Home > At What Cost: Rethinking Resource Management in 2024

At What Cost: Rethinking Resource Management in 2024

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Shrinking resources pose formidable challenges in today’s enterprise environment, with almost half (46%) of CIOs reporting their budgets will stay flat or shrink in 2024. Across diverse sectors, budget constraints threaten to profoundly impact IT teams' ability to deliver high-quality services. In the first of our four-part series tackling the needs of IT pros today, we explore approaches to turn cost management from conservative penny-pinching to a strategic lever for driving growth. Let’s dive in.

Today's Cost Landscape

Enterprise leaders struggle to balance ambitious goals with constrained budgets. Talent acquisition is a persistent concern as skilled professionals demand higher salaries in a competitive market. Rapid technological advancements require enterprises to invest in digital transformation or risk being left behind. All the while, increased digitization multiplies the range of entry points for bad actors, making security and compliance spending an added priority.

As technology becomes a critical competitive battleground, CIOs play a pivotal role in shaping strategies that balance innovation with cost-effectiveness. Many are looking beyond short-term cost reduction to strategies geared toward long-term value creation.

Optimizing Current Infrastructures

Historically, outsourcing IT functions enabled cost efficiency and risk transfer. However, for many enterprises, this approach has led to complex arrangements with multiple vendors. Tool sprawl proliferates, and IT teams are bogged down by disparate, poorly integrated systems. Once viewed as competitive advantages, legacy IT systems now represent technical debt, burdening organizations with operational complexity and high maintenance costs. In the third article in this series, we’ll discuss the power of tool consolidation in depth. For now, here are some methods for addressing infrastructure challenges head-on:

  • Rationalizing application portfolios: Detailed assessments of the IT environment help eliminate redundant programs and unnecessary expenditures.
  • Standardizing applications and management: Uniform application standards and common management processes serve to streamline operations.
  • Optimizing server inventories and locations: Detailed inventories help enterprises to consolidate assets and reduce physical locations.
  • Implementing value-driven solutions: Observability and monitoring tools enhance visibility, providing actionable insight into system health.
  • When executed successfully, the savings these strategies facilitate can be channeled into more progressive initiatives, such as:

    Embracing the Cloud

    The budget benefits of cloud adoption have been well documented. On-site options can be pricey, encompassing hardware, setup, and ongoing management expenses. Transitioning to the cloud cuts hardware and setup costs, offering subscription plans tailored to budgets. Cloud services also enable organizations to pay only for the resources they need. Reducing electricity consumption for server power and cooling also drives cost savings. Particularly beneficial for organizations with limited security expertise, cloud providers offer round-the-clock security services at competitive costs. Gartner states, “Enterprise IT spending on public cloud computing, within addressable market segments, will overtake spending on traditional IT in 2025.”

    Cloud doesn’t come without risks from a cost perspective. Poor cost visibility, budget overruns, and a disconnect between departmental priorities can undermine these benefits—if not effectively managed. Proactive cloud cost management is essential to realizing value from cloud investments, especially given the anticipated increase in cloud usage driven by technologies like artificial intelligence (AI).

    AIOPS and Smart Automation

    The increasing complexity of IT systems and the data they generate, mounting security threats, and the scarcity of human talent to address these challenges mean AIOps (artificial intelligence for IT operations) is becoming indispensable for enterprises navigating the modern IT landscape. One key benefit lies in reducing downtime—AIOps enables teams to detect and address emerging issues before they become costly failures. It also helps organizations identify, analyze, prioritize, and remediate vulnerabilities, reducing the chance of security breaches and the associated financial impacts. As with the cloud, AIOps comes with its own potential challenges: privacy issues, the perpetuation of algorithmic biases, and opacity in decision-making. That’s why it’s critical to choose AI systems designed using thoughtful ethical frameworks to ensure responsible development.

    Breaking the Cycle

    Contending with external pressures like talent shortages and security threats is made all the more difficult when systems and tools lag behind industry standards. Too often, IT teams find themselves mired in complex, costly processes with legacy systems, lacking the human capital or spending power to improve their situation. But a blend of strategic thinking, careful assessment, and wise investment can help break this cycle of frustration. The right approach will see teams move beyond reactive cost-cutting to a resource management strategy for confident optimization over time.

    Stay tuned to Orange Matter for the second in our series on the essential needs of today’s IT professionals. The next installment explores methods for enhancing productivity.

    Jeff Key
    Jeff Key
    Jeff Key holds over 25 years of senior executive, boardroom and investment banking experience with a solid background in all aspects of finance, strategy, business…
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