CIOs will feel the pinch of corporate belt tightening in 2023, according to a Gartner survey of more than 2,200 CIOs.
IT budgets are projected to increase by an average of 5.1% in 2023, lagging behind a projected 6.5% global inflation rate, the report, released Monday, said.
To overcome the 1.4 percentage point difference, Gartner says CIOs should:
- Prioritize tech projects that show top- and bottom-line enterprise growth.
- Use clear metrics to demonstrate the value of digital investments.
- Deploy IT staff to business-led fusion teams.
Pressure to deliver digital dividends is nothing new to most CIOs, but it’s likely to increase in the coming year, as inflation remains high and enterprises trim budgets in response to slowed economic growth.
The belt tightening comes at a time when CIOs are still wrestling with supply chain disruptions and difficulties sourcing tech talent. Doing more with less complicates an already knotty situation.
“I have never in my life met a CIO who says, ‘I have plenty of budget, plenty of time and plenty of resources,’” said Janelle Hill, distinguished VP analyst at Gartner, in an interview with CIO Dive.
“The list of things their business expects them to accomplish is always way bigger than the budget they have,” Hill said.
The focus for CIOs has been on modernizing internal operations and customer-facing technology. More than half of respondents cited improving operation excellence as their top objective, and just under half cited improving customer experience.
In contrast, growing revenue was the leading concern for only 27% of respondents, and just 22% cited improving cost efficiency.
Reconfiguring those priorities will be key in the coming year.
“Senior executives are essentially saying, ‘show me the money.’ They’ve been investing for years [in modernization] and they want it to show up in the financials,” Hill said.
Gartner recommends CIOs take several actions to highlight the impact of IT spend. Pushing digital initiatives that have market-facing growth potential and using clear metrics to attach accountability to individual projects and demonstrate their value are two strategies outlined in the report.
“Look across initiatives that are in flight, identify those that are likely to have the best short-term impact on your financials, make sure they are on track and accelerate them by redirecting resources,” Hill said.
Companies lacking a COO to coordinate and prioritize initiatives across business functions can find that kind of leadership in their CIO.
“Most companies that weren’t born digital don’t have a chief operating officer,” Hill said. “The CIO is the best proxy for that role.”
Fusion teams are another way for CIOs to reach financial benchmarks while getting the most out of technology staff.
“Stop trying to do everything yourself,” Hill said. “Put some of your best IT talent on fusion teams that bring technologists together with business subject matter experts to work on prioritized initiatives. That’s how you accelerate an initiative.”
