measures such as shifting from on-site to remote support and switching to lower service levels, this ‘bare minimum’ approach ensures IT is operated sufficiently rather than excessively, while offering minimal or no impact on performance.
Rethinking IT asset management
These flexibility-driven cuts include halting the costly purchase of new hardware. Alternatively, by revaluating their IT asset management strategy, CIOs can identify opportunities to delay or stop CapEx investments, decommission systems with lower usage and replace inefficient parts with cost-effective refurbished assets to significantly cut spending throughout the asset lifecycle. In practice, this can look like partnering with a Third-Party Maintenance (TPM) provider to extend the useful life of existing assets, enabling CIOs to reduce the costs of post-warranty manufacturer maintenance while benefitting from flexible Service Level Agreements (SLA) tailored to their exact needs.
According to the IDG’s 2019 State of the CIO survey, more than 60 percent of CIOs4 are now responsible for creating revenue-generating initiatives or are part of a team that does. And in 20225 the IDG found that increasingly CEOs expect them to spearhead digital business and transformation activities to enhance customer experience and maximize the efficiency of operations too.
CIOs are no longer focused solely on technology; rather using it as a tool to achieve long-term business transformation and generate value on the top line, principally through calculated investments in innovative solutions.
Maximizing data with technology
CIOs can maximize the value of their data by using it alongside innovative technological developments such as AI and machine learning to create new value propositions and pinpoint potential new revenue streams. By digging deeper into performance data by department, project or initiative, CIOs can channel resources into areas of the business driving the most growth, and away from those that are less beneficial or damaging performance. CIOs are also leveraging external data to track current business patterns and behaviors to ensure any revenue-generating strategies can be adapted to the current environment.
Additionally, by combining external data with internal operational, sales and marketing insights, CIOs are helping to implement strategies that improve customer experience, which in turn helps to reach new customers, drive sales, and improve brand reputation – with significant revenue boosting benefits.
Automating key processes
Another important way CIOs are boosting revenue – and gathering data – is through the automation of key IT and business processes. This includes offering customers and employees self-service options that can better meet their needs and improve their experience. It also offers various other revenue boosting benefits, such as by reducing cycle time, eliminating errors, minimizing rework, cutting labor costs, and ensuring compliance.
Crucially, intelligent automation using machine learning can speed up the pace of digital transformation – especially important considering organizations wholeheartedly engaged in digital transformation are seeing nearly twice the revenue growth6 as those that have been less willing to follow suit.
A holistic approach for the ‘new normal’
60% of CIOs7 currently face ongoing COVID-related disruptions; the initial impacts of the pandemic are finally easing, yet the global economy remains vulnerable to turbulence and fluctuations. The Global Economic Prospects report predicts that if inflation remains elevated, it could result in a sharp global downturn and a financial crisis8 amongst emerging markets and developing countries.
Ongoing disruption is representative of the ‘new norm’: times in which inflation and shortages could worsen and become routine occurrences as finite resources continue to be stretched to their limits. In addition, transportation bottlenecks, rising energy costs, component scarcity, stockpiling, and skills shortages, are also adding to the financial toll placed on companies around the world.
By actioning the strategies covered, which acknowledge the close interconnection between reducing costs and prioritizing capital for technological investments, CIOs are able to adopt a more holistic approach to help mitigate the uncertainty and maximize business performance in these trying times.
Prioritize performance in your IT
At Evernex, we offer a wide range of services designed to help you make the most of your equipment. We follow industry and environment forward practices, helping to shape a more sustainable and profitable landscape in the world of IT.
Especially now, we understand the pressure CIOs are under to deliver on their financial and performance targets. If you need support in making sure your IT strategy reaches your goals, contact us today and one of our experts will be happy to help.
Sep 20 2023