3 reasons why the CIO needs to think like an economist
A recent study showed that the average CIO spends 16% of their time on strategy, 15% on operations, and another 15% on financial economics for the organization. The truth is that it’s not enough for a modern technologist to know how to build cloud infrastructure and run support services. The role of the #cio and #cto has evolved into something much more complex than what it once was.
CIOs are increasingly finding themselves answering questions that warrant them to become experts in areas that aren’t typically associated with their core skills and are much more beyond technology. Why? Because technology is becoming increasingly intertwined with these other business functions. As a result, CIOs need to start thinking like an economist to be able to manage business challenges and provide their organization with an integrated strategic solution. Three examples below provide a unique perspective:
Firstly, the CIO must understand how to manage IT budgets beyond being just a bean counter. Budget spending on technology has a direct impact on employee productivity and the ability of the organization to scale its products and services. The CIO needs to be surgical and strategic in spending their CapEx and OpEx dollars. For example, beginning of this year, when most Wall Street gurus were ringing alarm bells about the forthcoming inflation, CIOs who anticipated and locked in their Annual Maintenance Service (AMS) contracts for 3–5 years instead of the usual 1-year extension saw over 30% in year-over-year savings due to inflation adjustments by most consulting organizations.
Secondly, for the past 5-years, pivoting the organization’s IT to a cloud-first strategy was the most important strategic initiative for CIOs. Large hyperscalers (AWS, Azure, GCP, IBM, and others) incentivized heavily to reduce overall friction in moving key workloads to their platforms. The pandemic further accelerated the transition and many CIOs and their teams worked tirelessly over the past couple of years to embark on a #digitaltransformation journey by sunsetting data centers and transitioning to the public #cloud as fast as possible. CIOs deservedly received kudos from industry leaders and met their organization’s short-term goals. As we are rolling into years 3 to 5 of a successful move to the cloud, hyperscalers are racking up the overall Annual Recurring Revenue (ARR) spend for their customers. The promise of the cloud to convert your CapEx spend to OpEx is now making a serious and noticeable impact on the annual IT spend of most organizations. Everyone knows that cloud costs incurred cannot be recovered or harvested. Many CIOs are now retracing their steps and going back to a Hybrid Cloud strategy where they are no longer looking to move all workloads to the cloud. They are more strategic about which workloads to keep on-prem vs. cloud to optimize their overall annual compute, storage and network spend.
Lastly, most organizations realize that “Labor is the new Oil”. As a C-suite executive, you can’t predict the demand and supply of skilled labor, but you can surely manage the lack of skilled labor by planning ahead. Utilizing #artificialntelligence (AI) as a process improvement tool to improve overall productivity is turning out to be a methodical strategy for CIOs. AI Ops for data collection, operations automation, intelligent monitoring, DevSecOps automation, intelligent workflows, etc. are the low-hanging fruit that is now table stakes for large and small enterprises. These AI methods help reduce the pressure on hiring demand while automating and making business processes efficient. For example, CIOs can partner with the supply chain and operation leaders within their organization to identify use cases where there are known inefficiencies in the last mile and automate them with the help of IoTs, 5G, and AI.
As a CIO, you are the visionary who is empowered to shape the future of your company with bold ideas. You are the best friend of your CEO and CFO, whom you help guide through the risks and rewards of business decisions. You are no longer just the tech guy!
Disclaimer: Opinions expressed are solely my own and do not express the views or opinions of my employer
Originally published at https://www.linkedin.com.
