[Blog] How pharma companies manage the IT spending in an inflationary environment
SaaS, infrastructure software, IaaS, and PaaS are the technology investment areas where everyone most expects inflation/currency fluctuations to affect budget decisions.
During challenging economic times, CIOs and CFOs tend to scrutinize their budgets, especially the largest and fastest-growing parts which usually are related to on-premises solutions and their adjustment to emerging market regulations, in anticipation of the need to cut spending.
SaaS, infrastructure hardware/software, IaaS, and PaaS are the technology investment areas where everyone most expects inflation/currency fluctuations to affect budget decisions. However, these investment areas are also important to support ongoing digital business transformation, which is at the core of the company’s automation and modernization.
Due to recommendations in research of IDC, the two-track approach to technology investment plans in 2023 and 2024 is sustaining technology projects that benefit the business and adopting trustful Cloud-based practices. Prioritizing cloud services and as-a-service solutions or platform-as-a-service for infrastructure software can provide benefits such as cost optimization, early access to innovation, and intelligent governance capabilities. As a mid-term strategy, the experts present reallocating funds from “run” projects to “new” projects that can boost revenue or productivity – for example introducing a software system that overwatch, analyze and report issues with the production processes such as OEE reporting service.
In times of unstable economic situation, preventive thinking it’s a must and helps to set appropriately the priorities for 2024 beyond the right IT automation mix that will ensure long-term operational improvements. To minimize risks in cloud-based systems, the IT team of each company should adopt a set of services that leans on reliable infrastructure such as Microsoft Azure. Then, the focus should not be only on the features of the exact services but the benefits of applying/implementing them to our ERP, third-party systems or even the production environment.
It is crucial to implement a step-by-step strategy that provides the following:
Immediate cost reductions;
Medium-term benefits to safeguard the business in case of worse-than-anticipated circumstances;
Long-term structural decisions guarantee lasting decreases in operating expenses as the business environment improves.
By leveraging the various cloud services leading providers offer, businesses can select the most cost-effective and high-performing solutions without incurring additional administrative costs or business risks. SaaS solutions, in particular, provide early access to cutting-edge advancements in collaborative applications, customer experience, AI/automation, data integration, and security that are closely tied to critical business objectives.
Moreover, cloud platforms are equipped with increasingly sophisticated governance capabilities that enable businesses to monitor and automatically respond to fluctuations in compute, storage, data, and process resource requirements in near real-time as market conditions evolve. Overall, these advantages are all about speed, with lower upfront costs, enhanced flexibility, and pay-per-use models that allow businesses to pay only for the services they need.
All pharma companies that prioritize technology projects focused on application modernization and automated data processes can swiftly alleviate budgetary strains. To achieve meaningful short-term business benefits in 2023, companies should embrace technologies that maximize cloud capabilities.
Early consideration of priorities beyond 2023 is crucial. Despite fluctuations in inflation and currency conditions, the pharma companies and their IT managers will continue to be wary of potential future cost disruptions linked to human resources and processes. As technology suppliers, like SoftGroup, increasingly integrate automation and IoT into their products and services, forward-thinking businesses will identify and implement the optimal mix of IT automation in 2024 to achieve sustained operational enhancements.
Pharmaceutical businesses worldwide are constructing novel business models founded on smart connected devices, automated operations, and continual customer engagement. This development entails efficient utilization of cloud-based solutions, which will necessitate prompt and precise implementation, scaling, and long-term cost projections for critical digital business systems, such as the track & trace system. Consequently, cost reduction in back-end business systems will become a secondary objective.
During 2023, certain countries witnessed a decline in inflation early on, while the US dollar weakened. Nevertheless, some individuals are left to ponder whether the events of 2023 will be remembered as the “GODOT recession.” However, irrespective of the economic winds of change that global businesses may encounter in the next 12 months, the factors that triggered concerns surrounding technology costs have already been established.