Special Feature
Part of a ZDNet Special Feature: Tech Budgets 2022: A CXO's Guide

The CIO's new challenge: Making the case for the next big thing

CIOs need to do even more – but getting the cash to make these changes won't necessarily be an easy conversation.

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Over the past 18 months, rather than the hesitancy that often characterises boardroom approaches to digitisation, CIOs at many organisations got the rapid OK to fast-forward digital transformation plans.

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Consultant Deloitte reports the coroanvirus pandemic saw companies recalibrate technology investments and, in many cases, hasten their spending plans for technologies that helped to support remote work, electronic commerce, and supply chain processes.

But Deloitte also warns that rapid digitisation has introduced new risk into business operations. Organizations should consider conducting risk assessments of digitised processes undertaken during the past 12 months, and may need to take action to identify operational concerns and remediate any security gaps.

SEE: Digital transformation: This is why CIOs need to stay brave and keep on innovating

For organisations that find themselves in this position, the next 12 months is going to be about bringing more structure to the IT systems and processes that were put in place quickly to help the business cope with the pandemic. That brings new pressure for IT chiefs.

While these projects -- such as the introduction of collaborative platforms and mobile apps -- satisfied unprecedented short-term demands for IT, developing technology reactively is never a sure-fire strategy for success, says Nicki Doble, group CIO at insurance company Cover-More Group. That means that, for some organisations, it's a time of reflection and re-ordering.

"In these companies where remedial work is required, the board has, all of a sudden, realised that just racing ahead and building technology doesn't necessarily mean that it's going to do what you think it's going to do," Doble says.

Gartner says that worldwide IT spending, driven by companies' needs to shore up their digital transformation efforts, will increase by 9% in 2021 to reach a total $4.2 trillion, with most money directed to technologies -- such as devices (13.9%), enterprise software (13.2%), and IT services (9.8%) -- that support hybrid-working strategies.

But as well as firming up digital foundations, the analyst expects pioneering companies to head for a new budget phase where digitisation -- through cloud, big data and emerging technology -- drives long-term business growth. 

Many CIOs, therefore, now have a long to-do list that includes both refining existing systems and introducing new services. In such circumstances, how can they secure the funding they require?

For Jon Cosson, head of IT and CISO at wealth management firm JM Finn, the key to success is articulating to bosses how an investment in technology now can allow the business to reap big dividends later.

"They've got to be able to align this investment idea into the wider business strategy. That's all about focusing on what it means to the bottom line: what's the advantage, why should we do this, and why do we have to do this?" he says.

This concentration on business objectives will be apposite during the next 12 months and possibly longer still. While CIOs might be eager to push digitisation and innovation, the business is likely to be tighter on justifying use cases than ever before.

Even though technology helped keep businesses operational through the pandemic, many organisations -- particularly in sectors such as travel and transport -- have seen profits and margins slashed. 

Add in continued restrictions on global travel, and ongoing fears over further coronavirus variants, and boards are unlikely to be queuing up to fund big-bang IT projects.

As Cover-More Group's Doble suggests, in a tough economic market, boards are going to have to be certain that spending on technology will deliver a return on investment -- even in hyped areas like data science and artificial intelligence.

"Some businesses are not necessarily willing to go all-in because it costs a lot of money and the ROI is not necessarily always there. Common sense tells them that an investment in big data should pay off, but how many CFOs fund a multi-million business case on what they think might happen? They want the numbers; they want the proof that the value is there" she says.

While investment is needed to maintain digitisation, IT spending will be under scrutiny during the current uncertain business climate, suggests Deloitte. Executives will need to show the projected value of a digitisation initiative when stating their case for more funding, pointing out both short-term and long-term benefits.

SEE: Agile management, agile leadership: The secret of making better decisions, faster

Consultant EY agrees, suggesting CIOs who want money for new technology projects must provide a sense of surety. Rather than proposing big-bang investments, IT chiefs should encourage the board to spend modestly but steadily on technology infrastructure upgrades that help stave off technical debt and potential cyber risks.

EY says the board is much more likely to embrace this proactive approach -- which it refers to as "care and feeding" of the organisation's infrastructure -- rather than requests for large, one-time outlays.

That modest but steady approach to IT investment is something that resonates with Cosson. A few years ago, the IT team at JM Finn was keen to invest in cybersecurity. By demonstrating how this investment would help protect the firm's data, the technology department was able to secure funding for a range of cyber-focused projects.

The team also took a similarly proactive approach to its technology infrastructure. While some of his IT leadership peers had to invest huge amounts of money to ensure their staff could work from home during lockdown, Cosson says his team had already made the case for an investment in cloud computing and a Nutanix hyperconverged infrastructure platform. When lockdown came, the business switched to home working over a virtualised network in just five days.

Now, the IT team are looking at the workplace of the future. They're thinking about lessons learned during the past 12 months and how a proactive investment in systems and services will help refine the hybrid-working model.

Cosson says the key to success will be selling ideas to the board and getting them to spend money in a way that means they'll see real benefits across the business: "Ultimately, at the end of the day, it's about one thing: what does the board want?" he says.

"In our case, the board wants services, they want flexibility. So how can we, as an IT team, make that model work? What technologies can help us do this and how can it help us achieve our goals? And what solutions do we need to develop, so it makes the process easier for us to do business?"