Should inflationary pressures reduce your IT budget?
This is the question on the minds of many business leaders, as the price of just about everything skyrockets, due to both supply chain shortages and inflation.
You may be tempted to back out of IT projects you formerly green lit, but according to many figures active in both the business and IT space, this would be a mistake.
Emily Lewis-Pinnell, Vice president for cloud services at NTT Data Services, argues this would be an unwise decision: “The current inflation rate makes it imperative to remain focused on strategic, long-lead projects that will benefit organisations in the long term.”
Jay Upchurch, CIO at business analytics software firm SAS agrees, reporting he hasn’t slowed any of his firm’s technology initiatives. He stresses that his organisation’s priorities, which include “IT modernization, cloud adoption and IPO readiness” are “critical initiatives” for its future success.
In addition to this, he emphasises that such initiatives “include business benefits, like labour savings with automation, workload optimization, and streamlining audit and compliance.
Ultimately, delaying these projects due to fears over inflation, will only “create higher long-term operational costs” in his view. So while in the short term businesses may be feeling the crunch by spending on IT, in the long term digital transformation will provide a significant payback for your business.
Additionally, there are major risks associated with suddenly putting your IT projects on hold. You could be increasing:
- The risk of IT talent turnover, as talent may depart for opportunities in other companies' transformational programs.
- Your risk of losing money. This seems paradoxical, as the primary reason people are pausing projects is concern over skyrocketing prices. However, you may end up paying more in the long term to restart a project. As it could be materially more expensive in the future to complete than today.
So while you may save money in the short term, you could be impeding your long term success by pulling back on IT.
Emily Lewis-Pinnell recommends that businesses examine each project's total cost of ownership, ranking them by cost and impact.
“Don’t be afraid to cut projects that aren’t bringing you enough benefit,” she adds, suggesting that the best response to our current inflationary challenges is to be strategic and selective with IT initiatives.
The decision to rein in or proceed with IT initiatives remains a pressing one for business owners as prices rise. Ultimately, it's a decision that comes down to your perception of IT - as either a revenue driver or as a cost centre.
With the growing evidence that IT is a major revenue driver, and that digital transformation is a process companies must undergo to remain competitive, we believe the current cost hike shouldn’t deter enterprises from moving forward in some capacity with their IT.
Because when you start seeing the benefits of your projects - they'll more than pay for themselves.