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Navigating uncharted waters: IT budgeting strategies to tackle an impending recession

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By: Mathivanan Venkatachalam, Vice President, ManageEngine

In light of the fluctuating global economy over the past few years, businesses have made significant cuts and focused on smart investments. Now, with the possibility of a recession on the horizon, companies are making wise choices about their IT investments to ride the recession wave and come out stronger. To understand how businesses have been working through their IT budgets, ManageEngine recently conducted a survey of more than 470 IT decision-makers from various industries based across the globe to understand their budgeting plans and strategies for uncertain times. 

Despite the concerns and challenges, the survey highlighted an interesting trend in the Indian market: more than 70 percent of respondents expressed their intention to maintain or increase their IT operations budget for the coming year. This clearly indicates the crucial role that technology plays in ensuring business continuity and driving growth in challenging economic conditions. 

Strategic investment areas in IT operations

More than 40 percent of survey respondents stated that they would increase their budget by 10 to 15 percent. This increase is driven by several factors, first, being the recognition of the importance of digital transformation initiatives. Moreover, investing in the right IT infrastructure and software leads to long-term cost savings, operational efficiency, and an overall better customer experience. 

Key areas for ITOps investment in 2024

Automation and AI: Embracing AIOps is one of the most effective strategies for businesses in India. More than 50 percent of businesses have fully enabled or started implementing AI into their workflows; and AIOps is forecasted to be integral to enterprise digital transformation moving forward. Leveraging advanced machine learning algorithms and data analytics empowers organisations to take a proactive approach to incident management and troubleshooting. Additionally, automation is a core feature of AIOps, enabling organisations to reduce manual effort and increase efficiency.

By automating repetitive tasks and leveraging AI for data analysis and decision-making, organisations can offload repetitive and manual tasks from employees to enhance productivity, drive innovation, and further streamline operations.

Cloud migration: Moving to the cloud has been fundamental to digital transformation and streamlining IT operations, owing to today’s complex IT environments and unpredictable workloads. According to the survey, nearly 57 percent of organisations stated that investing in their cloud migration strategy would be their primary focus in the coming year. 

Cloud infrastructure is a game-changer for enterprises in India, as organisations no longer need to heavily invest in on-premises hardware and maintenance. Additionally, cloud services provide enhanced data accessibility, collaboration, and remote work capabilities, which is particularly valuable for businesses operating in remote areas or with distributed teams.

Infrastructure modernisation: As more organisations adopt cloud and hybrid IT models, traditionally managed legacy systems no longer have what it takes to keep up with modern ITOps demands. A modern ITOps infrastructure helps navigate complex environments, enabling consistent monitoring and management across on-premises and cloud-based resources. Modern systems are also more available, responsive, and reliable, leading to higher user satisfaction and improved business outcomes. While there might be upfront costs associated with modernisation, the long-term benefits result in cost savings, efficient resource allocation, and improved resource utilisation.

Effective strategies for optimising IT operations expenditure

While the right investments provide long-term benefits, many organisations often turn to cost-cutting during a recession. However, reducing IT operations expenditure requires careful consideration to ensure that essential services and capabilities are not compromised.

These are some effective strategies organisations can employ:

  • Switching to subscription models: As IT environments continue to grow more complex, organisations will need the right software tools to meet their business needs. Subscription models offer predictable monthly or annual costs. They also allow organisations to easily scale their ITOps resources up or down based on their current needs. This flexibility is particularly beneficial for businesses with fluctuating demands, as they can adjust their subscription levels without over-committing resources.
  • Vendor negotiations: With the increasing cost of on-premises hardware, engaging in negotiations with IT vendors can lead to cost savings. Businesses can reassess contracts, explore alternative vendors, or consolidate service providers. This often enables them to achieve better pricing and more favourable terms. 
  • Employee training and upskilling: Solutions such as AIOps and cloud migration have the potential to revolutionise IT operations. However, they require expertise to be properly implemented. Investing in employee training and upskilling programs enhances productivity, reduces reliance on external IT services, and fosters a culture of innovation and learning within the workforce. This enhances productivity and helps future-proof the organisation by ensuring that the workforce is equipped with the necessary skills and knowledge to adapt to changing technologies and business needs.

Navigating a recession requires careful planning and decision-making, particularly when it comes to IT budgeting. Especially during an economic downturn, making the right investments in IT without making budget cuts delivers a competitive advantage in today’s digitally dominant world. While decisions on IT investments depend on financial commitments and long-term goals, prioritising and optimising the IT budget helps an organisation thrive in challenging times.

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