2023 is shaping up to be a less robust spending year for IT budgets. In this environment, IT leaders will have to work harder to sell projects.

Mary E. Shacklett, President of Transworld Data

January 17, 2023

4 Min Read
BUDGET 2023 text on the display of a calculator that lies on a blue folder and a white background
Sviatlana Zyhmantovich via Alamy Stock

IT budgets (and the rate at which IT spends them) will be under close scrutiny in 2023. This means that IT leaders who are responsible for developing budgets and selling their worth to others in management such as the CEO and CFO, should spend more time in creating narratives that explain exactly why certain technology investments are needed. That means showing how these investments tie back into the two central concerns of companies: making money and reducing operating expenses.

One needs only to look at recent history to understand why persuasive salesmanship is needed for IT budgets.

The term “virtualization” was first coined in the 1960s, when IBM began partitioning its mainframe software. However, virtualization as a data center strategy didn't gain budget traction until the early 2000s. Why? Because virtualization was an amorphous term to those outside of the computing world. Just what did virtualization mean? How could you run an invisible operating system and applications without a dedicated physical computer to run them?

It took IT and the IT industry decades to explain the benefits of virtualization in plain English and business terms. They explained how it was possible to create software versions of hardware on a single server that could run multiple systems and applications at once. This meant that you didn’t have to invest in more physical servers or incur the additional energy and facility costs required to run them. You might even be able to reduce the amount of square footage needed in the data center. Better yet indefinitely delay the need to build a new data center!

When CIOs began to present budget arguments along those lines, dollar signs flashed in CFOs’ eyes. CEOs liked the operations savings stories that they would be able to tell their boards, and virtualization got sold

What Happened?

IT leaders found a way to create a story that explained in plain language what virtualization was, how it worked, and what its financial impact would be on the organization’s bottom line.

The moral of the story is simple: If you can explain what a particular technology investment is, how it works and how it will impact company performance, you can sell your budget more effectively.

Here is an example use case for 2023:

You want to invest in a supply chain risk management system that will cost six figures.

You could just go to management and say, “We need to invest in a supply chain risk management system because we need more insight into our suppliers and the security risks that they present.”

However, then management is likely to ask:

“Why spend on a risk management system? We already have a supply chain system?” Or, they would ask, ‘We’ve spent over one million dollars on an ERP system already. Isn’t investing in this risk system overkill? Another executive might ask, “Doesn’t someone in finance already assess risk?”

You realize that your proposal is not likely to get approved if you don't find a better way to present your case. So you decide to tell a story: “We have a supply chain of over $10,000 suppliers, and we are in a vital industry that cybercriminals are likely to target. Our own internal systems are well defended, but what do we know about a mission-critical supplier in another part of the world that still uses public Internet to communicate with us?"

Then you could mention, “Last year, XYZ company had the security of its supply chain compromised and lost over $10 million in orders. It is still repairing its reputation. The cause of the security breach was malware passed into its supply chain network by a downstream supplier's system that cybercriminals had penetrated.

Wrap up with, “We have our corporate security in place, but do we really know where all of the weak security links with our suppliers are? This is what the supply chain risk management software can help us identify and mitigate.”

There is still no guarantee that management will fund your proposal, but you've vastly improved your chances by presenting the need for supply chain risk management in a business scenario that is real and compelling.

It’s also why storytelling as a part of the 2023 budget selling strategy will be more important than ever.

What to Read Next:

10 Creative Ways to Slice IT Costs

How to Maximize Your Organization's Cloud Budget

Data Analytics Can Fix the Supply Chain. Eventually

About the Author(s)

Mary E. Shacklett

President of Transworld Data

Mary E. Shacklett is an internationally recognized technology commentator and President of Transworld Data, a marketing and technology services firm. Prior to founding her own company, she was Vice President of Product Research and Software Development for Summit Information Systems, a computer software company; and Vice President of Strategic Planning and Technology at FSI International, a multinational manufacturer in the semiconductor industry.

Mary has business experience in Europe, Japan, and the Pacific Rim. She has a BS degree from the University of Wisconsin and an MA from the University of Southern California, where she taught for several years. She is listed in Who's Who Worldwide and in Who's Who in the Computer Industry.

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