Maintaining healthy IT budgets is vital for business growth, innovation, cost control, and maximising profits for the tech startups Southeast Asia has developed. According to Technavio, the IT spending market in the region is likely to reach USD 33.97 trillion by 2026, a compound annual growth rate (CAGR) of 8.4% from 2021-2026. Factors like Big Data and analytics, mobility, tech infrastructure development, and cloud technology contribute to the spending as companies attempt to grow and compete with their rivals.
Digitalisation has played a significant role in how businesses manage their IT budgets. Consecutive e-Conomy SEA reports from Google, Temasek Holdings, and Bain & Company have highlighted the rapid digital transformation in Southeast Asia and other parts of the world since the COVID-19 pandemic began. These changes have impacted every sector, with startups emerging to deliver technological solutions and digital integration in all walks of life.
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Southeast Asia has seen seismic shifts in innovative technologies like blockchain, the Internet of Things (IoT), financial technology (fintech), education technology (edtech), and smart technologies. Other options impacted include renewable energy, environmental, social, and governance (ESG) policies, data centres for cloud technology, Big Data, Web 3.0, and others.
Therefore, companies are spending more money on IT to grow and stay competitive in their market, which may lead to cash flow problems, tech talent challenges, and debt if they fail to deploy the money wisely. Businesses must maintain innovation standards and manage costs without sacrificing their research and development (R&D) goals.
How to manage IT budgets
According to Gartner Research, tech startups and consumers are currently dealing with two different economic realities based on the global economic slowdown. While the consumer markets have been decimated by inflation, leading to mass layoffs, businesses have continued spending on various digital initiatives to remain viable and earn money.
The tech labour market is also tightening, further increasing IT services spending costs. Companies are streamlining their operations to keep only the best tech workers, upskill others, or recruit the best possible tech talent—all that despite the immense competition for top employees by other bigger businesses.
Technavio’s research shows that there is a lack of skilled talent available. Moreover, retaining top employees has become essential for cost management and maintaining consistency in innovation. Here are several strategies for managing IT budgets:
Create a technology roadmap
Startup founders must know what their businesses need regarding technology integration in the workplace, research and development, and the cost of purchasing or implementing tech. Having an idea of what is required helps predict expenses, plan and budget for upgrades, and spot gaps in the company’s tech offerings to identify better replacements.
Determine your business goals
An IT budget must fit with the business’s goals. Otherwise, the misalignment will lead to expensive mistakes. There should be periodic assessments of the tech software, hardware, and infrastructure to ensure that technology enables employees to accomplish the company’s goals.
Cut unnecessary expenses
There is a tendency for businesses to spend too much money on unnecessary tech because other startups are doing it or it is the latest trend. There may also be a failure to understand some new tech’s purpose, leading to investing and hoarding unneeded stuff. Another example is wasting money on paper instead of going fully digital. By cutting out unnecessary expenses, startups can maintain a healthy cash flow and manage their budgets better.
Invest in cybersecurity
It costs more to solve cybersecurity challenges than to invest in preventing them. More people went online when the digital transformation in Southeast Asia began, bringing an avalanche of cyber threats. Cybercriminals are stealing data, holding information for ransom, spying on companies, damaging systems, and infecting devices with viruses.
The Association of Southeast Nations (ASEAN) must learn to deal with sophisticated threats online. For example, startup founders can consider modern-day solutions like blockchain to get secure data handling and encryption tools. Cyberattacks are skyrocketing because many people are now using a model of working remotely, which means it may be easy for criminals to breach the devices and steal data. It costs a lot to try to recover lost or destroyed data.
Partner with top tech companies
Finally, startups should seek to partner with top tech companies. It will save money because the company can provide funding and offer guidance and support. Furthermore, the more prominent company’s network may be valuable in making lower-priced IT deals.
Maintaining some flexibility in IT budgets is essential, as the sudden emergence of the COVID-19 pandemic showed the need for businesses to remain agile. Many tech startups Southeast Asia has can handle innovation and cost control well, thereby helping them grow, save money, invest in technology, maintain cash flow, and maximise profit.