With the latest Gartner stats predicting global IT spend will hit $3.9 trillion in 2020, it’s clear technology will increasingly impact business strategy for the year ahead.
The year ahead for technology and finance professionals is shaping up to be a period of significant change. The increasing influence of technology is being felt across industries, and this is manifesting itself in the reshaping of organisational structure and financial management. Businesses must not shy away from this, and instead need to tackle the challenge head on.
Rather than scrambling to keep up, 2020 needs to be the year in which businesses take a step back. They need to reassess the direction in which they are headed and evaluate where broader systematic shifts need to take place. This macro view is necessary if they want to implement the changes that are needed to thrive, in an age where technology is more than just a tool — it’s a driving force for innovation.
Here’s my take on what the year ahead looks like, and how the expanse of technology will determine business strategy.
Roles within IT will be rewritten
The ongoing narrative of the IT department is a story of change. Roles that are commonplace today, such as chief digital officer and head of cloud excellence, simply didn’t exist 10 years ago. This trend will continue in 2020, and what we’ll also start to see is that the broader requirements of the IT department will begin to shift and change as well.
IT no longer relies upon technical skills alone, because technology is no longer confined to a single department. Teams across the organisation rely on IT expertise to deliver their business goals — from marketing or sales to HR. As such, the people delivering this expertise need to be able to manage relationships, communicate their advice appropriately, and even persuade other business partners to take a given course of action based on their knowledge.
Inevitably, this will result in a need for the IT function to upskill, or else you risk fragmentation and tension.
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IT will need to become better aligned to the business as new technologies take hold
Beyond the upskilling that will need to take place, there’s also a certain amount of ‘growing up’ that the IT function needs to do in order to take up its now necessary position as partner to the business. With technology as the foundation to the modern business, the IT department needs to establish itself as a strategic partner instead of a simple cost centre.
One way in which the need for this is demonstrated is in the rising adoption of new technologies like AI and IoT. Legacy IT finance systems aren’t set up to properly assess intangible costs that surround these technologies, such as the total cost of ownership for the vast number of smart devices that are entering the workplace, or the labour cost that AI’s transformation of manual processes might reduce.
CIOs and CTOs will need to start mapping the cost outlook of technology advances, as well as justifying them to the business where needed. As AI, IoT and other emerging technologies continue to be used throughout the business, it will become increasingly important in 2020 for CIOs and the wider IT function to step up and spearhead this new way of working.
The traditional set up of the IT function will no longer be fit for purpose as the list of new innovations grows longer, and this year we’ll begin to see this seismic shift take place.
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Agile will become more prominent and the business needs to mould itself around this
As the agile methodology continues to permeate through organisations in 2020, the finance department will need to adapt to accommodate the change. Companies need to embrace the shift away from a waterfall model as part of a necessary strategy to speed up innovation.
CFOs must manage this process without hindering it. To do so, they’ll need to gain a bird’s-eye view of the investments being made, with the aim of matching them to the business’ wider short- and long-term goals. It’s no easy task, but governance of agile projects is crucial to managing an organisation’s budget properly, as well as ensuring that these projects are aligned to business strategy. This will be a key challenge for the year ahead.
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Cloud providers will continue to specialise rather than conduct a ‘race to the bottom’, and businesses will need to manage the cost implications
Price wars might not quite be over, but the major cloud providers are starting to pivot away from focusing on costs and towards honing their offers for specific functions and verticals. Whether that materialises as a focus on a specific capability (such as AI), a given sector (such as finance) or even doubling down on capacity to scale, what this means more broadly is that cost management of cloud will become even more complex.
It’s already a difficult task to make like-for-like comparisons of the different cloud providers but looking ahead, we’re likely to see greater bumps in the road in terms of quantifying ROI. How can you quantify value for money when the benefits of each provider don’t boil down to a number on a spreadsheet? How are you comparing different providers with one another? There’s a definitive need to understand the answers to these questions, and it’s likely that organisations will need specialised tools in order to do so.
More widely, in order to manage and analyse these enhanced cloud offerings, businesses need to move towards a “FinOps” mindset, with cloud taking centre stage. A FinOps mindset means that all areas of the organisation are held accountable for their cloud spend across different products and services. This in turn enables the business to get a better understanding of cloud as a whole. All this can be driven through a cloud centre of excellence, which will itself prove crucial in managing expanding cloud costs.
The year ahead is shaping up to be an exciting time, as more cutting-edge technologies become integrated into business strategy. What will be interesting is seeing who is able to properly manage this step-change and who will be blindsided by the resultant side effects in cost management.