Top business needs driving IT spending today

After years of prioritizing digital transformation and focusing on innovation, many CIOs are reporting that their No. 1 goal now is supporting operational efficiency.

CIO.com’s 2023 State of the CIO report, its 22nd such annual survey, showed that more CIOs today are seeing improved operational efficiency as the top imperative.

Some 45% of respondents listed “increasing operational efficiency” as a business need driving their IT agenda, propelling it to the top spot on the list of business initiatives driving IT budgets today, besting other critical business needs such as increasing cybersecurity protections, furthering transformation, and even improving profitability.

But IT leaders say there a host of other business needs shaping IT initiatives today that are not only nearly as important as driving operational efficiency but are frequently supportive of it.

That’s what Matt Mead, CTO of the technology modernization firm SPR, sees in the market.

“Driving efficiency is very much on everyone’s minds,” he says, while quickly adding that CIOs are investing in technologies that help them address multiple business needs. He cites automation as a case in point, noting that the technology can transform processes as well as improve customer and employee experiences, all while creating more efficient operations. Cloud migrations and data analytics projects do much the same, Mead says.

Top 15 business needs driving IT spend

The State of the CIO survey asked 837 IT leaders and 201 line-of-business (LOB) participants a range of questions regarding their current and future IT strategies, with 56% reporting that they expected their overall IT budgets to increase this year. In terms of business initiatives driving their IT spending this year, the top 15 enterprise needs are:

1. Increasing operational efficiency: 45%
2. Increasing cybersecurity protections: 44%
3. Transforming existing business processes: 38%
4. Improving the customer experience: 36%
5. Improving profitability: 27%
6. Increasing employee productivity: 25%
7. New product development: 22%
8. Increasing topline revenue for the business: 20%
9. Developing new digital revenue streams: 19%
10. Improving/optimizing the employee experience: 19%
11. Enhancing hybrid work technologies: 18%
12. Improving talent acquisition/retention: 17%
13. Meeting compliance requirements: 16%
14. Monetizing company data: 14%
15. Adhering to environmental, social and governance (ESG) standards: 11%

The top portion of this year’s list varies from last year’s findings in notable ways, with increasing cybersecurity protections having been the top business need driving IT budgets in 2022, followed by increasing operational efficiency, improving customer experience, transforming existing business processes, improving employee productivity, and improving profitability.

The shifts suggest that a portion of enterprises are moving on somewhat from last year’s protection posture in favor of revamping business processes and increasing efficiencies, and that the pandemic’s lens on employee productivity is giving way to an eye on profitability as economic headwinds rise.

Business pressures drive IT

Multiple CIOs across various industries say their IT agendas line up with the State of the CIO Report findings.

Woody Groton, the CIO for Draper, a nonprofit research and development organization, until April 2023, says the IT strategy he had put in place is a testament to that.

“Operational efficiency and profitability and productivity all tie into the business pressures we’re all seeing,” he says, adding CIOs continue to hear calls for IT to help reduce costs and drive efficiencies. “There’s a renewed focus on all this; that’s something I’m experiencing.”

But Groton says the pressure for operational efficiency isn’t about identifying technologies that can help slash costs — as had been the case in the past. Instead, the imperative is to determine how IT can improve operational efficiency while also meeting other key business needs, such as transforming processes and improving customer and employee experiences, he says.

The IT plans Groton had implemented for 2023 at Draper called for moving the company from an on-prem ERP system to a software-as-a-service option; Groton says such a move enables business units to update existing business processes, with the expectation that the company will enjoy both transformation and improved operational efficiency as a result.

Groton’s IT strategy called for moving other systems to the cloud to gain efficiencies, spur additional process transformations, and boost the company’s cybersecurity posture — all top business priorities at Draper that correspond to the CIO.com research findings.

Automation efforts, such as robotic process automation (RPA), and implementing software with built-in AI capabilities are other key initiatives, given their ability to shift workers away from mundane time-consuming tasks to higher-value activities, thereby generating further efficiencies and improved user experiences, Groton says.

As Draper CIO, Groton also focused on meeting the company’s push for maturing its cybersecurity posture. To that end, Draper adopted a zero-trust security model, with IT implementing various technologies, such as network detection and response (NDR) software to support that defense-in-depth strategy.

Draper’s continuing drive to maximize its use of data also meant more investments in business intelligence and analytics tools, Groton says, while its ongoing hybrid work environment necessitates ongoing investments in technologies that support and improve both worker experience and productivity.

