CIOs torn between innovation and optimization | CIO Dive

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Dive Insight:

Companies have learned to lean on technology to drive business outcomes, improve efficiency and grow revenue. Investing in the right kinds of integrated technologies — cloud, cybersecurity and data systems, to name three — can even boost market valuation, according to a recent Deloitte study.

But the enterprise embrace of modernization can put CIOs in a tricky spot. Weighing the cost and value of new deployments against the perils of piling up technical debt within existing infrastructure is a delicate operation.

One-third of CIOs surveyed acknowledged their organization’s IT lacks resilience, a state that often derives from a failure to optimize, leading to technical debt.

“In business terms, we call it ‘the increased cost of complexity,’” Aamer Baig, senior partner at McKinsey, said at last month’s MIT Sloan CIO Symposium.

“In non-technical terms, it’s ‘spaghetti code’ leading to spaghetti-sprawl solutions,” Baig said, citing temporary IT fixes that become permanent, poorly written code embedded in overlooked applications and software in need of updates.

Balancing IT’s needs with internal pressure to onboard new technologies is difficult under the best of circumstances. Economic uncertainty has added to the challenge. While analysts agree enterprise tech budgets will continue to grow, inflation and high labor costs in a tight market for talent are limiting factors.

Nearly 3 in 5 CIOs expect their IT budgets to grow by 10% or less in the next 12 months, which may provide some spending flexibility if current inflation rates hold.

The long-term solution involves integrating optimization into digital transformation so that innovation can keep up with continued attention to existing infrastructure, according to Manju Naglapur, SVP and general manager of cloud, applications and infrastructure solutions at IT services and consulting firm Unisys. 

Modernization and optimization are parallel activities, Naglapur said.

David Linthicum, Deloitte’s chief cloud strategy officer, sees new technology as integral to optimization.

“The reason people are leveraging generative AI, for example, is because they see the ability to optimize building boats or manufacturing cars or whatever their business is,” Linthicum said. “It’s technology that’s going to allow them to take the business to the next level.”