22nd March 2022:
The start of 2022 marked a significant shift for businesses with many leaders turning their attentions away from urgent firefighting, to focus on creating new digital businesses fit for future growth. According to Deloitte reports, 94% of CFOs expect to invest more in digital technology in 2022. In fact, further findings from Deloitte’s 2020 Global Technology Leadership study reveal that almost eight in ten (79%) respondents have recently undertaken a technology-enabled transformation or are considering one.
Pressure is mounting on CIOs and their IT teams, with the ongoing ramifications of the pandemic still making lasting impacts on the global economy, which is expected to run into multiple roadblocks on its way to recovery. While having to operate in a more complex and dynamic environment, they must also deliver greater customer value at faster rates with tighter budgets. To ease the pressure IT teams are under and truly benefit from digital transformations, organizations must shift their current operating models and mindsets to focus on transparency.
In a recent interview Alex Becker, Chief Operating Officer at Serviceware, spoke with Peter Grydgaard, Partner at Deloitte Denmark, about the partnership which combines the leading ITFM tool with the leading practitioning consultancy. The two shared their expertise on how CIOs and CFOs can deliver optimum business value from their technology investments by:
- gaining complete transparency over their IT costs,
- delivering more efficient IT services, and
- moving the conversation from one about costs to one about value.
Unlocking intelligent IT investment decisions
The dramatic changes over the last 18 months have left businesses burdened with unforeseen pandemic-related expenses and vital investments to support virtual business operations. As a result, many business leaders have had to minimize their costs elsewhere to guarantee a stable cash flow. Pressure has been mounting on the c-suite to not only perform and build resilience in order to survive the ‘now’ but to also fuel future business growth.
Peter Grydgaard, Partner at Deloitte Denmark, who helps clients bridge the gap between finance and IT commented, “Everyone was nervous about the consequences of COVID and how their businesses would be impacted by it – and there is no simple answer. At the beginning of the pandemic, most companies held back investments in technology. Now, companies are positioning themselves to be ready for new opportunities by investing more in the latest technological capabilities and adopting more flexible ways of working within the organization.”
Of course, many companies strive for increased digital investments, however, tightened purse strings have also put the CFO in a tight spot. Therefore, businesses need to reconsider their current spend and discuss how to create efficiencies to free-up existing budgets.
“Whilst projects are being initiated everywhere to drive the business forward with IT, the level of investment needed and particularly the long-term run costs are underestimated. Therefore, creating an effective management toolset around this sooner rather than later is the best insurance to keep costs under control and achieve maximum business benefit from digital investments,” said Alex Becker, COO at Serviceware.
Investing in the cloud to support Green IT
Along with the challenges surrounding cost, the c-suite is also under pressure to boost sustainability and invest in initiatives like Green IT. For organizations committed to reducing carbon emissions and fostering innovation, a move towards cloud adoption is considered a more environmentally friendly as well as cost-effective option for data management.
Grydgaard commented, “Working towards net-zero and eliminating the emissions from your own IT operations is a significant part of reducing costs. Our research shows that, for many, cloud computing is already a cleaner and welcome improvement. Less hardware running and fewer workloads means less electricity consumed. However, cloud data centers still need electricity to power them. That’s where greener, sustainable cloud computing comes in, replacing fossil fuel-based grid energy with renewable resources.”
What is needed to ensure cloud investments meet these needs and drive value? Becker explains, “You need good data on the current total cost of ownership of a service that you want to move to the cloud, as well as the associated volumes and consumption patterns. It’s important to know how much a service costs you today, as this can help determine whether an investment in the cloud makes sense in the short and long-term.”
Why proving value will be key to future investments
Preparing for any form of digital transformation requires strong levels of transparency around prospective investment costs against ultimate ROI. In other words, investment of any kind must be able to prove its value, and fast. Alex Becker explains, “Transparency and a clear view of data is the basis for good decision making. If you are a CIO or CFO and do not have this transparency, you’ll struggle to make informed decisions. The best-case scenario is that this “only” slows you down in your decision-making, for example, it takes the organization a lot of time to get the right data for a business case to justify the investment. The worst-case scenario is that you make the wrong decision, which ultimately impacts your business.”
Grydgaard explains, “A more flexible approach to planning and forecasting is, therefore, required. We recommend creating scenarios to prepare for different, maybe even extreme, conditions in your business. If you plan for the future, you might be well advised to think about different options: quick recovery, longer inflation and recession – who knows. Having the tools in place to easily create and compare such variants makes you much more flexible and adaptable.”
Becker concludes, “For me creating the necessary transparency and establishing a database that allows you to flexibly analyze and adapt your cost base is crucial. Therefore, companies should have a clear steering model for their technology costs, which includes processes and governance.”
The full video interview can be found here and for further insights Grydgaard and Becker will be presenting together at a ‘Grab and Go’ session on 3rd May on the topic of Digital Cost Optimisation – Controlling the Digital Money Monster.