Michael Hicks is Senior Vice President and Chief Information Officer at Jackson.
As we enter the year’s second half, most of us have hit our stride in our 2024 operating plans and are delivering on commitments we made just one year ago.
However, many macro-level changes have emerged since we established those original planning assumptions, including the transition of the “great resignation” to “the Big Stay,” stiffening of flexible work arrangements, economic volatility and the breakneck rise of GenAI, which is generating a tremendous amount of noise. To put an exclamation point on the impact GenAI has had in the past 18 months, Marc Andreessen, cofounder of the venture capital firm Andreessen Horowitz, who in 2011 famously proclaimed that “software is eating the world” has now asserted that AI “in fact may save it.”
Amid this backdrop and with an expected continuation of accelerated disruption, where do you start when budget planning for 2025? My simple answer is to avoid overreacting and maintain balance. Since assuming my first CIO role more than 25 years ago, I have practiced a basic four-point strategy for budgeting, which I find to be even more essential during periods of significant change.
1. Deliver What Matters Today
Spending wisely to ensure your IT operations are up to the task of effectively running your business is table stakes. While there may be pressure to reduce costs, it is important to stand your ground in this category while also showcasing efficiencies gained through investing in continuous improvement. You need to keep your critical infrastructure and business applications running smoothly to have the credibility and capacity to focus on the future. This includes achieving defined service levels, securing customer data and intellectual property and meeting minimum regulatory requirements, depending on your industry.
Given economic volatility, it is even more imperative that CIOs understand the impact IT operations have on their company’s financial statements. There is a significant opportunity to smooth quarterly and annual financial cycles as you shift technology infrastructure spend from a capital expenditure to an operating expense through leveraging cloud-based services; however, it is critically important to also invest in a strong financial operations (FinOps) practice and governance model to keep cloud costs in check. Your CFO will be your strongest ally if you can do this well.
2. Invest In Your Number One Asset—People
The most important investment you can make when budgeting is in your team. By making suitable strategic hires and continually upskilling your associates through the three E’s—Exposure, Experience and Education—you can position your team for success.
Additionally, establishing an early career pipeline strategy to futureproof your team via continually refreshing internal talent is key. Through targeted internships, co-ops and apprenticeships, you can increase the diversity of experience and thought to fuel your culture and solve business problems in new and different ways.
Speaking of culture, this is the secret sauce that brings everything together for an organization, and like anything else, it requires investment and nurturing as well. The biggest investment returns you will see are those centered on improving collaboration, recognizing team and individual performance and enabling a culture of ownership and accountability.
3. Enable Business Agility And Innovation
Investing in business agility and innovation is necessary to improve your dexterity in taking advantage of industry shifts by enabling quick pivots to capitalize on new opportunities. Business agility enabled by collaboration tools and agile ways of working helps organizations move faster, react quicker and increase capacity to focus on what is most important to customers.
Innovation is not about chasing shiny objects but about managing a pipeline of relevant “test and learn” opportunities to accelerate business strategies. While it may seem counterintuitive, there is a strong business case for increasing innovation spend during economic volatility to differentiate amongst a crowded field of competitors and grow market share.
4. Position For The Future
Digital transformation has become one of the most overused buzzwords in technology, but at its core, it is more vital than eve,r given the rapid pace of technological change. Integrating digital into all areas of your company’s value chain is necessary to keep pace with evolving consumer expectations. By deploying new digital capabilities, you can also reduce costs associated with traditional analog methods and channels of engagement.
Laying the foundation for AI to become an integral part of your digital business is now imperative, given the arms race of investments in this space. GenAI large language models (LLMs) and new large action models (LAMs) have changed the trajectory of AI use across industries and provide significant opportunities for increasing organizational productivity, enabling hyper-personalized customer experiences and powering growth and diversification strategies.
Now What? Start Planning!
Most organizations have some level of strategic portfolio planning and governance to inform and prioritize discretionary technology spending. Portfolio governance provides a channel for you to bring your four-point budgeting strategy into the forefront through socializing and positioning foundational technology investments with executive stakeholders for joint sponsorship.
Like anything else, you will get out of your budgeting process what you put into it. Annual budgeting is your opportunity to be strategic, showcase your sense of urgency for your business’ immediate needs and exercise your influence to ensure you leave your organization in a better place for the next generation.
At Jackson, we successfully apply these principles to our planning and see the inherent benefits of a balanced four-point strategy. Given these unprecedented times with ever-shortening change cycles, there is no time like the present for you to also begin exercising purposeful budgeting to both win the next year and position for the next decade.
Jackson® is the marketing name for Jackson Financial Inc., Jackson National Life Insurance Company® (Home Office: Lansing, Michigan) and Jackson National Life Insurance Company of New York® (Home Office: Purchase, New York).
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