Navigating Economic Uncertainty: Strategies for IT Leaders and MSPs
Lately, it seems that each day brings news of more economic uncertainty. Companies that have been navigating the pandemic for the past two and a half years have been suddenly forced to confront growing inflation and geopolitical instability that are fueling issues with global supply chains.
Throw in, too, rising concerns about a coming recession, and it can feel like MSPs and IT leaders are being tossed on the rough seas of unpredictability.
Inflation is being driven by macro factors that are unseen and largely out of industry control. Companies’ pricing power, buoyed over the last two years by high demand and low supply, is waning in the face of shrinking consumer demand. Mergers and acquisitions, too, are slowing as the valuation of private companies drops.
Given these factors, it’s no surprise that companies are battening the hatches for a possible recession and concentrating on cost savings. Complicating a straightforward strategy for reducing spending are industry changes that make it more important than ever for leaders to adopt a savvy approach to volatility by keeping the cloud top of mind.
Companies turn a critical eye on cloud spending
IT budgets have passed through previous phases of belt tightening largely unscathed. This time around, however, those budgets might be on the chopping block. Because costs are now a rising concern, companies need to optimize their cloud spending. By and large, however, they are not.
A Couchbase survey found that many companies are overspending on cloud services, losing roughly $8.75 million each year. Driving the overspending are the usual suspects: lack of insight into cloud investments, the need to improve functionality around compliance and security, and inflexible pricing plans.
Companies have run up against service limitations. And budget-makers are taking notice.
Cloud spending is predicted to dip in 2023. Such projected spending cuts, however, present IT leaders with an opportunity to consider their company’s cloud operations in a new light as markets reorient themselves to the slowdown.
As Philipp Carlsson-Szlezak, Paul Swartz and Martin Reeves noted, “Those with a playbook centered on resilience and controlled risk-taking stand a chance of relative, or even absolute outperformance if they can create and seize strategic opportunities in bad times.” As the overall economy works to find its footing, now is a good time to right-size your company’s clouding spending.
Consider all options
Inflation and the threat of a coming recession only increase the challenges MSPs and IT teams face. These include the ongoing costs of cloud services, deciding whether to invest in new cloud technology and the impact of cloud services on business in turbulent times.
This doesn’t mean shying away from the cloud. On the contrary, given current challenges, it’s important that leaders understand all the cloud options available to grow their businesses.
This understanding can be key to navigating the unknown. Given our current shifting ground, CEOs need to be “front-seat evangelists for the cloud,” writes Nitin Rakesh. “Why?” he asks. “Because the cloud facilitates communication, flexibility and collaboration—key functions in a fast-changing world.” Companies now have clear mandates and goals with their cloud spending: To strengthen themselves against volatile market forces.
But companies must be strategic. Research has found that organizations, on average, waste up to one-third of their cloud spending budgets. Despite this, 70% of companies using cloud services plan to increase those budgets.
Now is the time to maximize your cloud spend. To do that, you must consider all your options.
Five key steps to help maximize cloud spending
As companies reshape themselves among economic uncertainty, the advantage will go to those who maximize their ROI on cloud services. These five options can help you do just that.
Watch the industry forecast: If you see a projected softening of demand for services, now’s the time to reevaluate your cloud needs. Cutting cloud services ahead of slowed growth can help you navigate those periods of uncertainty. Thanks to the cloud’s flexibility, you can always increase services as demand bounces back. In addition, monitoring the adoption of new technology and phasing out old technology can help you remain compliant with security and policies, among other areas.
Assess cloud spending: Take a close look at each of your expenditures for cloud services. Are you paying for services you don’t use? Do you have multiple subscriptions that could be consolidated? Is cloud adoption declining in certain office locations? And, if you’re looking to optimize spending, you might consider consolidating services or migrating to more affordable solutions. But to realize these savings, you need to understand all your cloud expenditures and options.
Evaluate investing in new technology: If you have the means, now is the time to take advantage of new technology to increase operational efficiency as competitors struggle. With inflation, the price of some cloud solutions will only increase. Now might be the time to invest.
Work efficiently: Migrations can help your company increase efficiency, but they can be costly if mishandled. In fact, 75% of data teams believe that outdated migration and maintenance processes are costing their organizations time, productivity and money — potentially at an annual price tag of up to $43.5 million. If you take on a migration, make sure you’re using the right solutions and have the support you need to migrate effectively.
Combine forces: As company valuations react to economic uncertainty, now might be the time to merge with a competitor. This often lets you synergize IT expenditures and reduce costs. But don’t lose sight of IT needs. As we’ve seen, integrating IT teams during M&As is crucial for a deal’s success.
MSPs and IT teams have a wealth of cloud options to remain strong while navigating economic headwinds. Now’s the time to research those options. In the coming year, 61% of businesses plan to optimize cloud costs. Making sure your company is among them will give you the best chance to ride out any storms on the horizon.
By Tosin Vaithilingam – Senior solution architect, BitTitan