To say 2020 hasn’t been easy for many businesses would be an understatement. The COVID-19 pandemic has reshaped almost every industry across the globe. In many cases, the newfound need for remote work and online tech adoption to unfold at a far faster pace than many organizations had foreseen.
While most companies intend to make their new tech adaptations a part of a permanent plan, according to research from McKinsey, the race to innovate during the pandemic may have left many companies with a tech stack filled with software that is either too expensive or does not add enough value to make the lower initial price tag worth it.
Organizations that rush their implementation processes to meet the moment may find themselves in tech debt. Tech debt is the idea that poor-quality or badly implemented software will cost an organization down the road because of IT issues and lackluster performance, and therefore not represent good long-term value. According to a separate survey of CIOs conducted by McKinsey, between 10% and 20% of a total tech budget may have to be directed toward closing the tech debt. By paring down this number, you can create huge savings for your organization.
Some of the most common drivers of tech debt reported in the survey included the continued use of legacy software, a skills gap amongst employees and a mismatch between IT capabilities and a larger business strategy. While these issues may require your organization to identify processes that aren’t working, tech budget optimization is a great place to start.
For many companies, the COVID-19 pandemic has forced both a reduction in total budgeting and a need for greater tech optimization. Leaders must then ensure their SaaS budget aligns with their company’s long-term goals and current financial reality, and every dollar spent must provide the most value possible. Every part of your tech budget, from software to personnel to partners, needs to be considered carefully.
When looking to optimize your tech budget, be sure to consider the following five factors:
Effective tech budget optimization doesn’t have to be a large hurdle. One of the easiest ways to optimize your tech stack is by replacing legacy software with SaaS programs that live on the cloud. These programs offer easier scalability, so you can continually adjust to meet the moment.