Image credits: Elif Ayiter
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News Article

Digital Transformation under Budgetary Constraints

By Jan Hogewoning | Tue, 07/21/2020 - 14:29

With increasing pressure on company budgets during these times, spending extra resources on new IT infrastructure, both material and digital, will be more difficult. Even without the COVID-19 situation, multiple MBN interviewees have mentioned that financial constrains remain a significant barrier for investment in digital infrastructure in Mexico. As an example, Simon Harrsen, Director Mexico of leasing solution provider CHG Meridian, states: “What we often see is that there is a budget problem for companies when it comes to investing in new IT infrastructure.” The barrier put up by a limited budget is not unique to the country. According to a global study conducted by Dell Technologies, in collaboration with Vanson Bourne, a lack of budget is the second obstacle to digital transformation worldwide.

Despite the pressure imposed by the contingency, less investment is not always the case. This is confirmed by Adan Samano, Director General of asset leasing and management company Tec Pluss, who says companies are looking to rent equipment, especially now with the COVID-19 pandemic keeping employees at home. “Semi-new laptops are particularly popular as companies have to make a fast migration to home environments,” he says. Investment in IT is not limited to hardware, either. “Projects that were planned for Q4 or the following year have been advanced. There is a lot of interest in ‘digital transformation’. We have noticed an increase in the request for quotes from corporations that are looking to invest in new 100 percent digital products that are not part of their core business,” says Ricardo Arriaga, Founder and Director of Innovation of digital solutions company Ironbit.

The accelerated digital transformation taking place at the moment is a global phenomenon. In a study conducted by cloud development company OpsRamp during the COVID-19 crisis in the US, 58 percent of the 137 US-based IT leaders surveyed were planning to increase IT investment. 73 percent of those surveyed expected to accelerate or maintain IT initiatives during the crisis. The shift to home office is an underlying cause. Another motivation, OpsRamp reported, is that companies have to offer better services to their clients who are more scrupulous with their spending. Tech tools, both hard and software, can be a very effective way to increase a company’s value proposition rapidly.

The primary area of focus for investment, the OpsRamp survey drew out, is information security and compliance (62 percent), to protect remote workers from cyberattacks. Another investment area is Big Data and analytics (46 percent), with a need to generate fast insights and quicker decision-making. Another 45 percent of respondents planned to invest in public and multi-cloud services to ensure a flexible and on-demand computing power between mobile teams.

One of the challenges for companies offering tech products and services is to provide a convincing picture of the utility and need for new technologies to clients or potential clients. Openness to technology is a matter of company culture, which starts with the company’s management. Openness can reduce depending on company size, as well. “Big Mexican and international companies have the ability to adapt, apply and obtain the benefits from Industry 4.0 but SMEs sometimes do not know or care, since they lack the time and the resources to do so,” says Luis Aaron Jiménez, Co-founder and President of tech service provider Assetel. Over 99 percent of businesses in Mexico are SMEs. “It is a niche that represents a big opportunity for us to grow and expand alongside our clients,” states Jiménez.

Bringing tech tools to companies with budgetary concerns that are affordable and actually provide an advantage to overcome and win during these stressful economic times is the real challenge for Mexico. The first step is to establish the right communication, one that is non-imposing and considerate of the company’s concerns. Then comes a creative financing solution that facilitates tech adoption, while at the same time avoiding the burden of a major onetime investment. Some companies have already ventured in the right direction by offering financially favorable leasing solutions or trial periods to experience the immediate impact of IT tools. The latter can allow companies to identify more rapidly, without spending, where new IT can make an immediate change.

The data used in this article was sourced from:  
Mexico Business News, Dell EMC, OpsRamp, GlobeNewsWire
Photo by:   Elif Ayiter
Jan Hogewoning Jan Hogewoning Journalist and Industry Analyst