CIOs steadfast on driving transformation and cost savings through tech
Recession, cutbacks, retrenchment. They aren’t slowing CIOs down. PwC’s third Pulse Survey of 2022 reveals that tech investments are on the rise. It may be counterintuitive, but there’s good reason for the relative boom times in the IT function. Technology is still seen as the most effective and reliable way to drive growth, improve efficiency and enhance ESG initiatives. It doesn’t matter what business function you analyze — IT is working behind the scenes to digitally transform it. For example, 97% of CIOs say they’re maintaining or increasing investments in finance transformation. And nearly all (98%) are doing the same for operations. The list goes on.
Meanwhile, CIOs are also trimming expenses by digitizing and modernizing outdated processes and equipment, improving sustainability efforts along the way. It helps that the modern CIO has an established seat at the C-suite strategy table. But that’s not to say that technology leaders see an easy time ahead. More than ever, they need to demonstrate a return on investment (ROI) of tech initiatives.
IT spending on the rise
CIOs aren’t seeing budget cuts, even with concerns about the economy.
94%
of CIOs see steady or increased budgets, despite recessionary risks
Looming budget cuts? Not for CIOs
CIOs overwhelmingly say their businesses are continuing to invest in digital transformation initiatives across the enterprise. By and large, these investments are set to increase in the coming year, and at the very least maintain their current level for the vast majority of CIOs in our survey. When considering investments in supply chain transformation efforts, for instance, 57% of respondents tell us they’re increasing their budgets, 38% are maintaining existing budgets, and only 2% are decreasing them. Those numbers are typical across almost all digital transformation categories, with five of the eight areas surveyed showing more than half of respondents seeing an uptick in investment levels.
How does this positive trend reconcile with the current economic situation, with 87% of CIOs and 90% of all executives saying they’re concerned about the macro environment? While it might be tempting to write this off as irrational exuberance, the technology function does in fact seem to be enjoying some level of insulation against widespread budget cuts. This paradox is likely explained by the recognition that competitiveness on the digital stage is paramount to overall success. CIOs understand that growth and efficiency requires investment in digital capabilities, and they feel confident that they can deliver, recession or not.
What you can do
- Be prepared to prove your business case. Consider breaking up larger initiatives into more agile projects that enable you to demonstrate ROI along the way.
- Invest in technologies, such as cloud and AI, that can drive efficiencies and transformation.
- Don’t overlook change management. Make sure you can match the speed of adoption with that of development to achieve results.
- Proactively engage finance and risk leaders to reap the biggest potential benefits. Tap tax leaders early on so they can help you identify the impact of taxable presence, withholding and indirect taxes, and how R&D tax credits against US federal and state taxes can offset digital investments.
IT driving efficiency programs
CIOs tasked with using tech to save money across the business.
52%
of CIOs are incorporating analytics into processes to drive better, faster decision-making
Efficiency efforts remain a top priority for CIOs
Part of increased tech spending is targeted at achieving organizational efficiency, a theme echoed in our August 2022 Pulse Survey. At that time, CIOs told us they spent about half their time focused there. Now, for example, 53% of CIOs say they are working to a great extent to replace physical events, processes and products with digital ones. And 52% are looking for ways to incorporate analytics into processes to drive better and faster decision-making. Automation, digitizing legacy infrastructure and self-service IT are also seen as top priorities for cost savings and productivity.
There may be a need for some CIOs to sharpen their focus and determine key priorities as they aspire to evolve their roles. Having a strategic focus is the mark of what we call a "triple threat” CIO, an executive who understands that mastery of technology, business and strategy are essential to help secure success, both for the business and for personal growth in the long run. In today’s environment it’s nearly impossible to pursue everything simultaneously.
What you can do
- Cost cutting remains key across the enterprise, regardless of business conditions. Prioritize the strongest initiatives and build support for these efforts in the executive suite.
- One clear priority area should be data. By modernizing your data systems and unlocking the power of AI, you can use insights to build a roadmap toward further transforming functions and processes.
- Align closely with the executive team and think broadly about how to transform digital capabilities into business growth.
CIOs take a lead on ESG
Sustainability isn’t just a lofty goal, it’s a business necessity.
52%
of CIOs are actively implementing cloud-based solutions in order to advance sustainability
CIOs are tackling ESG challenges across the business
As ESG continues to permeate the corporate agenda, CIOs are coming into their own as ESG leaders. In some ways, they’re being forced to. Recent reports about the incredible amount of power consumption used by large data centers have drawn significant attention to the less green aspects of IT. At the same time, CIOs may hold the keys to ESG success, given that data is the lynchpin to understanding, mitigating and reporting on a company’s carbon emissions.
The good news is that CIOs by and large are actively part of setting strategy for net zero initiatives, and those who aren’t do at least have significant influence over it. They’re evaluating greener options across the board (56%), including moving remaining legacy data centers to greener cloud operations. They’re also looking to a new breed of cloud solutions to help them better manage and report on the company’s carbon emissions data.
The same is true when it comes to advanced tech like blockchain. CIOs know that more sustainable approaches for resource-intensive applications will be the key to enterprise success and many are looking to see how Ethereum’s recent Merge affects corporate adoption. At the same time, they’re considering how emerging tech (49%) like virtual reality, digital twins and the metaverse can help reduce travel and other operations costs (and thus the organization’s carbon footprint). They’re aware that these technologies can move the needle on sustainability and they aren’t afraid to lead the organization on that front.
Governance — the “G” in ESG — is one area that sometimes gets overlooked by CIOs, as issues like data privacy and security aren’t immediately obvious parts of the equation. Fortunately, 54% of CIOs say they’re actively focused on strengthening cybersecurity and privacy initiatives. That, in turn, can help bolster a company’s ESG ratings, which factor in cyber and privacy activities.
What you can do
- Take early aim at easy targets, like energy-devouring data centers that can be shifted to the cloud.
- Engage your cyber, privacy and ESG leaders around how you can collaborate to better bring together efforts to collectively strengthen the company’s position.
- Start a pilot in using emerging tech to replace in-person activities and processes, looking at where you can improve efficacy as well as sustainability. Consider VR and metaverse environments for training and onboarding or a digital twin for a specific process or single facility.
About the survey
Our latest PwC Pulse Survey, fielded October 12 to October 18, 2022, surveyed 657 executives and board members from public and private companies about the current business environment, the risks executives are facing and the impact those risks have on company strategy and growth plans. Of the respondents pool, 87 are CIOs, CTOs and technology leaders.
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