Companies often invest in technology, thinking it will get their company ahead. However, they quickly discover that not all investments are wise investments. Companies are taking a step back to scrutinize investments and determine ROI before moving forward.

Why IT Budgets are Being Scrutinized

A higher level of scrutiny is tied to pandemic recovery. During the pandemic, companies were racing to adopt technology to keep their company afloat. Any system was worth the price of staying in business.

Around 2023, the tide changed. Companies no longer had an urgency to adopt. They further realized some of the products they invested in were not producing an ROI. CIOs had to determine which products would benefit their company and budget accordingly.

Is Renting vs. Buying the Solution?

Companies are seeing higher success by adopting a ‘rent vs. buy’ sensibility. Renting equipment and subscription plans allow them to determine if systems will benefit ROI. If they are not seeing the desired ROI, they can simply cancel their subscription and pivot to another system.

This strategy is also commonly adapted to talent acquisition. Companies find that skilled talent is challenging to come by. Highly skilled workers tend to move to technology-specific organizations. Existing talent may require time and cost-intensive training.

Organizations are overcoming these barriers by outsourcing tech talent. They can access the services they need without investing in training. The system also reduces expenses related to talent acquisition.

How to Scrutinize Your Tech Systems

CIOs must adapt to advanced scrutiny by choosing products they know will benefit their company. Here are some things to look for.

• Alignment with Business Goals: Businesses must determine which problems they seek to solve. Does the new technology help them mitigate pain points? Will it help their company run more efficiently?
• Integration: Does the new technology integrate well with existing systems? A system that is easily integrated will be easy to work with. If the system does not integrate well, you may spend time and money to make it work seamlessly in operations.
• Scalability: Choose systems that will scale up or down to suit your business needs. Scalable systems reduce the need for manual adjustments and ensure you don’t pay for features you don’t need.
• Cost: Cost goes beyond the initial investment in the product. You must also consider how much the system helps you save, depreciation, and investments in technology that support the system.
• Quick Adoption: Is the product easy to use? Will you need to train employees on new systems? Training can lead to added expenses and a reduction in productivity. It’s best to choose products your staff can adopt quickly.
• Security: Choose systems with advanced security features that keep customer information safe.
• Risks and Benefits: Cybersecurity is a significant risk. However, new technology can also increase risks like downtime and reduced regulatory compliance. Organizations must choose low-risk products. More than that, the product should reduce risks within the company.

Technology that meets these requirements should boost ROI and favorably impact your budget.

How to Improve IT Budget Management

Making wise IT investments is only part of effective budget management. Leaders must also:

• Review Your Current Budget: Conduct a review looking for areas of overspending and underspending. Determine improvements that can support the ideal balance.
• Establish Spending Priorities: Companies must prioritize essential tech investments like cybersecurity. Technology that doesn’t support direct business goals should take a back seat.
• Choose All-In-One Solutions if Possible: Organizations may run several subscriptions or use various tech products to address needs. However, one system or subscription can often solve issues, leading to money savings.
• Train Your Team on Cost-Efficient Processes: Cost efficiency should be a companywide mission. Work with your teams to create more efficient workflows that promote cost savings. Teach them to identify areas of overspending. Even something as simple as shutting down systems after work to reduce electricity use can lead to spending reductions.
• Analyze Your IT Budget Regularly: Continue analyzing your IT budget to determine if it meets company needs. Spending priorities and pricing can change over time. Ensure your system is still meeting your organization’s financial and operational standards.

Want to learn more about processes that support your operations? Sign up for our newsletter today.