Adjusting Tech Budget To Survive Post - Covid Pendamic

Key Takeaways:

IT Budget Shifts: As a result of the pandemic, traditional methods of controlling IT spending are no longer viable. CIOs and business partners are under pressure to reduce expenses while acknowledging technology's important role in business survival and growth.

Prioritizing Needs: IT managers must align technology budgets with business priorities, technological requirements, and economic realities. Lockdowns have resulted in an increase in smartphone apps such as on-demand services, entertainment, and digital payments throughout the pandemic.

Budget reason: When presenting technology budgets for approval, it is critical to provide clear reasons and correlate them with business goals. Understanding business demands is critical for making sound budgetary decisions.

Economic Impact: The pandemic has produced a substantial economic downturn, forcing firms to balance reduced revenues with increased tech spending on critical areas such as security and customer service. 

Tech Budget to Survive Post-Covid Pandemic

Here are some tech budgets to survive :

1. Survival-Mode Businesses Would Need to Reduce their Tech Budget by 30 Percent or More

This would mean reducing spending on new hardware instead of certain measures that are vital for company survival and vendor management and cutting the new project budget. Such businesses can also include layoffs of important technology employees. They need to look at their software maintenance contracts, software-as-a-service subscriptions, engineering outsourcing, and telecoms contracts.

2. Adaptive-mode businesses Would Need to Slash the Tech Budget by 10% to 20%

The main goals will be rationalization and delays. Accelerating the transition to the cloud will help minimize spending on hardware and remove maintenance costs for old on-site applications. It would be beneficial to drop obsolete or underused applications and delay major projects with longer-term payoffs. It can also make sense to use workers to conduct tasks performed by businesses or outsourcers of technology services.

3. Growth-Mode Businesses Need to Economize when Investing in Growth and Helping Key Suppliers

This climate will tempt companies with strong revenues and balance sheets to beat discount vendors — but they should not. Yes, to close new deals, and collaborate with suppliers greedy for every organization that lowers their fees. But for price breaks, don’t rely on current suppliers, which could cost credibility and potential support and might even push them out of business. Firms can be divided into 3 categories after the state has been created. The interventions recommended would depend on increasing the group the business is in.

State 1: Survivorship

Companies are still experiencing a decline in revenue in this situation and are having trouble managing regular operations. These businesses would need to reduce their technology budget by approximately 30 percent in this situation. Of course, this would depend on each company’s particular situation, it is necessary to emphasize that this is an approximation, and without sufficient previous analysis, no action can be taken in any case.

State 2: Evolutionary

In this case, we are talking about businesses that have been slightly impacted and have had only mild issues, or also slightly gained from the case. The advice, in this case, is to reduce costs by between 10 % and 20%.

State 3: Development

Not all businesses are affected by the current situation, and certain businesses are also benefiting from it. In this scenario, to sustain and increase the growth rate, it is advisable to choose the best products and cloud service providers.

Determining the Priorities of the Project to Reduce the Tech Budget

It is suggested to use a methodology developed in 1970 by Peter Pyhr for Texas Instrument to decide which projects should be prioritized, and which projects should be suspended or scrapped from our entire current portfolio. In planning or the course of implementation, this approach involves reevaluating each of the projects. We would be able to change the budget and mitigate negative consequences by doing so.

Firstly, we need to put all programs on hold and bring down spending to zero. After that, for each of the programs, we can determine the budget and build a decision process. Mandatory, transformation, differentiation, software development, and enhancement programs should be included in the traditional decision process. One of the key virtues of this strategy is that it is not important to explain why projects have been stopped at this point. We then move on to the next level of study, which is to explain why certain projects should be revived or others should be initiated.

1. Required Projects

There are projects we can’t pause or cancel. Usually, they are related to legal duties, compliance with legislation, or quality requirements.

2. Projects for Transformations

These types of initiatives must be related to the strategy of the business and concentrate on developing the organization’s potential core competitive advantages.

3. Project Key Distinction

For the company, these are critical ventures related to the added value provided by the company that allows it to remain in the market.

4. Projects for Development

Some ventures concentrate on increasing existing lines of business.

5. Projects of Progress

These programs seek to provide the company with organizational or capital efficiencies. Projects for repair or general enhancement are also included. It is often a challenging job to change the tech budget of an organization. Several variables must be considered, but I have concentrated on two basic factors in this report – the current state of the business and the portfolio of projects. Surely, users will be able to decide on projects that are appropriate for your organization and ensure your company’s survival and positive evolution.

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