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This article was originally published in the Opinions section of ITforBusiness magazine (July 2024).
In the summer of 2024, when sports take center stage, let’s extend the analogy to the CIO: just like a new game, every fiscal year is different. And just like a sports coach, the CIO must prepare his team with the right strategy. In other words, they must develop their budget strategy while taking circumstances into account: the economic context and business objectives will guide the choice between a defensive or offensive strategy.
Defensive strategy: managing under financial pressure
Just as a sports team falls back to protect its goal, a defensive strategy becomes necessary when a company is under financial pressure and facing headwinds. It’s a balancing act. Like the coach of a struggling team, the CIO tracks down and cuts unnecessary expenses to ensure business continuity, preserve resources for action, and guarantee their optimal allocation. Every expense is scrutinized, as reducing non-essential costs becomes a top priority. The CIO optimizes operations to maximize efficiency and emphasizes value analyses to demonstrate the value of the Projects that are retained. In this climate of austerity, where tactical skills and resilience are essential, every euro saved is a point scored, and every streamlined process is a successful defensive move. This rigor paves the way for a stronger recovery in the future.
Offensive strategy: capitalizing on growth
Conversely, during periods of growth, the CIO becomes a coach for a bold team that seeks to capitalize on every opportunity. The IT department’s budget becomes a lever to propel the company to new heights with an ambitious vision. Access to significant financial resources makes it possible to accelerate innovation and fund new Projects without the usual constraints. In this context, strategic planning—as reflected in the Roadmap—takes on a new dimension: it’s no longer just about maintaining the existing IT system, but about developing and transforming it. We will then come to appreciate the CIO’s ability to mobilize resources on multiple fronts to amplify the impact of their efforts. This is an exciting time in which every initiative has the potential to become a “game changer” for the company.
Intermediate strategy: the subtle balance
For most CIOs, the reality lies somewhere between these two extremes. Often, they must navigate moderate growth and Budgets that are increasing by about 5% compared to the previous year. The CIO’s approach remains tactical nonetheless: skillfully navigating existing constraints while maximizing their room to maneuver. In other words, containing the operating budget without sacrificing the capacity for strategic investment. The CIO must therefore demonstrate that he or she has successfully challenged the various business units to align the development budget with an ambitious strategic vision. This balanced approach requires a keen understanding of the company’s needs and a genuine ability to make judicious compromises.
Adapting to today’s environment: stronger defense
The current environment is a game-changer: marked by inflation and budget cuts that are sometimes arbitrary—particularly in the public sector—it requires CIOs to put stronger defenses in place. Now more than ever, CIOs must be recognized as champions of optimization. While everyone will have an opinion on their approach, they must know their budgets down to the last detail, identify new opportunities for streamlining, and convincingly justify every essential expense.
Educating people about Budgets becomes a crucial asset. Explaining the strategy and showing that every euro spent is a well-considered investment will win the support and buy-in of the Business Units and management… and rally as many supporters.
Whether their role is offensive or defensive, CIOs must therefore be agile in adapting their budget strategy to the broader context and that of their company. A tactical approach is essential for skillfully navigating financial pitfalls and growth opportunities. The strategic CIO thus demonstrates their ability to act with finesse and determination. It’s also their responsibility to effectively communicate this strategy—backed by analysis and sound arguments—to rally their sponsors, teams, and supporters for the battle ahead. Good luck!