How can businesses keep on top of tech costs in an inflationary environment?

Amidst today’s heightened inflation and interest rate environment, it can be challenging for companies to stay on top of technology costs and keep investing.

Chief Technological Officers (CTOs) must seek to balance forward-looking innovation with the rising cost pressures. In addition to the expense of maintaining existing systems and the complexity of multiple licenses, the last few years have seen an increasingly developed cyber threat landscape, with businesses facing huge pressures to protect internal and external data against malicious actors.

With these competing challenges and pressures, how can businesses ensure the quality of their systems and build cost-effective technological innovation into a company’s development plan?

  1. Balance strategy and costs using a tech roadmap

CTOs face the challenge of providing clarity on tech strategy and costs, at a time when effective cost management is high up the agenda. A strong tech roadmap is an invaluable tool to assist with this, helping to communicate the strategy and keep the business to plan. This will ensure that everyone understands where the business is investing, and what will happen if that investment doesn’t take place.

Although it’s near-impossible to predict the year ahead, a solid tech roadmap needs to consider both the risks and costs of tech investment, but should also remain agile enough to adapt to unplanned threats and financial pressures. This roadmap should have board approval, allowing for 360-visibility, alignment on the plan and giving key stakeholders the option to refer back to it throughout the year.

  1. Economies of scale

With cost-effectiveness in mind, tech contracts can be negotiated and volume discounts should be utilised. This is a benefit of using external partners such as BCN’s flexible IT managed services. Partners can recognise how the price compares, but crucially understand the level of service provided, so CTOs don’t negotiate a cheaper rate at the expense of requirements. Negotiation is an art, and it’s key to striking the balance between gaining and losing.

  1. Open-source code

CTOs should also look to explore free or lower cost software options, including open-source code, which can result in significant cost-savings for organisations. Open-source projects often have large and active communities of developers who can provide support and guidance, minimising spend on dedicated IT staff or in-house problem solving. Open-source code can also be customised to meet specific business needs, providing greater flexibility and control.

  1. Automation

Furthermore, automation can be harnessed to streamline processes and costs, particularly around maintenance. However, progressing slowly is the key to effective automation. Managers should look to gradually reduce team commitment, as gently-integrated automation can begin to take on lower-stakes maintenance tasks. Likewise, it’s important for leadership teams to have internal conversations around strategy to determine to what extent automation will be used alongside human capital, and any ancillary impacts that should be considered.

  1. Optimisation

As the cost-of-living crisis continues to pinch at profit margins, it’s never been more important to be rigorous on costs. Businesses must continue to re-evaluate existing technology and decide whether it still delivers value. This can be done through referring to the tech roadmap and assessing the existing tech stack against it.

Companies can also be over spec’d for their needs, with many products that aren’t fully utilised and with excess licences, which can become ‘business as usual’ costs if not examined and assessed for utility. These licences will need to be checked against usage, especially if they are used by third parties.

Ultimately, although CTOs face enormous pressure to cut budgets, there are many areas where it is important to preserve both maintenance and investment in technology to adapt to the challenges of tomorrow. Short-term savings may ultimately lead to long-term costs, both financial and reputational. If tech maintenance can be streamlined, however, with a focus on being well-managed and cost-effective, there will be clear, demonstrable value.

About the Authors

Mark Rotheram is CTO at BCN. BCN Group are a team of over 260 technology advisors, cloud specialists, software developers, security experts, project managers, and support operators. Based across four sites covering the north of England, we are one of the fastest growing and most trusted Managed Service Providers in the UK.

Duncan Ramsay is Partner at ECI Partners. ECI is a leading private equity investor, focussed on offering collaborative support to management teams. We pride ourselves on being straightforward to deal with, we help where we believe we can add value, and we work in absolute alignment with management teams. This is how we’ve delivered such exceptional results for over 45 years.

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