Emerging Tech Projects on Chopping Block as CIOs Shift Priorities

CIOs, tech budget, investment

There’s been more pressure on chief information officers (CIOs) to both add and cut some capabilities for tech investments, especially as fears of a recession are beginning to become more severe, The Wall Street Journal reported Friday (June 24).

This is being spurred by a cocktail of factors, including the pandemic and the rise of cloud computing. Those things have shown how important it is to focus on enterprise tech and digitization.

The report quotes executives and analysts who said that discretionary spending, including proof-of-concept tests, might be pushed back. Proof-of-concept tests validate whether or not a new kind of tech is ready to go commercial.

However, businesses have also been seeing more value in tech and bolstering the customer experience, which could give them a leg up in the current tense market. According to numerous CIOs, corporate boards have become more likely to understand technology’s value, per the report.

If cuts do happen, the CIOs think they’re closer to core business operations and will likely play a big role in those conversations.

Additionally, according to Federal Reserve Chair Jerome Powell, the central bank’s fight with inflation might end up with it raising interest rates high enough to spur an economic downturn.

The Journal report noted that around 90% of a CIO’s budget is comprised of important spending like cloud subscriptions, which needs to be paid “no matter what,” according to John-David Lovelock, a research vice president with Gartner, a tech research and advisory firm.

The other 10% goes to proof-of-concept tests, new laptops and tablets for employees and updates for software — which could see a cut in spending, according to the report.

The news of a worsening economy has been circling for some time, and PYMNTS wrote that Treasury Secretary Janet Yellen recently said the current level of inflation won’t go away this year.

See also: Yellen Expects Inflation Through 2022, Economic Slowdown

Yellen said she thought the economy would slow down — though a recession may not be as inevitable as some have said. While inflation was at a 4o-year high in May, Yellen said the inflation was spurred by “global, not local” reasons.