More than 90% of tech leaders said they expect IT budgets to keep growing into next year, despite uncertainty in the market, according to a Forrester survey of 2,200 business and technology decision-makers.
The study indicated executives expect larger budgets for software and technical staff due to increased demand for AI and modernization, but the report noted that much of the projected 2024 tech spending growth will only offset inflation.
“As we edge closer to 2025, technology leaders find themselves at a crossroads, navigating through a mix of economic, technological and geopolitical uncertainties,” Matthew Guarini, vice president, research director for Forrester, noted in a blog post.
Michael Curry, president of data modernization at Rocket Software, said CIOs should focus on prioritizing investments that offer both immediate and long-term benefits.
“Many companies today are already prioritizing AI and modernization, and CIOs should continue to emphasize these areas as they support growth and customer retention while creating a foundation for future cost savings,” he said.
Implementing AI in cost-effective ways across the business can reduce inefficiencies, allowing employees to focus on more strategic initiatives.
To manage inflationary pressures, CIOs should consider reallocating funds from lower-priority areas or projects that don’t align as directly with long-term strategic goals.
“The key is to continue investing in AI and modernization, as these areas are likely to yield returns that can offset rising costs, both now and in the future,” Curry said.
He noted the reallocation process may not be a significant shift, but rather a continuation of the trend where modernization and AI are at the top of the priority list, enabling other investments to be optimized or scaled back accordingly.
“Balancing rising costs in AI, cloud, and tech talent while keeping digital transformation on track is a tricky task for CIOs,” Curry added.
He said CIOs can also investigate ways to optimize cloud costs by implementing a FinOps approach to track and manage expenses.
“Automating routine tasks can free up your tech team to focus on more strategic projects, which keeps your digital transformation moving forward without needing to hire more staff,” Curry said.
Jim Liddle, chief innovation officer, data intelligence and AI at Nasuni, said the key is to start small and show AI’s value before fast-tracking expansions.
“Focusing in high-value AI use cases that will deliver specific and meaningful ROI will ensure CIOs can stay within budget while operating against the pressure to modernize,” he said.
He explained at the heart of AI advancements and modernization efforts is a company’s corporate data, and that is where many organizations are finding opportunity for cost savings that can be reappropriated for other uses.
“It’s not a matter of storing less data,” Liddle said. “It’s a matter of storing it smarter and eliminating existing storage silos that tend to create redundancy.”
From his perspective, CIOs must leverage cloud-based object storage to analyze how and where they store data.
By doing so, they can then cut costs on expensive backup and recovery solutions that become redundant and unnecessary once files are stored in object storage, thanks to the inherent immutability and instant recovery capabilities that exist there.
“Another area to investigate is to extend the life of some technology investments,” Liddle added. ”Rather than replacing a piece of software on its standard lifecycle, can you get 1 or 2 more years out of it without hampering productivity?”
He explained the resources that were then planned for a replacement can be invested in other value-generating solutions.
In addition, CIOs should look for specific productivity gains and cost reductions through leveraging AI services and cloud resources.
“Productivity gains will be hard to measure on the short-term basis, but as results are demonstrated in reducing cycle times and improving quality, the long-term benefits will emerge and will facilitate the business transformation that is promised,” Liddle said.
