Technology and Innovation Community

Latest Insight from McKinsey Technology:

"Recalibrating technology budgets for the AI era"

Key summary:

Becoming a deliberate modernizer takes a concerted effort to balance technology spending across run and change with an eye on long-term growth goals. CIOs that want to unlock optimal value from technology expenditures can start by deploying three main strategies:

• Decide what to remove from run. Leaders need to make clear choices about which run applications, platforms, or services to maintain or extend. Without these decisions, change initiatives, including agentic AI, will add to run costs. But it's not all or nothing. Often, companies can reduce usage levels for certain services or switch to less expensive options without impacting performance. These decisions are underpinned by an analysis of what each service costs and how much it's being used.
• Ensure every dollar invested reduces future costs. Rather than optimizing for near-term delivery alone, CIOs can direct change spending toward shared platforms, standardized services, and data and analytics foundations that lower the marginal cost of future innovation. This strategy allows capabilities such as agentic AI to scale without driving proportional increases in run costs.
• Use AI as a catalyst for simplification. Forward-thinking technology leaders are embedding agentic AI into simplified processes so that AI replaces work and systems over time, instead of multiplying pilots that increase long-term run costs.

#AI #innovationcommunity

- Todor