10 Questions to Guide Your Yearly Strategy
One of the key messages I communicate to technology professionals across the country is the need for us as an industry to collectively shift our mindset when it comes to the efficiency of technology. Over the last 30 years, the industry has been focused on building more, bigger, faster technology services – which has led to an environment of abundance, the feeling that our technology resources, capacity, and storage, not to mention, budgets – are endless. Sadly, this is not the case. Starting this year, we need to commit to leaving the era of abundance and begin to move to the era of efficiency in technology. I believe so strongly in this precept, I wrote a book to help bring forth the End of Abundance in Tech
As businesses, we’re all driven to introduce new applications, products, features, data services, and more, as we should be. Innovate or die! But innovation costs money and time, both of which are limited resources. So how are companies going to balance supporting the 20 to 30 years of technology they’ve already built with the business’s larger appetite for innovation in AI, ML, and data analytics?
One way to do this is to conduct an annual technology review as a basis for planning next year’s technology budgets and initiatives. Without full knowledge of the workings of your tech stack in real time each year, you simply cannot plan for the future. What’s more, comparing annual reviews each year to gauge progress makes it easy to see where strides are being made and where more work needs to be done.
The goal for this annual technology review is to illuminate your technology function to things they did not know about how the tech stack is being used. It’s always an eye-opener for the clients of my company, Fortified. To start this type of process at your business, we’ve developed questions to ask in 10 key areas to help you understand just how much data is there, what features you need and at what cost, and how to find efficiencies in the system that will benefit processes in years to come.
Assessing your technology’s performance in 2023
1. Business Growth:
What was the growth rate of your business in the last 12 months in terms of revenue, market share, or customer base expansion?
The U.S. economy has seen a 5.2% annual growth rate from July through September 2023, and this does not yet take into account the record-breaking shopper turnout figures from Black Friday. Shifting to business revenue, total revenue in the Business market was projected to reach $0.95 billion in 2022 and total revenue is expected to show an annual growth rate (CAGR) of 13.62%.
How is your business faring in the current economic environment and how will that impact the technology funding?
2. Data Management:
On 12/31/2023, what will be the total size of data within your organization?
The IDC has projected that the creation of new data is expected to grow at a CAGR of 23% from 2020 to 2025, which translates to approximately 175 zettabytes of data.
How much of this unimaginable figure is your data responsible for? How much of your data is duplicate and/or of lower value?
3. Annual Data Growth:
What was the rate of data growth in your organization during the last 12 months? How much data does this translate into?
Of note, the global data storage market is projected to grow from $247.32 billion in 2023 to $777.98 billion by 2030, at a CAGR of 17.8%.
As an example, if the total size of your data is 500 terabytes and you grow by 23% compounded annual growth rates (CAGR), then next year you’ll have 615 terabytes of data. Over five years, the data would grow to 1,144 terabytes. And with every increase in terabyte, there is a cost.
How will your organization better manage the growth rates of data and implement a data lifecycle to optimize these growth rates?
4. Product and Feature Launches:
How many new features and products has your company introduced to the market in the past year?
Think about all the code that was generated from those new features over the last 12 months. Underneath the hood, most deployments are creating and modifying tens of thousands to millions of lines of code each year.
What is the impact of these changes on your system’s performance, capacity, efficiency, and total cost of ownership?
5. Impact of New Offerings on Resources:
What is the impact of new products and services on your data growth rate, technological capacity, and the associated budget in the last year?
Staying with the same example above, if you have 500 terabytes of data stored, over five years, this could rise to 1,114 terabytes at an annual cost of $245,760 to $1,406,280 or higher (based on estimates from Microsoft Azure) depending on how many new products you build and your business grows.
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
Total Data Size | 500 | 615 | 756 | 930 | 1,144 | |
Yearly Cost of Storage (Standard) | $245,760 | $302,285 | $371,810 | $457,327 | $562,512 | |
Yearly Cost of Storage (Premium) | $614,400 | $755,712 | $929,526 | $1,143,317 | $1,406,280 |
Source: Microsoft Azure
How will increased data volumes impact your application performance and other technology costs?
6. Technology Waste and Debt:
In the past 12 months, how much technology waste or debt has your company identified, and what are the potential cost savings?
At Fortified, we recommend to our clients that 80-90% of their work should be innovation-focused and 10-20% should be devoted to identifying and resolving tech debt. We’ve seen in the work we do for our clients that each 1% reduction could potentially yield up to 50% in cost savings.
How many product modifications are on your 2024 product roadmap that work to resolve your tech debt?
7. Reduction of Tech Debt in Legacy Systems:
How much technology debt was your organization able to reduce or eliminate in your legacy systems over the past year?
We can’t just keep creating non-optimal features or rewriting processes without any attention to their impacts on the greater ecosystem. Our actions have downsides, including cost and environmental impact, that far outweigh any potential benefits of accumulating data in outdated systems.
Do you have steps in place at your company to address and control technology debt?
8. Technology Capacity:
What percentage of total capacity were your technology services operating at across your enterprise in the last 12 months?
Having enough capacity to process all your business transactions requires a delicate balancing act between gauging capacity needs in real-time and over-allocating resources for the whole year as a just-in-case protection measure.
Determining capacity requirements is a very manual and time-consuming process because of the complexities in technology. I can envision a day when we can predict the target capacity requirements in near real-time and over 5 to 10 years just as a 401(k) calculator can predict your retirement savings.
Until we get there, how are you measuring the capacity of your applications and systems to keep your business running optimally at your organization?
9. Budget Adherence for Technology Services:
Did your organization’s spending for 2023 fall within budget? How did the consumption pricing models of the cloud impact that budget?
In an article for Gartner, analyst Sid Nag said:
“… cloud spending will continue through perpetual cloud usage. Once applications and workloads move to the cloud they generally stay there, and subscription models ensure that spending will continue through the term of the contract and most likely well beyond. For these vendors, cloud spending is an annuity—the gift that keeps on giving.”
Cloud spending aside, one of the reasons it’s so hard to keep track of how much you are spending on technology is that we don’t really know the total cost of code and data as your organization implements 100 new features over the next year or grows your data footprint by 23%. Until we can start to better control the cost of code, we are placing bets on what our costs might be even 12 months from now.
Do you know what the total cost of code is for the technology at your company?
10. Future Tech Budget Forecast:
Based on the last 12 months, do you have a reasonable budget projection for supporting your technology needs over the next 3 to 5 years, considering the growth of your business, data, transactions, and new products and services?
Consider – what do you want to accomplish in the next 3 to 5 years? How are you going to become more efficient? What percentage reduction can you expect to see and what is the potential saving you can glean from that? (Remember, we’ve seen that just 1% in data reduction can translate into a 50% annual cost savings.)
If you’d like to delve more deeply into how to figure out your technology needs for the future, a more detailed technology assessment can help.
Without the right, timely information reflecting the health, capacity, and costs of your technology systems, how can you be expected to drive results that will impact the very future of the business overall?
I never said these questions would be easy to answer. But it’s important to start somewhere, and more importantly, develop the mindset of efficiency while you ask these questions each year.
Only with a solid and stable foundation that is not a deficit on operational growth each year, can you truly innovate and grow. Without stable platforms, you have outages, service disruptions, performance that is below expectations, and excess costs that will divert your attention from the future because you are too busy fixing things now.
Isn’t this the time of year for reflection and resolve? From a technology perspective, reflect on 2023 and resolve to do better next year.