Business Growth Strategies
Responding to Inflation From the CIO Seat: What 3 Analysts Recommend
CIOs are waging an uphill battle to keep IT organizations running as they had planned by last year's end. Though a mix of political, economic and supply chain disruptions are threatening to derail executive plans, historic inflation rates constitute a growing concern.
The Consumer Price Index, a key bellwether for annualized inflation, rose 8.6% in May, according to the U.S. Bureau of Labor Statistics. The spike was the largest 12-month jump since 1981, a shift that's bringing upward pressure on everything from key supplies to labor costs.
Economic conditions, including inflation, were identified as one of the top five global risks of 2022 perceived by C-suite leaders, in a survey conducted by Protiviti and North Carolina State University. The two organizations surveyed more than 1,400 C-suite executives and board members.
As executives begin to think through their goals for the rest of the year, here are three analysts on the playbook CIOs should stick to amid stubborn inflation.
The upside to CIOs becoming more connected to the business side of their organizations is a clearer understanding of how the company operates.
The first step of a CIO proactively responding to inflationary pressures is to assess how inflation will impact their company, said Bryan Hayes, senior director analyst at Gartner.
"It's really about the position of the organization: some are in a stronger price position where they can push that onto their own customers," said Hayes. "Some can't."
This factor will guide whether CIOs end up asking for more resources to execute on plans or accepting their budgets won't reach as far as initially thought, Hayes said.
Tightened labor markets and historic inflation rates have teamed up to drive wages up for U.S. organizations. C-suite executives started the year worried about talent wars — and the struggle has only worsened. In IT positions especially, higher salaries at competing organizations are luring workers away.
"Most IT departments right now are feeling like they're at capacity or over capacity," said Brian Jackson, research director at Info-Tech Research Group. "There's huge competition to hire people and that does place pressure on wages. People that are talented in IT right now, it's definitely their market."
In response, CIOs must advocate to the broader organization why it makes sense to retain existing workers or expand capacities in specific areas, according to Jackson. For example, if a company wants to increase e-commerce sales, CIOs should explain why it would make sense to hire or retain workers well versed in that area.
Allotted budgets are covering less than previously expected, yet organizations will still look to the CIO to meet their goals.
"Requirements are not going to change," said Craig Wright, senior partner at West Monroe. "For a CIO, there is no letup in terms of expectations."
The challenge to do more with less means making use of every available resource, including the vendor ecosystem.
"The CIO also has an opportunity to leverage their ecosystem of providers to come up with the answers," Wright said. "We shouldn't try and solve the problem in a vacuum."
To maximize existing resources, companies can also reevaluate their mix of in-house, outsourced or contingent talent to meet demands on time.
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