How businesses can better navigate technology spend

Holographic representation of cloud computing over open businessman's hand
(Image credit: Shutterstock)

“Tech is breaking out of tech”, as I was once told, and this has never been truer than in 2024. Every company is now a technology company, whether it sits within the automotive, manufacturing, retail, financial services or other sectors. While new solutions are enabling incredible modernization across various industries, we are currently in a position where the amount of technology and data organizations have to manage is growing exponentially.

This means we must be more tactful in how we navigate this challenging landscape, especially as many companies look to implement even more technology to further optimize processes. The strategic importance and purview of technology leaders has changed dramatically in recent years and its key that we all re-evaluate how we assess and control tech spend.

Ajay Patel

General Manager, Apptio.

Technological advances create ripple effects

Artificial intelligence (AI) and cloud computing represent areas of technology that continue to evolve. With AI, we have seen waves of innovation, most recently with generative AI, leading to a flurry of investment. Similarly, the adoption of cloud computing has continued to accelerate, and both of these modern technologies are energy and resource-intensive, requiring significant investments to support associated projects.

But the complexity isn’t limited to innovation in software and hardware. The expansion of diverse technology footprints increases cybersecurity risk and invites further regulatory compliance and governance considerations. There is also the matter of shifting from CapEx to OpEx and variable spend models along with decentralised provisioning, making spend less predictable.

Cost management is more essential than ever

Factoring in all the above, it is easy to see how costs can quickly spiral out of control. How do you effectively wrap your arms around such a vast and multi-faceted technology footprint? Over half (55%) of business leaders say they lack key information regarding their technology spend decisions. Equally, despite the promise of cloud, including scale, security, flexibility and faster innovation cycles, the vast majority (75%) of enterprises cannot boast a solid ROI from cloud transformation.

Managing costs becomes an absolute imperative and costs can accumulate in a multitude of places. To name just a few, technology leaders must monitor for redundant applications, overprovisioned IT infrastructure, underutilized software licenses, the technical debt of legacy systems and inefficient vendor contracts. The variable spend model of cloud also introduces a host of new challenges, including risks of overprovisioning, leaving resources idle or underutilized and, more generally, navigating the labyrinthine of pricing and discount models across public cloud providers.

Even though Gartner predicts an 8% increase in IT spending in 2024, increased technology budgets come with very serious provisos – and company leadership wants to see performance, and not just technical performance of the solution but positive outcomes for the business. Tying investments to outcomes when operational and financial data is spread across a multitude of systems and business units can feel like a monumental task. It becomes more challenging when you are trying to connect technology spend to key corporate objectives like operational efficiency, agility, resiliency, risk reduction or revenue. No matter how difficult, these are the expectations technology leaders face.

Harnessing tech investment growth requires a modern approach

In the past, when businesses grew and inevitably became more complex, you could solve complexity through personnel – hiring more people as the solution to this challenge. However, technology is accelerating too quickly, and you cannot solve an exponential problem with a linear solution. The wrench is no longer useful. Modern technology management requires proper tooling and automation, a single source of truth for monitoring and optimizing investments. There is no other way to keep pace in this dynamic environment.

However, there are new tools that can help. For example, solutions that allow companies to efficiently collect operational and financial data from across the enterprise and, importantly, translate that data into terms that stakeholders across the business can understand – outcomes.

We have seen the impact of such technology through our work with companies such as Unilever. Since adopting more holistic solutions it has been able to align IT capabilities to enterprise strategy via cost transparency. To the extent that its IT team has established complete end-to-end ownership of services with clear visibility into costs.

With tech investments working in alignment with corporate objectives, the business of managing technology can move from a focus on basic run-the-business costs to grow-the-business innovation. This evolution is where we see companies take the reins of their technology spend and use it to successfully accelerate into the future.

We feature the best cloud cost management service.

This article was produced as part of TechRadarPro's Expert Insights channel where we feature the best and brightest minds in the technology industry today. The views expressed here are those of the author and are not necessarily those of TechRadarPro or Future plc. If you are interested in contributing find out more here: https://www.techradar.com/news/submit-your-story-to-techradar-pro

Ajay Patel, General Manager, Apptio.