The CIO Agenda for 2025 - Room for Cost Efficiency, Innovation, and Strategic Value

October 2024 | Article By Niklas Scipio

#cio #cto #leadership #strategy

As CIOs prepare for 2025, they are at a critical juncture where the pressure to cut costs intersects with the need to drive innovation and resilience. The role of the CIO has transformed from a technology custodian to a key architect of business success, where strategic thinking is as vital as operational excellence. This moment demands more than the usual advice — it requires thoughtful, personalized guidance that addresses the unique challenges facing each organization.

Cost Efficiency and IT Optimization

One of the top priorities for CIOs heading into 2025 is reducing costs. Simply cutting IT spend can be shortsighted, especially if it undermines the long-term ability to innovate and compete. Instead, CIOs will adopt a more strategic approach to IT optimization.

Typical cost-saving measures include optimizing cloud infrastructure, consolidating legacy systems, and renegotiating vendor contracts. Cloud migration projects, for instance, can deliver long-term savings of 20-30% over a two-year period.

Based on this years data, we anticipate an average increase of approximately 10-13% in cloud costs for most customers of hyperscalers in 2025 (key drivers: inflation, energy costs, investment reduction, and a general economic slowdown). A meaningful approach in terms of cloud usage optimization and architectural reviews might be able to balance out this natural cost increase - Scipio & Partners

Similarly, application rationalization programs — eliminating redundant systems — can reduce IT costs by up to 15%. CIOs will be proactive, identifying inefficiencies within their IT landscapes and restructuring where necessary to achieve immediate and sustainable results. Most of our clients at Scipio & Partners invested heavily into improving their enterprise architecture management capabilities including the setup of EAM tools like LeanIX. Having a 360 degree insights into your application and infrastructure landscape is the base investment you need to run your IT on a similar competitive level than your peers in 2025.

While optimizing IT infrastructure is essential, most CIOs will focus in 2025 on further modernizing existing platforms. Legacy systems often fail to meet the agility and flexibility demands of modern businesses, resulting in higher maintenance costs and technical debt. By transitioning to more scalable, cloud-based environments, tech leaders can lower TCOs (total cost of ownership) while positioning their organizations for future growth.

Are you as a CIO enabled to have real-time insights into your global IT? Simple test: Do you know your current global IT run costs or application run costs? If the answer is no I highly recommend having a look at your current analytical capabilities and IT enterprise management capabilities. Most global corporations already build capabilities that allow access to those information on demand. This is crucial to keep your IT focused on business outcomes and as client-centric as possible. - Niklas Scipio (Scipio & Partners)

AI and ML Product Liquidity- Balancing Spent on Innovation with Speed-to-Market Practicality

Artificial intelligence (AI) and machine learning (ML) are no longer optional — they are integral to driving operational efficiency. Many organizations in 2024 still struggled to justify the upfront costs of AI/ML initiatives. Establishing experimentation budgets for AI is critical, especially for organizations without dedicated AI teams.

Projects can create positive business case e.g. predictive maintenance or AI-driven customer service automation typically yield efficiency gains of 10-15%, making a strong case for investment. CIOs will further review their AI roadmap and prioritize for 2025 those use cases that offer the highest probability for business outcomes - which will be mainly focused on efficiency related AI use cases in 2025.

Ninety-two percent of CIOs believe AI will be implemented in their organizations by 2025 (more than any other technology), and CIOs face surging expectations from their CEO and board about the business impact of AI. - Gartner Research

Most CTOs and CIOs started to experiment with LLMs. It's important to plan a dedicated budget for accelerator platforms like LLM gateway layer that are positioned between the user and the model to improve the speed-to-market of LLM-based use cases. As always architectural strategies need to be evaluated to improve your organisational muscles to deliver AI solutions that work on the long run.

Gen AI allows access to a vast amounts of unstructured data up to 90 percent of available data in most cases - IDC 2023

For smaller organizations, it may not be feasible to build internal AI capabilities. In such cases, engaging external consultants can provide the expertise needed to identify high-impact use cases. The key is to focus on areas where AI can drive immediate business value, such as automating routine tasks or enhancing data analytics.

Reviewing your IT HR and IT Supplier Strategy

Throughout 2024, many CIOs we worked with at Scipio & Partners took a critical look at their HR and personnel strategies, realizing that the way they structure their IT departments must evolve to meet the demands of a fast-changing business landscape. In an economic climate defined by uncertainty and the need for greater agility, CIOs have increasingly focused on strengthening the internal capabilities that matter most—particularly around IT architecture, governance, and high-level management—while outsourcing much of the operational delivery and transformation work to external partners.

