The events of last year were financially damaging for many businesses. Resources and budget were in short supply. It required a re-evaluation of spending priorities and a renewed focus on acceptable ROI from existing technology spend.
Gartner reported that worldwide IT spending will increase by 4% in 2021 compared to last year. It has never been more important to communicate a robust and clear ROI message to secure a piece of the growing pie.
ROI-focused messaging can help drive the approval of both planned and unplanned purchases.
Furthermore, if you can demonstrate a short payback period, it increases the chance of multiple projects receiving approval. This multiplies the impact of the spend. This drives sales and the adoption of new technologies. But it also ensures that businesses don’t have to decide between savings and innovation. The digital environment is so crucial to a firm’s success.
The first step to delivering a compelling ROI message is to ensure credibility, which will help it stand out. The key is to prioritise actual ‘hard’ savings over ‘soft’ savings, such as increasing customer satisfaction or improving employee productivity. Therefore, these claims are tough to prove and won’t stand up to scrutiny from senior management or the board. It’s essential to lead with real data, using customer’s actual avoided costs to prove the ROI of new spend. Involving a third-party in reviewing and certifying the methodology used to reach these figures can also help quell objections or suspicions.
As a result of the pandemic’s financial constraints, Gartner reported a 10.3% decline in data centre spending last year. However, the report predicts that data centre investment will experience all IT systems’ second-highest growth at 5.2%. This is likely due to data centre expansion plans as offices reopen. When aiming to secure new spending, it’s crucial to communicate the continued challenges that the market may face while highlighting the investment required to meet future needs. Only then will businesses see the choice to invest as exciting rather than daunting.
Adapting to survive
Despite the need to keep innovating, businesses shouldn’t be disillusioned that this year will be a clean slate. Financial pressures and reduced budgets will likely continue to be rife for the coming months. This may provide a hurdle to new investment. If this is the case, business leaders should assess how to do more with less by optimising their existing investments and ensuring their tools work at maximum capacity. However, a focus on ROI should continue to remain the central focus of all investments in the future if businesses wish to emerge victorious into the new tomorrow.
Dave Arkley is CFO of Gigamon