Ceridian and CIO Vice President Carrie Rasmussen received a 7% increase in her 2022 IT budget, with her company’s growth, continued pursuit of digitalisation and security focus contributing to the boost.
In particular, Rasmussen is increasing his cybersecurity spending to help manage risk, a key element in allowing Ceridian’s planned global expansion.
Some of the additional funds pay for work to consolidate applications and services, a move that Rasmussen classifies as an efficiency game “that will free up money for reinvestment.”
It also has money for automation, process improvements and data projects that are planned in part to “overcome inefficiencies and help workers be more productive,” she said. “As you grow globally, you need to have this efficiency to help increase margins.”
Taken together, these technology initiatives – along with its cloud / SaaS-based modernization projects – are helping the cloud software maker HCM scale its digital capabilities to meet growing employee needs and customer requirements, Rasmussen said.
Rasmussen’s budget is representative of CIO spending in 2022, based on CIO.com’s findings 2022 CIO Status Report and other studies on IT spending, which show that IT directors generally enjoy increases in annual budgets, with IT spending expected to exceed last year’s figures.
Although these budget increases are in line with previous years, the leading business imperatives behind them are different, with technology leaders seeing shifting business priorities that drive costs, with increased cybersecurity and improved efficiency and productivity requirements at the forefront. the list. This comes after years of transformation initiatives cited as the main reason for the budget increase.
The CIO’s status report, published earlier this year, found that the desire for increased IT security is the number one business need that boosts technology spending for the current year, followed by increased operational efficiency and improved customer experience. Transforming existing business processes, improving employee productivity and improving profitability rounded out the top six.
Technology leaders and analysts say these business priorities reflect the important balancing act that is evolving in the CIO office: the need to constantly pursue operational achievements while providing transformative technology services, with the former supporting the latter.
“IT is one of the best places to invest, but executives want to make sure that those dollars are spent on the right things in the right way. They are smart about where they spend their technology dollars, ”said Dan Priest, managing partner for cloud and digital services at professional services firm PwC. He says business leaders in general have gone through the past to think of IT as a cost center to a means that can create more cost-effective operations, improve existing business lines and help deliver new ones, with their budget solutions increasingly more reflect this. “That’s why IT costs are so strategic right now. Information technology directors have a lot of choices to make right now, and they have long-term consequences.
Top 10 business needs that drive IT spending
The report on the state of CIOs found that 59% of CIOs plan to spend more in 2022 than in 2021. Compare this to last year’s findings, in which only 49% of CIOs entered in 2021, saying they plan to get an increase in the budget for the year.
When asked about the business initiatives that would be “most important for stimulating IT investment in your organization”, IT leaders cite the following:
- Increase cybersecurity protection: 49%
- Increase operational efficiency: 46%
- Improving the customer experience: 42%
- Transformation of existing business processes (ie automation, integration): 41%
- Improving employee productivity: 27%
- Improving profitability: 24%
- New product development: 22%
- Improving hybrid work technologies: 21%
- Increase in basic business income: 20%
- Compliance with compliance requirements: 19%
Other researchers have found similar trends in IT spending.
Info-Tech Research Group in its CIO priorities for 2022 The report found that CIOs consider business process improvements, digital transformation / modernization, security and growth support / revenue recovery as the most important business imperatives driving the IT agenda this year.
Looking further, Info-Tech found that in terms of key priorities for competition in the digital economy, CIOs list the following priorities:
- Reduce friction in the hybrid operating model
- Improve ransomware readiness
- Support an employee-oriented retention strategy
- Design an automation platform
- Prepare to report on new environmental, social and governance indicators (ESGs).
Researchers from Gartner report similar trends in it IT cost forecastincluding a 4% increase in global IT spending this year, largely supported by investment in analytics, cloud computing, customer experience and security.
Cybersecurity must drive IT spending
Of course, organizations invest in fundamental elements such as cybersecurity every year, but the merger of problems has necessitated an ongoing increase in security costs.
