ARTICLE
Authored by RSM Canada
Technology utilization has long been a key differentiator for successful middle market companies. But as new solutions and innovations continue to flood the market, information technology (IT) investments are becoming more difficult to prioritize and manage. Companies may know where they want to invest money, but they might not always know where it will come from, especially in an uncertain economy.
Your company needs to spend on technology for a variety of reasons, from increasing productivity to improving the customer and employee experience and providing more effective security for data and intellectual property. But the decision to make investments and the timing often comes down to one critical question: where are the dollars?
Many companies look at the bottom line and may not see the flexibility for increased technology spending. But there may be a solution to optimize IT investments and also discover potential funding. The reality is that not every middle market IT organization is right-sized to meet the need of the business. However, implementing a four-step process can create an environment that balances spending while uncovering opportunities for implementing modern technology resources.
A framework for more IT financial flexibility
Through the following exercises, your organization can gain more visibility into your current IT programs and applications and design a more confident plan for future IT spending.
Assessment
Take a detailed look at your technology infrastructure and budgeting process. How often do you look at your environment and budgeting processes? Do you have any visibility into how peers are managing technology and what solutions they have in place? Are you keeping pace with modern technology?
Low-hanging fruit
Are there any applications or programs that can be quickly right-sized? Are you paying for more capacity or licenses for certain applications than you need? What quick wins can you take advantage of?
Execution
Rationalize your IT framework and investments. Do you have any duplicate systems to combine into one? For example, many companies operate separate customer relationship management (CRM) systems in different departments. Aligning data under a single umbrella could reduce spending, allowing for additional investments.
Ongoing demand and governance
IT is commonly a reactive department. Ensure you have tight governance in place and encourage business units to make the right technology decisions that align with the digital and technology strategy for the company as a whole. An agile and business-aligned IT department can free up money for ongoing digital transformation while reducing duplication and minimizing off-strategy technology decisions causing system proliferation, reduced interoperability and increased cost.
When done right, this framework can be a recurring exercise to evaluate IT resources, identify gaps and discover potential additional funding to redirect to emerging innovations.
With the possibility of a looming recession, value will become more important in the middle market. Investments in technology cannot stop, but they will likely come under more scrutiny. A periodic look at your strategy can help you determine what opportunities are behind the technology and create more flexibility through several tactics, including turning off dimensions, adjusting support or addressing individual departments that may have their own digital strategy.
As an additional byproduct of streamlining IT finances, the chief information officer (CIO) or other technology leaders can become more strategic resources to leadership, providing guidance on maintaining digital progress in calm economic waters or during potential downturns.
If a mechanism is not already in place, your company should act quickly and implement a framework that evaluates the true value you receive from your technology framework—an ongoing transformative exercise that funds itself.
RSM’s experienced technology advisors can evaluate your overall IT strategy and work with you to uncover opportunities to get the most out of your investments now and into the future.
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This article was written by Rhys Morgan and originally appeared on 2023-06-15 RSM Canada, and is available online at https://rsmcanada.com/insights/services/digital-transformation/enabling-it-investment-by-cutting-costs.html.
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