When to Spend Your Tech Budget Dollars in 2021

In the first months of 2021, IT tech budget spending is on the rise, as as expected. In fact, according to a recent survey, 49% of IT managers revealed they were planning to spend more this year than last, given the rapidly changing requirements of the digital world. Simultaneously, a third of these managers plan on seeking ways to maximize cost savings to help them to absorb the new expenses. (Source: Flexera 2021 State of Tech Spend Report) The report, which was derived from the responses of 474 executives and high-level managers in IT, assessed the technology initiatives in which their colleagues are investing.

What is TVO? Technology value optimization (TVO) is the IT management practice that ensures visibility into a company’s entire hybrid IT asset landscape – both on-site data centers and in the cloud – to merge management of IT services and financial initiatives. What follows are five concrete TVO steps IT departments can take to identify where they currently spend, and how they can reinvest in technology initiatives.

1. Advance beyond reaction to COVID-19: The pandemic had a significant impact on organizations and the speed with which they could address digital transformation. 57% of survey respondents increased budget dollars for SaaS, and 49% increased money for cloud services. Tech budget dollars for on-site software is being reduced in 36% of organizations. Returning to “normal” is not the goal. The permanent addition of a remote workforce will require upskilling and reskilling employees, along with best practices which will accompany these new standards.
2. Identify wasted budget dollars:
   Nearly a third of total IT budget dollars are ultimately wasted. This number should give every IT manager pause, and while shocking, the knowledge can help managers to capture and reinvest those dollars which can be used for better purposes. Improving the efficiency of budgetary spending can support better digital transformation initiatives. A decrease in waste of 5% to 10% can represent meaningful improvements in what your IT department can produce. Companies who have lost budget dollars can reinvigorate their spending by identifying waste.
3. Associate spending with business services:
   According to 51% of survey respondents, the primary challenge in IT budgetary visibility, for the second year, is the ability to report on how the IT budget is allocated across business services. These services, which depend on multiple applications across multiple technologies, may share cloud resources, databases, hosts, processors, and storage with other departments and services. Identifying how those assets are utilized as demand ebbs and flows, is an important component of mapping your consumption from service to service.
4. Research decentralized IT departments:
   Decentralized IT tech budget spending is expected to continue, as diverse units in large corporations leverage the technology best suited to deliver the best business value. Permitting managers to make on-the-spot decisions to meet their markets’ requirements can promote agility and flexibility. However, it can also result in redundancies, security insufficiencies and double-spending by way of shadow IT. Business units should look to partner with IT to ensure that IT and software management teams have visibility into all technology assets.
5. Strategize for growth: Efficient daily operations often devour IT leaders’ time and attention. But attention to innovative growth is equally important for an organization’s long-term success. Growth relies on alignment between IT and business units. As a benchmark, IT departments on average spend 64% of their budget to running today’s environment, with 36% allocated to new initiatives and innovation.

If you are looking for strategic and forward-thinking ways to bring your IT tech budget spending into line, call Alliance IT. We can help you to assess your current situation, identify your short- and long-term goals, and find technology solutions to get you to your goals.