Business performance set to be crippled by a lack of IT cost efficiency and high inflation

Despite new research from Deloitte showing that 98% of CFOs anticipate operating costs to continue to rise, only 7% of businesses have optimised their IT costs, reveals global IT services and innovation leader Crayon. In the UK, as little as 3% of IT leaders believe their technology expenditure is as lean as it could be, exposing businesses to potential operations cost leaks. 

"Throughout the pandemic, we saw many businesses become digital without much of a clear strategy to accommodate the rise of a remote workforce during lockdowns and restrictions. Two years later, IT departments have less visibility of their IT stack across their hybrid workforce. This means cost-saving opportunities are not being capitalised on when expenses are rising and we're seeing more inflation pressures on the market. This perfect storm affects leaders' ability to deliver business growth," says Melissa Mulholland, Chief Executive Officer at Crayon. 

“Inflation will lead to the inevitable re-prioritisation of budgets, but at the same time leaders know that creating operational efficiencies can no longer be ignored. It’s impossible to run a modern business without software. To keep pace with competitors during the backdrop of soaring prices, businesses must tread the thin line of cutting costs and investing in their organisation’s IT portfolio, which in turn can lead to the discovery of innovative new income streams.”

This is evident in Crayon’s new research, conducted in partnership with Sapio 

Research, polling 2,050 IT decision-makers at large organisations (200+ employees) worldwide. 

The survey also shows most organisations (93% globally and 97% in the UK) admit that their spending requires improvement, despite 92% of UK based leaders listing optimisation of cost structure as a high priority for their business. However, 94% in the UK and 80% globally agree their organisations would benefit from help breaking down costs and identifying areas for optimisation.

In the UK, a third (32%) of technology leaders flagged they lack knowledge on how to optimise their cloud spending, with another third (34%) stating they do not have the time to search for the best deals. Over half (54%) of global IT decision-makers see IT cost optimisation as their biggest business challenge. This is followed by 34% who state that implementing the cloud and facilitating migration as their biggest task, while internal knowledge about new technologies like cloud and AI was called out by 39% as the biggest issue they face. 

Mulholland added, “IT investment is not shrinking, in fact it is only going to rise. According to Gartner, IT spend will reach more than $4.4 trillion by the end of this year, representing 4% growth. It is surprising to see that so few businesses do not currently believe their IT spend is as efficient as it could be, but what is more concerning is that many decision-makers do not know where to start.” 

“Planning ahead for investment in software such as cloud spend management tools and AI can lead to the long-term cutting of IT costs, while generating additional income streams. Businesses should also use external consultants wherever possible to assist with negotiating software licensing deals, as this can yield considerable savings for those in charge of budgets. If leaders start making changes now, they will be able to better navigate the inflation crisis, or at least significantly reduce its impact on organisational growth.”