CIOs seek efficiencies as uncertain economy looms

Novanta plans to retain 25% of its IT operations in a scaled-down data center, for which Betadam is experimenting with raising temperatures above 64 degrees to cut air conditioning costs.

“Saving power and improving sustainability is an important goal for us,” she says, noting that Google Research has shown that IT infrastructure can operate safely at 80 degrees. Betadam adds that the push to bring down cloud costs is not an unusual drive to economize, unique to 2023, but part of the company’s ongoing adherence to efficiency.

‘Shift left’ and an appeal to automation

Kevin Gray, CIO of Burbank, Calif., faces different forces. As nearby employer Disney announced layoffs of 4,000 workers, Gray took note.

“We haven’t been hit by a recession, but enterprises are reducing their workforces. If tax revenues decrease, we may lose steady funding,” says Gray. “We’ve had the discussion with the city manager. We’re trying to get ahead of that storm by driving more efficiency and automation, not just in IT but the entire city.”

To that end, the municipality of 108,000 is implementing a number of “smart city” initiatives built on the internet of things (IoT) and AI, including intelligent traffic management and an intelligent transportation system.

Although not implementing a formal FinOps initiative, the CIO is leading the implementation of Scaled Agile Framework (SAFe) for Government, a blueprint for deploying Lean, Agile, and other principles for public entities.

“We’re big on shift left — shifting work to the least expensive resources you can,” says Gray. “That includes shifting work to the least-cost human resources and implementing automation,” he adds. As for the cloud, Gray says he is “very wary” of cloud costs and seeks to trim expenses for AWS and Microsoft Office 365 services using tools that come with the services. For a city the size of Burbank, third-party tools would not offer sufficient return on investment, he says.

Managing the workforce for efficiency

Workforce flexibility plays an important role in cost control for the city of Burbank. With 33 full-time employees, Gray relies on contract workers, systems integrators, and managed service providers to fill gaps, rather than over-hire and be confronted with layoff choices down the road. Burbank uses a managed service to help support Oracle ERP applications and a systems integrator to build its Mobile 311 application, an easy-to remember number that connects

citizens with municipal services.

The surge in remote work prompted by the COVID-19 pandemic presents opportunities for savings, according to Greg Smith, professor at Georgetown University and CTO of a firm in the Washington, D.C., area. “Organizations are starting to implement economical operational and technological changes as a result of the hybrid work environment that organizations have adopted,” says Smith.

Geolocation-based pay can allow organizations to reduce salary to match wages in the regions where remote employees might choose work, according to Smith. Remote work also allows organizations to trim costly office space and sell off unneeded real estate holdings. “A mix of fully remote, hybrid, and office-based staff will achieve payroll savings that are significant,” says Smith.

Dynamic sourcing models, including team-staffing platforms and skills marketplaces, are also stepping in to help fill talent voids without committing to full-time resources.

Lessons and advice

Whether macro-economic forces are expanding or contracting, IT budgeting requires deft management.

“Every year is a year of economy. We always want to be good stewards of our budget dollars,” says Venkatachari of U.S. Bank.

As for Chan, having learned firsthand the cloud is not a panacea, he advises his peers to proceed with caution. “Don’t jump into the cloud and rack up expenses without knowing how to take the costs out, otherwise you will be stuck with high costs for a long time.”

Betadam says no matter whether the economy is turbulent or not, focusing on ROI for all IT programs by tracking savings and accomplishments year over year can pay dividends later on, especially during budget requests.

“IT leaders’ focus on ROI and operational efficiencies should become part of our DNA and brand,” she says.