Each year, I revise the CIO playbook to reflect the changing agenda for the CIO. Over the past several years, the role of IT has seen dramatic change within the enterprise. 2023 is no exception as a few focus areas continue to evolve.
To see how the playbook has evolved over the past two years, check out the updates last year and the year before along with an October update on how recession might impact the playbook.
This year, a new influence comes into focus with the macro-economic conditions creating a shadow across most IT strategies.
Macro-economic impact on spending
While some organizations are taking a ‘stay the course’ approach, most organizations are reducing overall spend through different actions. Here are a few examples of how leaders are reducing spend:
- Staffing. For positions where someone is departing, consider holding off or delaying rehiring of the position. While more dramatic, layoffs are another tool, but should always be the last resort for many reasons. Unfortunately, at times it is necessary and part of a larger reduction in force (RIF). In both cases, there are detailed strategies to help navigate through the needs of organization and people when making decisions as to what specific actions to take.
- Project review. Review and categorize projects. A few things to consider include a) impact to organization and stakeholders, b) risk associated with doing or no-doing project, c) urgency in doing project now versus delaying, d) costs associated with project, e) people resources required to engage with project and f) likelihood of success with project. All of these must be taken in context to determine next steps.
- Contract renegotiation. Consider renegotiating contracts. Vendor partners do not like to do this, but for them renegotiation is better than losing the customer all-together.
- CapEx/ OpEx spending. Look for ways to either delay, reduce or eliminate spending for service and products based on criticality to the business function and priorities. At times, it may mean reducing or delaying spending. In other cases, it is an opportunity to refactor and rationalize how products and services are consumed to ensure they are in line with needs.
Overall, there is a natural rationalization that CIOs should regularly be doing to ensure their strategies and spending are in line with business directions.
CIO focus areas
Beyond spending, there are areas that CIOs need to consider in 2023. From people to technology, there is a lot in flux that will continue through 2023 and beyond. Many of these are either a continuance or evolution from efforts in past year’s playbooks. Let’s get to the list of the top areas:
- Workforce Engagement: Remote and hybrid work along with collaboration tools and engagement are one of the top priority items. Most companies are already working in a hybrid approach. In 2023, the hybrid approach will flex as companies revisit how to manage staff on-site or remote. Beyond the physical location that staff work, companies are looking at the person more holistically than ever to ensure staff have what they need individually to be as successful as possible. HCM/ HXM along with collaboration tools will gain increased interest in 2023. These tools are getting incredibly sophisticated but need to be paired with organizational changes to take full advantage. Look for a more focused discussion around employee experience (EX) in 2023 as well.
- Customer Experience: Customer trends are changing once again, and enterprises need to have both the insights and tools at the ready. As customers change, so must the company. This means a company and systems that are as nimble as customers. Customer experience (CX) is the broader umbrella term that covers a number of ways enterprises engage with customers. In 2023, look for new ways to engage customers as they continue to evolve over time. Old methods need not apply as the modern enterprise is taking a whole new approach to CX. Historically, a core function of CX has been the contact center. The contact center of old is being replaced by modern solutions that support a sophisticated multi-channel approach. Contact center as a service (CCaaS) will see significant interest in 2023 as enterprises look for new, and nimble ways to engage customers through more meaningful methods. CX is also closely connected to employee experience so watch for more in this space as they work hand-in-hand.
- Cloud strategies and rationalization: Enterprises are facing significant headwinds that are pushing a renewed interest in how enterprises leverage, and don’t leverage cloud computing. Enterprises are getting wise to the long-standing and misleading marketing that cloud is ‘cheap’ or ‘someone else’s data center’. Even before the macro-economic impact, enterprises were starting to reconsider how and where they leverage cloud. Hybrid, multi-cloud and industry-specific cloud solutions will benefit from the current conditions. This trend was building prior to the pandemic but has seen significant acceleration through the pandemic and into 2023. Enterprises need to look beyond the marketing and focus on where cloud makes sense and where it doesn’t. There are strategies around rationalization of cloud within the enterprise that support a multi-faceted approach needed by most enterprises.
- Data and AI: Data, insights and automation are keys to success for many of the enterprise strategic thrusts in 2023. Data analytics, AI/ ML and data management tools will continue to gain interest. However, proceed cautiously to ensure that automation is being used in meaningful ways that isn’t offset by increased risk. There is broad opportunity coming from data and AI in 2023. The macro-economic conditions will hinder this a bit in the earlier part of the year with the latter part picking up steam.
- Build vs Buy: As economic headwinds continue to build; enterprises are accelerating conversations around which applications to build versus buy. Even before the macro-economic situation, enterprises struggled to acquire the right resources. For some this meant shift away from building toward buying even if building might have been the right approach. Resource constraints will ease up a bit in 2023, but not much. These macro trends will impact IT strategies both short and long term. There is a huge upside for cloud-based solutions including demand coming from application modernization.
- ESG: While interest in environmental, social and governance may decelerate slightly as economic conditions deteriorate, expect to see a significant uptick as macro-economic picture becomes clearer. Environmental and sustainability is a key opportunity for CIOs in 2023 and beyond. Governance, for its part, is getting incredibly more complicated every year. Regulatory, compliance and privacy legislation on the books and currently in discussions ensure a spirit discussion across organizations within the enterprise in terms of how data is stored, governed and used…or not.
- Cybersecurity: Cyber is a perennial topic, but it is time for a wholly new approach to cybersecurity and risk in general. Enterprises are both concerned and overwhelmed by the changing climate around cyber risks. At the same time, external factors are significantly influencing how enterprises approach cybersecurity. Cyber insurance is becoming harder and more expensive to acquire. At some point soon, it is likely cyber insurance will no longer exist either by deprecation from insurance agencies or by pricing itself out of reach for most enterprises. A more holistic approach to risk is needed in 2023 that will accommodate the evolutionary changes to the cyber landscape.
- Technical Debt: Enterprises continue to struggle with technical debt and the ability to have a fruitful conversation about how to effectively deal with it. Let’s face it, a conversation about technical debt is not that interest when compared against AI, ESG or cloud. However, recent issues like the Southwest Airlines meltdown are opening the door to conversation about technical debt. In the same vein as cybersecurity risk, technical debt has a significant bearing to an enterprise’s risk profile. Historically, technical debt has not been a widely discussed topic. With recent events, it is likely to get the attention due in 2023.
Where to get started?
The bottom line is that 2023 is bound to be a bumpy ride. Sit down and strap in as CIOs have a full agenda that will require clever thinking to out-maneuver the landmines popping up right, left and center.
The silver lining is that these experiences will continue to strengthen the capability of the CIO and their organization. In times of downturn is when the most clever and innovative ideas develop. At the same time, the CIO and broader IT organization is at a transition point that can provide the greatest value to the enterprise.
Do not get distracted by the macro-economic situation. Yes, the CIO must successfully respond to it. However, demand for technology is stronger than ever and the CIO sits in pole position to help drive significant and differentiated value for their organization.