The risks of prioritising operational IT spend over strategic IT spend

In our 2020 Acora UK CIO we took a closer look at exactly how UK companies are spending their IT budgets. One of the topics that emerged is the difficulties in balancing between IT spend on day to day operations, vs IT spend which drives medium and long term IT strategy.

This article highlights how important strategic IT spend is, and points to ways in which companies can optimise their operational IT spend to improve strategic outcomes.

IT must be a strategic priority

Information technology is, of course, principally an operational matter. Few organisations of size can function without consistently performing technology that supports everyday operations. Operational IT priorities will always be a CIO’s primary concern.

However, the tech leaders we surveyed suggested that operational IT frequently gets in the way of more strategic work. 29% of respondents said that IT capabilities are held back by day to day tasks ranging from fixing end-user issues through to ensuring that business as usual continues.

Leaving strategic IT as a low priority can put an organisation at a disadvantage in a world where the physical and the digital is increasingly blurring. Yes, it is challenging to manage technology requirements as it stands today, while simultaneously building a tech estate fit for the future. Nonetheless, our survey found that CIOs value the importance of strategic IT, with 89% of our respondents identifying with a transformational or strategic role.

Strategic IT is critical in today’s business environment

Business agility is growing in importance. In some sectors, agility is a do or die capability. Across all sectors, 2020 thoroughly illustrated how technology agility is hugely beneficial in a crisis. Strategic IT investment plays a key role in delivering that agility.

Organisations are likely to be far more fleet-footed in responding to environmental and technological change if CIOs and supporting teams have the capacity to take a strategic approach to planning and provisioning IT. Getting stuck in the operational mud will block this capability.

For many others, upheaval came in the first months of 2020. CIOs and their staff must have the freedom to evaluate the potential for disruption driven by technology. Tech leaders must also have the time and space to consider how technology can overcome disruption.

Staff are under pressure

What happens to strategic IT priorities when technology staff are under pressure?  On top of suggesting that day to day work reduces the opportunity to think strategically, 16% of tech leaders in our survey also said that a lack of resources limited their progress on the technology front. That compared to just 7% who flagged that a limited budget is the main concern.

If budgets not the primary issue that is holding back strategic IT then it is not unreasonable to conclude that pressured staff may be a bigger problem, through no fault of their own. CIOs know that an ongoing effort must be made to push strategic objectives. However, staff that are pre-occupied with the day to day won’t have the necessary headroom for strategic thinking.

Managed services restore focus

One of the more interesting findings in our latest UK CIO survey is that the organisations we surveyed indicated that they spend around three times as much on internal staff, as on managed services.

It would be very self-serving of us to simply suggest that companies are therefore underspending on managed services, but it is worth taking a moment to pause and think about the implications of that 3:1 ratio. Our respondents represented larger organisations in the UK, but even companies with large internal teams cannot match the capabilities of the technology team at a leading MSP.

In contrast, outsourced IT can leverage economies of scale, and benefit from skills built in a much broader environment. Indeed, 44% of respondents said that they leaned on MSPs for specialised skills. That is not to say that internal teams have no role, or that organisations should outsource entire IT departments.

Strategic IT is best resourced internally

Successfully executing strategic IT, and indeed digital transformation, requires intimate knowledge of an organisation. Knowledge that can only be obtained by working in that organisation full time. Day in and day out, internal teams matter.

However, we want to suggest that it is worth thinking about the ways in which an MSP can free up staff to be more focused, and to move from operational IT to strategic IT. In doing so a company can spend less time working out how to fix relatively simple problems, and dedicate more time to driving transformation, growth and customer satisfaction via strategic use of IT.