“Cyber protection [spend] it’s always growing, but it’s transforming from the perimeter security we’ve been accustomed to for 40 years to increasingly secure cloud and remote work and remote employees, “said John Lovelock, vice president of research and senior analyst at Garner. “Companies that used to be able to put virtual brick walls around the building and say they are protected from the inside now have too many openings – to the cloud, partners, customers, employees – for this strategy to be viable.
Although this change has been going on for many years, it still manages much of the cybersecurity IT costs, Lovelock said. “It provides what has evolved over the last few years and what has evolved.” Gartner’s figures in this space: 34% annual growth rate of cloud security spending, which rose from $ 585 million in 2019 to an expected $ 3.5 billion in spending by 2025
Ransomware is also another major cause of increased cybersecurity concerns and a corresponding increase in IT costs, said Brian Jackson, research director at CIO Practice at Info-Tech.
He says his company’s research shows that more companies than most realize have been affected by ransomware attacks and are in a state of recovery. “And it can cost a lot,” he said. Even those who have not been affected by ransomware feel compelled to oppose this option by investing in stronger protections, including, for example, better offline backups.
“With ransomware, we’re talking about state-sponsored cyber warfare, and these organizations are caught in the middle of it, and that’s just become the cost of doing business,” Jackson added.
Requirements for efficiency, experience and productivity
Other big business needs that drive increased IT spending – such as efficiency, customer experience, employee productivity and profitability – also say something about where organizations are in 2022, experts say.
“You have improved discipline in spending management now and you’re smart about where you spend your technology dollars,” Priest said, adding that “this is one of the best places to invest, especially in times of inflation.”
He says organizations are working to automate, streamline operations and cut costs to help tackle a troubled labor market, labor shortages, inflation and geopolitical uncertainty. These technological investments, in turn, allow them to redistribute their scarce (and increasingly expensive) workers to tasks of higher value. These technology initiatives also lead to savings that companies can reinvest in operations and initiatives that support growth at the highest level.
Priest says CIOs continue to spend money migrating from legacy infrastructure to the cloud, a move that helps them get rid of layoffs, optimize productivity, improve processes and destroy data silos. They also spend on data and analysis projects as a way to become more efficient, boost productivity and maintain profitability.
IN its research on how CIOs will spend their time and money in 2022PwC found that the first five priority areas are:
- Improving IT to be more flexible: 43%
- Migration from traditional data centers to the cloud: 35%
- Use of data and analysis to stimulate strategic decision-making: 34%
- Development of IT to be a strategic partner of the business: 30%
- Reset corporate cloud architectures: 28%
Supports growth, transformation
Rasmussen says researchers’ lists of IT spending priorities reflect her own budget breakdown and that they are in line with spending plans she has heard from CIO colleagues. “This is a common theme among most technology leaders,” she said.
Rasmussen and others acknowledge that this year’s list of business engines may seem like a break with the priorities of previous years, where transformation as a whole dominated. In fact, CIO’s CIO.com survey found that business engines such as introducing new digital revenue streams and generating revenue from company data – both usually part of transformation programs – are lower on the list of incentive initiatives. IT costs, numbering № 11 and № 13, respectively.
But experts warn against this assumption, saying IT spending solutions are indeed aimed at supporting ongoing and new digital initiatives and overall transformation efforts – even if it’s not called by name.
As Rasmussen points out, efficiency costs will “free up money to reinvest”, while security costs, user experience, employee productivity and the like will support new ways of working and engaging with customers. “It’s not about cost control; instead, we are talking about value investments. This is an investment strategy and this is a conversation about flexibility – the flexibility to be competitive in the market, “she added.
Priest agrees that this shift to fundamentals could lead to future progress, saying that the cost of IT security, efficiency, process improvement and productivity can put organizations in a strong position, no matter what the future holds – whether it is for growth, prolonged inflation or even a recession.
In addition, the cost of transformational business initiatives is increasingly falling outside the IT budget and in functional areas, adds Diane Carco, president and CEO of management consulting firm Swingtide.
According to Gartner, the total amount of Business-driven IT costs average up to 36% of the total official IT budget.
“We see transformation costs happening in non-IT departments, so trends in CIO costs may seem less strategic than they could have been five years ago,” Carco said. “But CIOs are the ones who spend to make sure [those transformational initiatives] are safe and secure to operate. “