As we approach the half-way mark of the year, CIOs are getting ready to execute their calendar Q3 and Q4 plans. What is…and not included in those plans? Let’s talk about it.
While we had hoped that the economic conditions would have improved by now, the global impact continues to provide a cloudy outlook. This, in turn, is causing CIOs to adjust their strategies accordingly.
One bright spot, however, is technology. Even with all the layoffs by major tech companies, the latest data shows that technology continues to be a bright spot on multiple levels.
CIO water cooler talk
Three things are on the minds of CIOs: financial planning, optimization and innovation.
During calendar Q1 and Q2, the conversation was about budget cuts in support of economic pressures. Externally, the budget cut word was used. However, internally this did not translate into actual cuts, but rather deferrals in spending. This choice of words provides some very interesting strategic financial and contractual leverage for CIOs.
The hope was that by holding off on spending in Q1/ Q2, savings would provide an adequate response to economic pressures without actual budget cuts. For CIOs and IT organizations, actually cutting budgets has a long-term impact that is much harder to recover from versus deferral of spending. This is a very strategic economic play on financial management within the IT organization. Should one expect that the economic pressure was relative short term (one to two quarters), deferral makes sense.
However, as we approach Q3, those deferrals may likely turn into actual cuts. If that is true and this is how it plays out, it also means a longer IT recovery once the economic pressures ease.
The thinking is: If you can weather the economic pressures and only defer spending, it puts IT in a position to catapult once the pressures ease. Actual budget cuts turn into a longer recovery process that includes rebuilding of resources.
Optimization and innovation
That being said, IT organizations are still spending and spending big…in specific areas.
Four areas of technology investment
The four areas of technology investment are:
- Customer engagement/ experience (CX)
- Employee engagement/ experience (EX)
- Business operations: Data management (DX)
- Generative AI (GenAI)
On the subject of Generative AI, CIOs continue to navigate choppy waters.
Much of the conversation among CIOs includes artificial intelligence and generative AI. It seemed that every conversation I have with CIOs includes AI at some point. Beyond AI, there is plenty of financial conversations about how to strategize moving forward.
The potential is huge, but the risks are starting to show themselves. For many organizations, the initial shine of generative AI and ChatGPT as a core building block has been replaced by questions. Lots of questions…and not a lot of answers.
These are very early days for generative AI and we are still figuring out how this works.
One common approach is starting to develop among CIOs. It is appearing that Generative AI as a core building block is becoming less interesting. While leveraging Generative AI that is built into incumbent enterprise products is become more interesting. There are a number of reasons for this.
Continuing with the theme of data, I just finished a series of three interviews with my colleague Tony Baeralong with data executives at SAP’s New York offices.
Sidenote…if you have a chance to visit SAP’s Fashion Experience in NY, it is quite an experience to see the art of the possible. While it shows an impression fashion experience, one can easily see how it would translate to other industries.
The interviews touched on recent SAP data announcements along with how partners like Collibra and DataRobot are helping enterprises navigate the data challenges. Here’s the link to the series:
Data Executive Interview Series
I also participated in a number of interviews you might find interesting.
- A Free-Ranging Discussion on Today’s AI Ferment and the Impacts of Generative AI (HPC Podcast)
- Inside the Mind of CIOs: Discussing the Biggest Challenges in Enterprise Tech Today! (Let’s Talk Shop Podcast)
What’s your take?
It seems like every conversation eventually turns to or includes generative AI. What’s your take? How are you navigating 2023 as we cross the half-year mark?
Now it’s your turn. I’d love to hear from you and your perspective.
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Originally posted on LinkedIn: https://www.linkedin.com/pulse/cio-know-strategizing-q3q4-2023-beyond-tim-crawford/
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