August 2, 2023
The strategic CTO’s survival guide to budget planning 2024
The cheerful reality is that as a Chief Technology Officer (CTO), you can’t escape death, taxes and the annual budgeting season. For many businesses, 2023 has been a volatile year. Creeping inflation has caused consumers to be far more discretional with their non-essential spending, and with no signs of the economy easing in consumers’ eyes, 2024 will be high pressure for merchants to meet KPIs, focus on the business’ core activities, increase customer acquisition, and most importantly, retain existing customers. With budget preparation and deadline right around the corner, we’ve prepared a guide for next year’s budget considerations to prepare you for 2024.
The importance of the budget cannot be overemphasised – its accuracy is critical to both the organization’s success and the success of the CTO as plans are set and opportunities are identified for the next 12 months. The CTO’s budget involves unique considerations that revolve around investments in technology and innovation, including payments, customer service, operational measures, ensuring compliance across multiple regions, maintenance of any infrastructure – and ensuring alignment with the organization’s strategic commercial initiatives.
So, what are some of the areas the strategic CTO should consider to survive budgeting season? We broke it down into two categories – technological priorities for 2024, and some of the more general best practices for CTOs as budget planning season approaches.
What should strategic CTOs be prioritising in the budget for 2024?
- Focus on innovation and future-proofing – Allocate a portion of the budget to support research and development (R&D) initiatives and innovative projects that can provide a competitive advantage and future-proof the organisation. For example, you can future-proof your payments infrastructure by having dedicated cloud instances to support your business capacity, resilience, redundancy and performance requirements
- Keep cybersecurity at the top of the agenda – Allocate sufficient resources to protect the organization’s data, systems, and intellectual property from cyber threats. Depending on your company’s size and needs, considering IaaS vendors over SaaS vendors will eliminate or minimize risks. For example, if you’re looking to optimize your payments in 2024, an IaaS payment orchestration provider can offer a regionalized approach to privacy and data regulation – allowing merchants to be compliant with GDPR, CCPA, Australian Privacy Law Standards, PCI DSS Level 1 and SOC2 Type 2 – through one integration, without being a single point of failure
- Review legacy systems – Assess the cost and impact of maintaining legacy systems versus investing in modern technologies. In some cases, modernizing systems can lead to long-term cost savings and improved performance
- Leverage cloud services – Consider leveraging cloud-based services and infrastructure to reduce upfront capital expenses, increase scalability, and improve cost efficiency
- Implement vendor management – Outsourcing some of the non-core activities to your organization can help to reallocate internal teams to more value-added activities to the business. By outsourcing to expert third-parties, you can negotiate favourable contracts, consolidate spending, obtain better pricing – and spend more time on innovation
- Consider total cost of ownership (TCO) – When evaluating technology investments, take into account any ongoing maintenance, support and upgrade expenses, and the actual cost of opportunity if you choose not to outsource those investments. For example, more and more merchants are considering implementing payment orchestration but is it better to buy or to build? How would building an MVP vs. outsourcing to a payment orchestration platform provider affect your business in terms of cost and other benefits?
To discover more about payment orchestration, how it can benefit your business, and how you can mitigate the risk of your payment orchestration provider becoming a single point of failure, check out our payment orchestration 101 breakdown.
What are the best practices for strategic CTOs for 2024 budget planning?
- Align with business strategy – Understand the company’s priorities and how technology can support and drive those objectives by ensuring the technology budget aligns with the overall business strategy. This includes making the key distinction between what represents a core activity to the organization vs. what doesn’t – e.g. could business performance be improved with something as simple as offering more payment options to a consumer? Or perhaps you have an arduous back-end process for managing returns or subscriptions that is impacting the bottom line
- Invest in talent – The success of technology initiatives relies on having a talented and motivated team working to drive the business’ core activity to reach its goal(s). Allocate funds for recruiting, training, and retaining skilled IT professionals to ensure high-quality maintenance of your current technology stack but also future-proof it for the years to come
- Adopt agile budgeting and continuously optimize costs – Embrace agile budgeting practices that allow for flexibility and adaptation to changing technology needs and/or market conditions. Regularly review technology expenses and identify areas where cost optimization might be possible – this could include eliminating redundant services, re-negotiating contracts, or adopting more efficient processes. CTOs must be able to respond quickly to emerging opportunities and challenges and develop contingency plans for any unexpected technology-related emergencies
- Involve stakeholders and communicate budget decisions – Collaborate with other executives, department heads, and key stakeholders to understand their technology needs and priorities. Involving them in the budgeting process can help to foster buy-in and support for technology initiatives. Transparent and open communication builds trust and understanding among team members and other departments
- Track Key Performance Indicators (KPIs) – Define and track technology-related KPIs that measure the effectiveness and efficiency of technology investments. Use these metrics to evaluate the success of projects and optimise spending
At the end of each budget cycle, conduct a thorough review of the budget’s performance and the outcomes of technology initiatives. Use the insights gained to refine future budgeting processes. By following these best practices, CTOs can develop budgets and strategically align technology investments with business goals, foster innovation, and deliver value to their organisations.
A CTO’s job satisfaction is around building more innovative solutions for a business. Take the pain out of managing and optimizing your payments for 2024 with Gr4vy’s cloud-native IaaS payment orchestration platform. With a payment orchestration partner, merchants can route any transaction to their PSP of choice through one integration. Reduce transaction costs as well as fraud and chargebacks, optimize processing fees, restrict the sale of prohibited goods, and more.
Gr4vy makes it even easier for merchants to optimize their checkouts with multiple currencies, in multiple countries, and with multiple providers. Get in touch with our team to find out how we can help take the pain of payments out of your budget for 2024.
To find out more about the differences between IaaS and SaaS payment orchestration platforms, and which one might be right for your business, download our eGuide, ‘IaaS vs. SaaS: An e-commerce merchant’s guide to payment orchestration’.