IT and Data Teams Leading Change through Uncertain Times

IT companies, crypto exchanges, and financial firms face economic tensions in the current global scenario. They are cutting jobs as worldwide economic growth has slowed down.

In a sign of a difficult time, business growth is going down abruptly because of the upsurge in the cost of living. Technology hiring can slow down in the coming time because of macroeconomic factors like geopolitical uncertainty, economic downturn, and recession in many client geographies. This scenario includes higher interest rates, inflation, and an energy crisis. 

In these uncertain times, the role of IT and data teams has been critical. They enable you to anticipate transformation and deal with uncertainty in the present economic climate. So, it has turned crucial to how the role of IT & Data Teams evolves and delivers value to the business.

How IT Strategy of Companies would Change

IT strategy of companies looks to shift from prominent in-house/service provider staffed teams of resources to outcome-based engagements. Outcome-based contracting has become more prevalent through the COVID-19 pandemic as companies look to share risk with service providers.

The steering philosophy behind an outcome-based service model is that companies are selling business results rather than merely products. In this model, business incentives work on prearranged annual contract value and better navigate sales cost ratios. This scenario helps enable the precise value for the investment made by businesses.

Examining the gains of switching to an outcome-based model, companies in a survey believed they could accomplish 5 percent to 10 percent annual growth in services revenue. In comparison, clients who accepted this approach realized 25 percent to 30 percent cost reductions.

So, the IT strategy change component will be the IT outsourcing strategy with new cost models that need to be intelligent, flexible, and effective.

What can IT and Data Teams do to be Partners with Businesses

Given the economic situation and the impact caused by the pandemic, there will be financial pressure on the organizations. So, IT services need to prepare more efficient and cost-effective offerings.

For instance, enhancing software ROI by automating license optimization is a cost-reduction method. Optimizing licenses can be challenging if organizations do not opt for automating the process. 

IT software license optimization by closer usage monitoring and discovering apps not actively leveraged based on activity levels is vital for cost saving. Automatically releasing idle licenses also maximize the value of parallel license management.

Companies need to add to their IT policies and automatically release licenses back to the license server to sidestep inactive usage of software licenses. These use case scenarios lead to opportunities for novel, cost-effective product alternatives and optimization approaches.

Challenges faced by Data and IT Teams

Companies build teams to work on data projects; however, these teams encounter multiple operational hindrances. Many of these encounters depend on the requirement for the alliance between IT and business profiles. 

Common slip-ups, such as leveraging static data or not methodically planning a solution's implementation, can trip up a young data team prior they finish their first proof-of-concept.

As data teams grow, the obstacles do not disappear but take diverse forms, for example, deciding whether to stick with legacy technologies or opt for the latest approaches.

Coming to challenges faced by IT teams, there are 30+ billion USD spent on idle software per year. Companies purchase software solutions they don't require because there is no proper interaction and orientation between decision-makers.

So, while the business department may like how the software works on its end to meet its requirements, if IT doesn't like the components, such as the database or the APIs, they might fight against the software acquisition. And that takes to extensive challenges ahead. 

Business Approaches Adopted by Clients in Uncertain Times 

The different approaches include outcome-based service contracts, where the client checks and validates the business outcome-related results and then pays the fees. 

In other scenarios, it could be the client paying the base fee for setup, and then the software is used as a service where the usage-based pricing is structured, and then it's the gain/profit sharing. 

In the gain/profit sharing model, a client agrees to share a part of the upside if the service provider surpasses the decided results. The gain-sharing payment is over and above the service provider's fee for sustaining the contract's fundamental necessities.

Moving Forward

Despite ongoing difficult times, clients continue to innovate with unique approaches. It is not uncommon for insights and analytics demand to be up 30 percent to 50 percent every year.

Some of the most successful organizations have already incorporated data-driven decision-making into their business.