Budgeting for tech projects in a financial squeeze
With the current financial squeeze expected to heap more pressure on IT teams in 2023, businesses must find smarter ways to progress tech projects
There are three ways to address planned tech projects when the money gets tight. Businesses can delete them completely, put them on hold, or try to achieve them for less than the planned outlay.
There are many reasons IT projects fail. When a project has been identified as necessary, though, deleting it completely due to external economic factors might only rarely be the right call, which leaves the other two options. As ever, the devil is in the detail, so how do organisations approach budgeting for new or existing digital transformation projects in a financial squeeze?
The role of value engineering
Many firms have actually accelerated digital transformation projects rather than having scaled them back, Lee Foster, CTO of technology consultancy Opencast, tells IT Pro. “Putting off those critical strategic tech projects might help in the short term but, longer term, it can show up as outdated customer experiences, inefficient processes and disaffected employees – ultimately impacting operating effectiveness and your bottom line.”
Nevertheless, businesses must also think hard about how to make the money they do have stretch as far as possible in the context of the cost of living crisis savaging the tech industry. This is where value engineering can play a part. This strategy is all about looking at every element of a costed project and finding if, and how, it can be achieved at a lower cost with no loss of functionality.
This is tricky – and requires expertise. Poor decisions can require additional spending later on to fix errors. The right personnel need to be involved in the exercise, and it will take time to work out what can be done differently, postponed or left out completely – and what simply must be done.
Starting to value engineer a project with a target cost reduction isn’t the ideal way to go, either. That can lead to desperate cost-cutting to meet the mark and could jeopardise the project. It’s better to take your time, and have an open mind.
Prioritising the to-do list
It’s entirely likely a business has more than one tech project on its wish list. These always have to be prioritised, even when cash flow is good. When money is tight, prioritising becomes even more important.
Related link: Why businesses should invest their way out of a downturn
Last year, Gartner devised a set of actions organisations could take to give them an edge in the light of what was then seen as the possibility of a global digital recession. These measures still hold water. Importantly, Gartner suggests taking a strategic view that allows an organisation to assess projects across a range of factors including the cost and capital structure, products, pricing, employee value proposition (because staff are increasingly hard to recruit and retain) and risk profile.
The nine areas that merit attention are: accelerating the move to the cloud; focusing on making workflows faster, simpler and more agile; rethinking support for flexible working; reimagining the customer vision (that is to say, looking from the outside in – what do your customers expect and how can you meet these expectations, because if you don’t they may jump to another provider); and taking a look at how you use digital metrics so that they truly align with business outcomes.
What to do when a project is shelved
If you cannot value engineer a project to a point it’s affordable without compromising functionality – or it isn’t found to be a priority after the to-do list has been triaged – it might need to be paused. It’s important to be brave enough to put any project on hold, and to understand and articulate clearly the consequences.
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Foster tells IT Pro that, in this situation, a business should “review the outcomes the project was intended to deliver”. Businesses should also ask: what additional technical and business risks will they have to carry as a result, and what can be done to mitigate them until the project is delivered?
It’s also really important to be aware that a shelved project is not a forgotten or deleted project. Foster advises that a business should keep the project visible on roadmaps and business plans discussed by decision-makers, while also continuing to report on the outcomes and key metrics the project was intended to address. This is so the consequences of not doing the project are clear, meaning it can be pushed up the priority list if necessary.
Stay positive and hunt for success
What’s most important in budgeting for new projects in a financial squeeze is not to think of any approach as ‘cutting’ or ‘deleting’. Instead, IT teams should take a more positive view centred on making the most of your assets, supporting the business through tough times, and maximising resources.
Finally, don’t lose sight of the fact that resources come in many forms – business finance today, business performance tomorrow, customer expectation and satisfaction, and the work experience and satisfaction of your people. All of these interplay to build up the entirety of a business’s resources.
Thinking in these terms may help businesses focus on the tech projects that really matter in an interconnected world, in which competitors and customers are also being squeezed. When everyone is in difficult times, a strategic approach and an eye on the positives can go a long way towards helping businesses take decisive action around tech projects.
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