While we can all agree that AI’s impact on IT is significant and will continue to grow, are organizations prepared to manage the growing costs on their IT budgets? Estimates suggest that AI projects could take up to 10% of IT budgets yearly, and this figure is likely to increase. Additionally, as AI spending rises, traditional infrastructure costs will also escalate. Cloud. Internet. “Data Pipes.” Although AI might not fall within your allocated budget, its deployment by other departments is likely to increase usage in conventional infrastructure spending categories, subsequently impacting expenditures in your budget. This growing demand introduces additional financial pressure, requiring leaders to adapt their budget strategies accordingly.
The Cost Dynamics of Incremental Transformation
A recent survey of IT leaders indicate three influential factors impacting the technology spend landscape of today:
- IT Budgets continue to restrict
- Generative AI is typically funded by stealing from other budget categories
- The ROI for AI projects remain anemic
To manage costs, many organizations approach AI-driven transformation in phases, breaking large projects into smaller, more manageable investments. While this method provides flexibility, it can significantly disrupt existing cost structures and projections.
Without careful planning, organizations may face trade-offs, reallocating funds from other critical IT initiatives to accommodate AI investments. This balancing act risks deferring key projects or diminishing ROI on AI initiatives due to delayed outcomes.
Simply put, other spending categories will need reductions to unlock the greater value AI provides for IT and the business lines they support.
Key Risks Without Financial Planning
Our experience with clients identifies three common challenges organizations face when effective cost management is not considered when preparing for AI investments:
- Constrained Budgets: Limited resources force delays in essential IT projects.
- Reallocated Funds: AI spending often pulls from competing budget areas, potentially impacting other priorities.
- Delayed ROI: Expectations for AI-driven cost savings and performance improvements may not materialize as quickly as anticipated.
Building Resilient IT Budgets
Navigating these complexities requires a disciplined approach to cost management, enabling organizations to unlock the full value of their AI investments. Through comprehensive inventory management and utilization-based frameworks, E78 ensures continuous cost control, particularly in infrastructure and cloud services. This approach provides technology leaders with the visibility and tools they need to achieve long-term scalability and financial flexibility.
Proven Process for Financial Success
Technology Expense Management teams that are collaborative and account for overall IT strategy deliver measurable results through three structured phases:
- Inventory Validation & Historical Audit: Accurate inventory management, carrier dispute resolution, and establishing a utilization baseline.
- Asset Optimization & Rationalization: Streamlined technology portfolios for maximum efficiency.
- Vendor Cost Benchmarking & Evaluation: Data-backed negotiations and informed decision-making.
By leveraging our expertise, we enable IT leaders to focus on strategic initiatives while our onshore teams handle the operational heavy lifting. Best of all, our fees are derived from realized cost savings, ensuring alignment with client outcomes.
Preparing Future-Ready IT
The demands on technology leaders are evolving rapidly, particularly as they face the dual challenge of driving innovation while managing costs. Effective Telecom and IT Expense Management is essential for balancing these priorities, ensuring organizations can adapt to the financial pressures of AI adoption without sacrificing other critical initiatives.
By focusing on comprehensive cost management practices, including inventory optimization, vendor benchmarking, and utilization-based frameworks, IT leaders can establish a sustainable foundation for growth. Preparing now allows organizations to not only mitigate the financial impact of AI but also maximize the value of their existing technology investments, positioning them for long-term success in an AI-driven landscape.
Learn more about our Inventory Assessment and Historical Audit here.
