Who decides when to spend money on IT to make money?

Who decides when to spend money on IT to make money?

James Petter, General Manager International at storage provider Pure Storage, explains the tension between CFOs, CIOs and CEOs when it comes to investments in IT.

“When the Covid-19 pandemic broke out in March 2020, most companies reacted decisively and quickly. The need for entire workforces to work from home and companies to close their doors increased the pressure on companies to digitally transform. Large parts of the IT budget were used for short-term, urgent projects. Company leaders agreed that they had a great responsibility to keep operations running and protect their businesses from physical and financial disruption. In many cases, longer-term strategic investments have been postponed.

However, soon after this initial consensus in corporate management, there was a sustained internal power struggle in many companies between the CEO, the CFO and the CIO: The CEO (Chief Executive Officer) primarily wants to get the company back on track for growth, while the CFO ( Chief Financial Officer) wants to be more careful with budgets and withdraw from extensive investments. The CIO (Chief Information Officer), in turn, sees worthwhile opportunities for long-term technology spending. In the face of the uncertainty and intense pressure many organizations are facing, the CFO’s conservative view has prevailed in most cases and has dominated the IT spending agenda. On the way to 2022, however, the tide is turning quickly.

Power struggles to prioritize spending

Despite the caveats brought about by the new variants of Covid-19, the business environment is generally much more positive. Executive teams are craving more flexibility in their IT infrastructure to respond quickly to new opportunities to gain competitive advantage and not be hampered by legacy systems. The pressure on business leadership has now shifted to an emphasis on agility: both in terms of the infrastructure that supports the entire business and in leveraging data to generate strategic insights and business intelligence. 83 percent of respondents in Pure Storage’s most recent survey found this approach essential to achieve innovation and growth.

The power struggle between the CEO and CFO is now much more balanced, with the CEO’s growth perspective now driving the conversation. Additionally, the importance of the CIO’s role is widely understood and respected. Your knowledge has proven vital in keeping business running during a pandemic. CIOs are in a position to advise the broader board of directors on worthwhile technology investments that will help the business mature and grow.

According to a recent study by ESG (2022 Technology Spending Intentions Survey), the top three factors justifying IT investments were strengthening cybersecurity (38 percent), improving data analytics for real-time business intelligence and customer insights (33 percent), and the Improving customer experience (30 percent). This shows how important and well-known the right IT investments have become. If not done correctly, it can have serious consequences for a company, e.g. E.g. ransomware attacks, insufficient response to customer needs or insufficient use of company data. The survey highlighted the importance of improving customer experience as a direct link between investments and projects that help grow a business.

Growth-enhancing IT investments

Companies that don’t want to lose their momentum need an IT infrastructure that is as fast as it is reliable. For business leaders, however, what matters is not the technology itself, but what it enables. Good technology investments are about supporting a business. Business leaders and IT leaders want better results and faster, smoother IT performance. They don’t want to worry about the infrastructure or hardware needed to do it – they just want a polished, seamless end result that enables a growth trajectory.

Meanwhile, investments in subscription and as-a-service models help the CFO in their need for financial stability. They allow for a better prediction of outgoing revenue because they commit to smaller regular payments rather than large one-off costs.

Maintain the “invest to grow” mentality

A leadership vision can be held back by infrastructure. In order to achieve the flexibility, customer orientation and innovation that companies strive for, IT needs modern technology that offers a cloud operating model and can be used flexibly by being set up and dismantled as needed. The freedom this approach offers frees companies more time and resources for growth-oriented investments.

By the end of 2022, companies will significantly move away from survival mode and into recovery mode. They will increasingly shift from the CFO’s hesitant attitude to embracing the CIO’s strategic tech investments to meet the CEO’s growth plans. The old adage “You have to spend money to make money” has never been truer than it is today.”

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