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How to spend your IT budget effectively in 2023  

by David Poole | 3 mins read

Emergence Exec Chairman, David Poole shares how to stay focused as IT budgets increase in 2023.

Reading the news headlines you might be for forgiven for thinking that when it comes to tech spending generally, it’s all doom and gloom. Yahoo is the latest tech firm to announce it is laying off 20% of its staff, following similar announcements from others including Google, Amazon, Zoom, Twitter and Microsoft.

In some ways, it was inevitable. The pandemic meant that many tech firms, had to recruit workers to meet growing demand for online services as brick and mortar shops were shuttered. However, as the ‘real world’ has re-opened for business, the demand for those online services has inevitably dampened meaning that those extra workers either need to be redeployed or made redundant.

At the same time, Russia’s invasion of Ukraine has helped to trigger a cost-of-living crisis, driven largely by massively increasing food and fuel bills. This has meant that many of us are simply spending less online than ever before, contributing to many of the layoffs within the B2C companies mentioned above.

Interestingly, though, this downturn isn’t reflected when it comes to IT spending within the enterprises themselves. The latest figures from Gartner show that while the rate of growth of IT spending has certainly slowed from 5.1% growth last quarter to 2.4% this, worldwide it is still expected to reach $4.5 trillion this year.

And while inevitably a turbulent economy can cause “CIOs to become more hesitant, delay decisions or reorder priorities”, says Gartner’s Distinguished VP analyst John-David Lovelock, IT spending remains ‘recession proof.’

So just how do enterprises manage their IT budgets effectively, especially in an uncertain business environment? Here we offer a few general tips:


1. Focus on the overall business strategy

Often when business leaders think about the IT tools they need, they are thinking of how to solve a very particular problem. Many haven’t taken a step back and thought about what technology the organization as a whole needs in order to fulfil its overall strategy. As Michael Spires, principal and technology transformation lead, Hackett Group, recently told CIO Magazine: “Decisions are made in haste and in the moment without thinking about what the transformation effort needs.” He adds: “We’re still seeing a lot of silos and IT is not managing that holistically. That leads to a proliferation of tools and a lack of common tools.”


2. Don’t believe the tech hype

With all the hype surrounding shiny new tech, it is easy for business leaders to get carried away and think it’s the answer to all their prayers. Especially when countless online features promise greater efficiency and cost savings if only they invest their budget in the latest piece of software or AI-driven chatbot. As far as we aware though, no significant innovation or competitor-beating idea has been generated by ChatGPT. Yet, at least!




3. Bring people with you on the digital journey

At the heart of any tech project must be the people who use it. For example, while digital transformation programmes are rightly considered essential for any modern business, they’re not always successful. In fact, a report from McKinsey (admittedly from 2016) suggests up to 70 percent of digital transformation fall short of their intended targets.

“Sustaining a transformation’s impact typically requires a major reset in mind-sets and behaviors, something that few leaders know how to achieve,” it says. In other words, digital transformation isn’t just about technology, it’s about the people who use it.


4. Recognise people’s fears of technology (and of being replaced)

While it’s certainly true that some people fear change for irrational reasons, it’s also the case that many just fear losing their job to a robot! However, most technology to date hasn’t so much made people redundant (which is why we are all working so hard) but changed the nature of what they do.

That’s why when many experts talk about the current industrial revolution – often referred to as Industry 4.0 – they refer to augmented, rather than artificial, intelligence as it is technology that helps people work in a more intelligent way. In a similar way, people on factory floors or in warehouses now work alongside robots, or cobots as they are known.


5. Outsource tech help where you need to

Extremely high competition for IT talent makes it difficult for many organizations to recruit the workers they need to carry out tech projects successfully. That’s why many are bringing people in instead. Gartner predicts spending on consulting is expected to reach $264.9 billion in 2023, a 6.7% increase from 2022.

“CIOs are losing the competition for talent,” says Gartner’s Lovelock. “IT services spending is growing more quickly than internal services in every industry. Skilled IT workers are migrating away from the enterprise CIO towards technology and service providers.”


6. Get started and defeat analysis paralysis!

Business transformation can feel a little overwhelming. You can spend ages investigating, analysing and discussing it without actually achieving anything meaningful: a phenomenon known as ‘analysis paralysis’.

That’s why it’s important to quickly identify particular pain points within the business and simply get started! After all the only way you are going to know if your plan is going to work is to try it. Emergence is here to help with Value Finder our diagnostic service, which provides a forensic assessment of your people and processes as well as identifies revenue-generating improvements you can make.

Talk to us about how we can help kick start or accelerate your transformation journey in 2023 and beyond HERE.