What Should IT Focus on in 2024 When It Comes to Software Management?
Ben Pippenger: Hey, everyone. Ben Pippenger here with another episode of SaaSMe Anything. As we ease into the new year, I'd like to take a moment to reflect back on 2023. I'll tell you what, if we thought 2022 was tough, 2023 only continued that trend. And it was pretty unexpected too. We saw that the economy didn't really bounce back, like we originally had thought or hoped that it would. There was a lot of uncertainty in the global dynamics and politics. Generative AI became the hot new technology, and we saw some pretty big security breaches last year. There are also a few trends in the SaaS industry that made an impact on our business.
Ben Pippenger: First, SaaS overran on- premise software. SaaS officially surpassed on- premise for the first time in 2022. In 2023, IDC reported in their Q4 state of the market report that 60% of software spend was on SaaS, up 10% from 2022.
Ben Pippenger: Second big trend is that AI totally blew up. More than ever, companies are exploring how to adopt AI. And IDC, in that same report, stated that they expect it to make up 10 to 20% of IT budgets by 2028.
Ben Pippenger: And last trend is that budgets continue to be tightened. Companies clamp down on unnecessary spend. Yet, the challenge going into 2024 is that prices will continue to increase. Gartner has projected that global software spend is expected to rise again this year by 13%, while IT leaders are only expecting nominal budget increases. So in a nutshell, IT orgs were and continue to be overwhelmed with spend increases.
Ben Pippenger: Now, despite all that chaos, I am really optimistic for IT in 2024. This year, I expect to see CIOs taking more responsibility in supporting business profitability. IT's reputation is shifting from being a cost center to a value driver.
Ben Pippenger: So our question on this episode is, what should IT focus on in 2024, when it comes to software management? I'm going to answer that with the five top things you should be prioritizing this year as an IT org.
Ben Pippenger: So let's dive in. Number one, become best friends with your CFO. There are two ways you can partner with your CFO. Number one is around cost optimization. Many of us are likely faced with a flat or reduced budget this year, yet there's still pressure to innovate. Oftentimes, your CFO or CFOs are holding the torch for cost optimization all by themselves As an IT leader, you have the opportunity to help them meet that goal by optimizing your software.
Ben Pippenger: Second area is around getting new technologies purchases approved. So in today's environment, CFOs are the economic buyer in the software acquisition process. The closer you are in aligning to their goals, as well as the budget that they have, the more successful you're going to be in getting a signature on new tech purchases.
Ben Pippenger: All right, second thing you should be prioritizing this year is that you should be centralizing SaaS governance. We've seen more and more IT orgs move toward a governance framework, that centralizes IT oversight, while still enabling lines of businesses and employees. Here at Zylo, we call that freedom within a framework. Why do companies do that? Well, it's a measure to curb costs and risk. Now, to drive effective governance, you must partner with your CFO or finance team to ensure policies are being followed on things like employee led purchasing, redundancies in your SaaS stack, and compliance, to just name a few. You also need to work closely with the lines of business to ensure tools meet the needs of employees, and that's really viewed as an ongoing conversation. By doing that, that helps you be seen as a value add and trusted partner within the business.
Ben Pippenger: All right, number three thing you should be doing this year is rationalizing your portfolio. Rationalization is making the top of many CIOs' priorities this year, and for good reason. Reducing your SaaS footprint and controlling SaaS sprawl results in increased efficiency in your stack and for your business. It creates less avenues for bad actors to enter, and it, of course, reduces your overall SaaS costs.
Ben Pippenger: All right, the fourth thing you should be prioritizing this year is to stay ahead of security risks. I can't say this enough, you can't stay ahead of security risks without visibility. It's paramount to know your risk exposure and identify and track apps that are or are not in compliance with policies and industry regulations. Your risk exposure and surface attack area continues to grow. As proof of the multiple hacks Okta had in 2023, you can't control everything, but you better be on top of what you can control. Make sure you're prioritizing visibility into security risks this year.
Ben Pippenger: All right, let's round this out. The fifth thing that you should be doing is preparing to make big tech bets again. Many of us have just been trying to keep the lights on. We saw companies clean up their acts over the last couple of years, making way for responsible business growth practices. Now that the dust has settled, more or less, more companies will get back to making those big tech bets in 2024. You should be using SaaS management as a mechanism for opening up your budgets to fund those initiatives. AI definitely should be one of those bets, but my advice is to take cautious advantage. It's the biggest area of risk and concern from a lot of companies. Talking to some CIOs, they're taking some different approaches to AI. Some are ready to start adopting in tools, and they believe they can unlock productivity by adopting AI tools and making investments into AI. Some are listening and waiting to be pulled by the business to go all in with an AI strategy. So really focus on what's going to work best for your company.
Ben Pippenger: All right, let's wrap it up here. So as an IT organization, you have the opportunity to become a true value driver for your organization, not just a cost center. Focus on forming close partnerships with key stakeholders, supporting profitability, and optimizing your software investments. This year, prioritize, number one, aligning with your CFO on IT budget and becoming their BFF. Number two, centralize SaaS governance. Number three, rationalize your SaaS portfolio. Number four, staying ahead of security risks. And number five, go ahead and make those big tech bets again in 2024.
Ben Pippenger: That's all I've got for you today. Look forward to and we'll catch you next time.
Whether you call them resolutions or goals, setting your intentions for what you want to achieve for the year creates accountability. For IT leaders, there are a lot of shiny objects. What initiatives are going to make an impact this year? In this episode, Ben Pippenger uncovers five key priorities your IT organization needs to focus on 2024.
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- [00:07 - 02:23] Ben overviews a tough 2023: the economy, global politics, generative AI, and security breaches
- [02:24 - 03:15] #1 Become best friends with your CFO, cost optimization
- [03:15 - 04:05] #2 Centralizing SaaS governance
- [04:06 - 04:31] #3 Rationalizing your portfolio
- [04:31 - 05:08] #4 Stay ahead of security risks
- [05:09 - 06:05] #5 Making big tech bets, navigating AI
- [06:06 - 06:42] Big bets in 2024, Ben's 2023 wrap-up
SaaSMe Anything is the bi-weekly podcast that brings clarity to the chaos of SaaS, hosted by your resident SaaS expert and Zylo co-founder Ben Pippenger. Connect with Ben on LinkedIn here.