While most IT leaders hoped that the end of the COVID-19 would bring them stability, the continuous rise in inflation highlights a different story. With uncertainty still lingering over the horizon, IT leaders should develop strategies to effectively navigate the inflation environment.
The uncertainty in the economic landscape is still a major concern for industries across the globe. The continuous rise in the inflation rate, which stood at 8.5% on Mar 20, 2022, highlights the grim reality of today’s world economy. For organizations, especially the inflation rate combined with the shortage of labor and low unemployment has created situations that they have been unprepared to deal with. While organizations may be pushing for advancing tech-stack pushing for more digital transformation initiatives, it does not mean that IT leaders are immune to the effects of inflation. It can have a detrimental impact on their operational and strategic activities. Therefore, IT leaders should create strategies that will help them support their organizations to navigate the ongoing uncertain economic landscape. A few strategies they can incorporate include:
Get visibility of investment
With IT leaders playing a strategic role in influencing decision-making, they should push for high-resolution visibility of enterprise spending. This will enable them to get a holistic view of where the money is spent and how it is being used. IT leaders should collaborate with their CFOs to establish repetitive, end-to-end, actionable visibility of spending by business process, cost category, and business unit. It will empower them to create a strong foundation for all productivity efforts. Not only that, IT leaders can help CFOs to create the right level of accountability across the organization, ensuring all decisions are made knowing the full impact on the P&L.
Oversee the people costs
One of the biggest factors responsible for driving inflation is sudden increases in rising salaries. Most IT leaders and business owners have experienced the rising costs for new employees as well as the surge in demand for pay increases from their current team. Wage inflation and the effects of The “Great Resignation Wave” are the prime factors for the sudden and steep rise in inflation that pose a significant challenge for tech leaders.
To deal with the salary gap, IT leaders should consider non-salary benefits or benefits with high perceived value and lower costs than additional salary. They should consider providing flexible working locations as well as hours that may cost a little in productivity. But, it can help them to get a competitive edge against their competitors. They can consider providing them additional holidays as employees perceive these to be equivalent to the compensation.
With a tight labor market and exploding labor wages, eliminating the work altogether can be the best bet for IT leaders. Organizations that champion this utilize a clean-sheet mindset or zero-based redesign that can help to reset the way the work is done. Incorporating this approach left organizations with no choice but to scrutinize what activities and how those activities are performed. IT leaders should integrate automation technology with specific functions that will help them eliminate unnecessary work and automate.