CDW Executive SummIT: How to Cost-Optimize Your Technology Investments

The more complex your tech stack, the more costly it is to maintain. Too often, IT executives are forced to scale back new tech investments to pay for maintaining current tools. For one B2B company, according to McKinsey, it became “an agonizing quandary: its leadership team was considering dozens of modernization initiatives that could bring a $2 billion margin expansion opportunity. But 70 percent of them depended on technology that would cost a staggering $400 million — much higher than expected.”

This business, like so many others, was forced to cost-optimize its tech investments. When this happens, the question then becomes: How can IT leaders re-evaluate the current tech stack so that new resources will yield maximum value?

At the CDW Executive SummIT, hosted April 2-4 in Chicago, experts discussed how to reverse-engineer ROI from the first days of a new tech investment and how to optimize existing costs.

Before investing in new technology, said Sanjay Sood, senior vice president and CTO at CDW, IT leaders should determine what problem this new tech will fix. Next, prioritize: “There’s AI, cloud, data analytics,” he said, so ask yourself which one is most essential and will drive positive impact across the organization. “Prioritization is key.”

From there, IT leaders should do a careful audit of their technology portfolio. This will pinpoint areas of technical debt and any redundant systems causing unnecessary financial strain. Identifying these areas can free up resources to be re-allocated to more holistic IT solutions.

Too often, organizations invest in new tools and deal with technical debt after the fact, said experts at the April CDW Executive SummIT. “An organization must review its tech investments to eliminate technical debt that could be inhibiting growth and driving up expenses,” advised E.G. Nadhan, global chief architect at Red Hat.

Once these redundancies are identified, IT teams can use AI tools to refactor existing codebases. Folding DevOps into workflows can make technical debt more manageable because it automates the process of updating old code to modern standards and routinely keeps systems up to date.

“One reason technical debt accumulates is that development teams don’t know there is a problem,” wrote Roger Campbell, a member of the digital services transformation team at CDW, in a recent article. “In a traditional ‘waterfall’ development environment, a team might release several updates before realizing that something isn’t working as intended. At that point, the amount of rework required to fix the problem can be daunting. By contrast, DevOps pipelines provide constant feedback, helping teams to catch problems as they arise.”

Folding technical debt reviews into larger project management workflows ensures that these tools are being prioritized, categorized and regularly reviewed.

Simplifying your tech stack is about strategic thinking. Every current and new tool should be in support of a company’s larger goals, explained Sood, and any new tool should have several use cases. So, look for a solution or service that solves three problems, not just one.

“Bigger is not always better,” said Ziad Azzi, head of partner engineering at Google Cloud. He urged IT leaders to “look for choice and value,” focusing on technology investments that offer internal and external use cases that drive productivity for employees and boost experiences for customers.

IT leaders can also streamline their technology stack by adopting cloud-native services and containerization, which would enhance scalability and reduce operational cost.

Evaluating current and new technologies from a “risk management perspective,” said Sood, is also key to optimizing costs. If a new tool can generate “30 percent more revenue, but the risk to the company is immense,” then it’s not a good investment because the “ROI is incalculable,” he said.

Organizations can also keep costs down by doing their research before signing on the dotted line for any new product or service, explained Kris Wayman, senior manager of global sales engineering at Sophos. This means asking if it’s possible to opt out of certain features, if the data collected is private or public, and if the product is compatible with your current tech stack. This level of granular due diligence will save organizations a lot of headaches.

Once IT leaders clean up their existing tech stack, it’s time to create an investment portfolio to sell executives on the benefits of new technology. “Every single piece of tech you have falls into three buckets: strategic, sustainment, enhancement,” said Sood.

Categorizing new investments within these budgets helps distill the value proposition for IT leaders. For example, a strategic investment may help a company level up against its competition in the market, whereas an AI enhancement will accelerate productivity and speed. Rather than place all bets on one technology solution, diversify your portfolio.

When it’s time to relay data insights to leadership teams, don’t take raw data to executives. “Look at the data, and find the story,” said Sood. Executives will likely want only the core takeaways, so make sure that the report is outcome-focused. “Create the narratives that you want and synthesize the strategy combinations.”

Last, think about how this investment will get an organization from point A to point B in the next three to five years. Working with a tech partner such as CDW can help organizations refine their strategic thinking as they cost-optimize their tech investments.