Organizations are spending more on digital transformation (DX) than ever before. According to the International Data Corporation (IDC) Worldwide Digital Transformation Spending Guide, global DX spending is forecast to reach $2.8 trillion in 2025, more than double the amount allocated in 2020.
“For the first time, IDC has forecast global DX spending to exceed $10 trillion over a five-year period,” said Craig Simpson, senior research manager with IDC’s Customer Insights and Analysis Group.
But not all organizations that don’t hesitate to increase their IT spending reap the hoped-for benefits, which include everything from increased profits to better agility to higher customer satisfaction. Why? Because simply throwing money at IT doesn’t ensure an alignment of IT and business strategy.
To achieve the desired business-IT alignment, organizations need to be more strategic about their tech spending, and the tips below are here to help you.
Technology has become an important enabler of growth and a major driver of competitive advantage. Despite its importance, you should still be realistic about your tech budget and know how much you want to and, most importantly, can afford to spend.
You can start by calculating the bare minimum amount of money you absolutely have to spend to maintain your IT infrastructure. Even when things get tough, you shouldn’t try to save money by lowering you minimum IT budget.
Next, establish a maximum IT spending threshold based on your objectives, business budget, and research. This threshold is not to be exceeded under any circumstances since its purpose it to prevent IT expenses from siphoning the life out of your organization.
Tech spending shouldn’t be just about investing in new, shiny IT assets. It should also be about the optimization of IT asset utilization. More specifically, you should constantly strive to eliminate inefficiencies and redundancies.
There are many organizations that desperately cling to legacy IT assets, maintaining them alongside modern alternatives because they’re so deeply ingrained in some of their workflows that they can’t imagine life without them.
The inability to eliminate redundant IT resources leads to higher IT expenses, more downtime, and more complicated troubleshooting. An experienced provider of IT services should be able to help you root out waste by suggesting the right technologies and approaches.
Just because all your competitors are using a specific IT solution doesn’t necessarily mean that it’s the best solution available. And even if the most popular solution has more bells and whistles than other similar products, it may not be ideal for your organization.
Before you make any major IT spending decision, you should do your due diligence in researching available alternatives. The web can be an indispensable ally when exploring the IT landscape and comparing different products.
Review websites like Capterra and G2 make it easy to discover what other organizations think about the products they use, and there are also forums where business owners exchange tips and support one another. Of course, you can also count on your IT provider to help you make the right choice.
Where do you see your organization in one, five, or ten years? Does your current IT infrastructure support your vision, or do you need to make certain investments so that you can confidently achieve your business goals?
Questions like these can help you align your tech spending with how your business will change in the years to come. For example, if your goal is to double in size, then it makes sense to invest in solutions that can unlock the necessary scalability.
When planning for the future, don’t forget that your needs may change in ways that you can’t reliably predict at the moment (just remember how much your needs have changed since the outbreak of the COVID-19 pandemic). The last thing you want is to be in a vendor lock-in situation, unable to use another vendor without substantial switching costs.
It can be difficult for SMBs to be as strategic about their tech spending as they would like to be because of their limited IT experience and expertise. Fortunately, they don’t have to work toward the desired business-IT alignment alone.
Managed IT Service Providers (MSPs) are happy to navigate SMBs through the complexities of IT, suggesting budget-friendly solutions based on their current needs and plans.
When choosing an MSP, it’s important to pick an IT partner who understands your industry and can offer a personalized approach that reflects the unique challenges you face. We have been helping organizations like yours make smart tech investments for years, and we would be thrilled for the opportunity to show you what makes us the right choice. Book a free consultation today.