Max Horne, CIO and senior vice president of Colonial Savings in Texas, has a similar list of business objectives to fulfill. He specifically listed operational efficiency, cybersecurity, and “projects that can help us bring more business in” as top drivers at Colonial.

Maturing the bank’s data and analytics program and improving customer experience are also top business objectives today, Horne says, noting, however, that these items are perennial priorities, with their rankings on the priority list changing mainly based on fluctuations in economic and business conditions.

“I find my project portfolio has always had those things in it,” Horne says.

Addressing multiple business at once

Other research shows a similar list of business imperatives shaping the IT agenda this year.

The IT Priorities: 2023 report, conducted by research and consulting firm Frost & Sullivan for tech company GoTo, surveyed 1,000 IT decision-makers and found that growing revenue was the No. 1 business objective for the year and that 83% of surveyed organizations intended to achieve that growth by acquiring more customers. Improving operational efficiencies was second on the list of business objectives, followed by reducing costs and increasing customer satisfaction.

Meanwhile, Snow Software’s 2023 IT Priorities Report found that reducing IT costs topped the list, followed by reducing security risks, delivering digital transformation, adopting new technologies to improve day-to-day operations, and driving company growth.

CIOs say they’re working to collectively address those multiple and often overlapping needs.

That’s the case for James Pennington, vice president, CIO, and HIPAA security officer at Southwell, a nonprofit healthcare system in Georgia.

He lists the business need to accelerate growth, strengthen the workforce, and reduce expenses as his top drivers for IT spending. He also cites the Southwell’s commitment to safety and quality as a top business need shaping IT today.

“As with most of the healthcare provider market, we are struggling to rebound to pre-pandemic volumes and revenue. Most of our technology initiatives are based on tangible ROI and/or maximization of our legacy investments. As such, our strategy centers around innovative solutions leveraging key strategic vendors in order to capitalize value,” he says.

Micha Albertijn, CIO of Meat&More, a vertically integrated Belgium-based company that incorporates food production and processing as well as distribution and retail activities, says he, too, is working to meet multiple business needs of near equal importance.

First, Meat&More is pushing for operational excellence. “The more efficient and effective our processes are, the better our company is running,” Albertijn says. “This can be translated to how we offer digital solutions to our employees and customers and vendors.”

The other two main drivers are becoming more customer-centric and containing spending, which means benchmarking activities from a financial point of view and working to “right size” in terms of budget, he says.

IT is working on various initiatives to support those business imperatives, with several IT projects delivering value in all three areas, Albertijn says, pointing to his team’s work with the sales and marketing department on data-driven know-your-customer projects, which help Meat&More be more customer-centric while supporting top-line growth and efficient use of marketing and sales spend.

“A topic that was already high on our agenda before my arrival but today is even far higher on the agenda is cybersecurity,” Albertijn adds. “We feel due to circumstances and also due to recent events that cybersecurity is asking for far more attention.”

Consequently, he and his IT team are spending more resources in that area, with money going to improving the team’s security skills and implementing next-generation security tools such as those that use AI to deliver more effective threat detection and response.

Focusing on the enterprise mission

CIOs say such intense focus on business needs — and aligning IT spending and the overall IT strategy to them — has become critical for enterprise success.

Bryan Kennedy, director of museum technology and digital operations at the Science Museum of Minnesota, speaks to that point, saying that the museum’s executive team is focused on “using technology to drive forward its mission.”

For Kennedy, that means investing in technologies such as automation and AI-based tools to streamline operations with an eye toward delivering efficiencies — echoing a familiar refrain.

It also means moving more workloads to the cloud, which is both helping the museum to transform processes while also cutting costs. And it means investing in data and analytics to help the museum become more data-driven — with the goal of using those insights to understand where it can grow and how it can move further into the digital space.

At the same time, Kennedy — like his CIO colleagues in other industries — says he has seen his business-side colleagues become more committed to maturing the museum’s cybersecurity posture. Kennedy has invested in various security technologies — including a password management tool and cloud access security brokers — as he moves the institute to a zero-trust security model.

Kennedy’s priorities mirror other findings in the 2023 State of the CIO survey, which noted that CIOs this year anticipate their involvement to increase in cybersecurity (70%), data analysis (55%), data privacy (55%), AI/machine learning (55%), and customer experience (53%).

The study further found that most respondents (77%) believe the visibility of the CIO role will continue to be elevated within their organizations. Already, 38% of LOB respondents consider the CIO as a strategic advisor who proactively identifies business needs and opportunities with another 25% viewing the CIO as a consultant who is evaluating and advising on business needs and technology choices.