39% of CFOs polled in May said they would cut costs in 4Q22 if high inflation persisted. The ongoing threat of recession will only add pressure to reduce spending.
Demands for cost reductions may seem urgent, but pause long enough to identify what will deliver impact in the short term and what could damage the business in the longer term.
Following these 10 rules will help you cut IT budgets rapidly and productively.
Amid inflation and the threat of recession, many organizations face demands for short-term cost reductions, even if they plan to deploy technology in the longer-term to sustainably reduce the cost of doing business and create a competitive advantage. The question for CIOs is how to cut costs while inflicting the least damage on the mid- and long-term health of the business.
See the Playbook: Recession Advice for IT
“Gartner recommends that organizations take a structured and programmatic approach to cost management , says Chris Ganly, VP Analyst at Gartner. “Research shows that organizations that continue to invest strategically in tough times are more likely to emerge as leaders. But sometimes, difficult times demand difficult actions.”
Gartner research shows that while most CFOs have been relying on pricing-focused strategies to offset inflation, 39% will zero in on cost cutting if inflation remains persistently high in 4Q22. That will soon turn into explicit demands for rapid cost cutting.
“Despite the urgency and pressure, pause and remember that there’s little value in cutting or stopping projects or services where costs have already been spent or incurred,” says Ganly. “Also, you’ll hurt the organization’s ability to ramp up when conditions improve if you cut in areas where you have already invested or are ready to deliver — and in key initiatives that can’t be easily restarted.”