This shift is not just about cost optimization but about meeting the expectations of CFOs and CEOs. From our discussions with senior IT leaders, it became clear that large, inflexible internal teams burdened with operational tasks slow down the agility needed to respond to economic challenges. Instead, retaining authority over IT design and architecture in-house, alongside a lean but senior team focused on orchestrating IT, allows organizations to stay agile and ensure high-quality delivery. These teams are not distracted by day-to-day execution but instead focus on long-term planning, strategic alignment, and governance.

We’ve seen that this approach offers substantial financial and operational benefits. Consider the difference in cost when comparing maintaining a full-time internal team versus engaging external experts for specific tasks. Suppose you have a full-time IT specialist with a salary of €150,000 annually, factoring in overhead such as benefits, taxes, and training, the total cost often reaches €200,000 per year. Over five years, that’s €1 million.

In contrast, engaging a freelancer or a top-tier external supplier for critical project phases might cost €1,500 per day. If that freelancer works 100 days per year, the annual cost is €150,000. Over five years, the total expenditure is €750,000—€250,000 less than maintaining a full-time role. But the real value lies in the flexibility this model provides. Should your IT needs change, you're not locked into a long-term salary commitment. You can scale up or down, engaging the right talent as needed, without incurring unnecessary costs for underutilized internal staff.

Additionally, leveraging specialized external talent for short-term, high-impact projects can accelerate delivery. For example, in a cloud migration project, if an internal team would take 18 months to complete the migration, but external experts could shorten that to 15 months, this acceleration results in three months of earlier access to operational improvements or new market capabilities. In a large enterprise, that can represent millions in opportunity cost savings or additional revenue generation.

This approach enhances quality. By keeping the architecture and strategic oversight internal, CIOs retain control over critical decisions, ensuring that the work done by external partners aligns with long-term business goals.

One of our clients — a multinational corporation (industrial goods) — restructured their IT team to focus on architecture and governance, while outsourcing much of the systems integration and execution work. As a result, they reduced their internal staffing costs by 20%, while improving project completion times by 25%. This not only met but exceeded the financial targets set by the CFO, creating a more agile and efficient IT organization - Scipio & Partners

The benefits extend to recruitment as well. In 2024, we saw many organizations struggle with the cost and time required to hire full-time employees, especially in high-demand IT roles. Recruiting and onboarding a senior IT professional can take several months and cost upwards of €50,000 in recruitment fees and onboarding expenses. In comparison, engaging external specialists on a project basis allows you to avoid these recruitment overheads and ensures that talent is brought in only when necessary. This reduces the overall operational cost while maintaining access to top-tier expertise.

CIOs must in 2025 rigorously evaluate their supplier relationships and strengthen those capabilties. Not all external partners are created equal. It’s essential to work with those who align with your business goals, values and consistently deliver high-quality results. Low-quality, transactional relationships may save money upfront but often lead to delays, subpar work, and the need for costly rework, which can negate any perceived savings.

In today's economic environment, the ability to quickly adjust staffing levels and resources based on business needs is critical. Maintaining a lean, highly capable internal team focused on IT architecture and governance, while outsourcing the operational delivery to trusted partners, offers significant financial flexibility. The savings can be substantial—reducing full-time staffing costs by 15-20% annually while increasing operational efficiency by leveraging specialized external talent.

The key to long-term success for CIOs in 2025 will be finding the right balance between internal capabilities and external partnerships. By focusing on retaining strategic oversight in-house while outsourcing operational tasks to trusted partners, CIOs can create an agile, cost-efficient IT organization capable of delivering high-quality results that align with the company’s strategic goals. This not only meets the expectations of CFOs and CEOs but positions IT as a driver of business value, rather than just a cost center.

Driving Value Through Transformation & Digital Resilience

Digital transformation projects must prioritize efficiency whilst maintaining stability. Automating manual processes, improving data management, and leveraging advanced analytics are just a few examples of how technology can streamline operations. These initiatives typically result in labor cost savings of 10-20%.

Digital downtime costs global corporates $400 billion annually - Splunk 2024

The rise in outages is largely driven by the growing complexity and interdependence of modern technology systems. In today’s digital landscape, an issue in one part of a company’s infrastructure can quickly spiral out of control, impacting entire operations. Take, for example, a software bug in a customer service platform—what starts as a small glitch can suddenly disrupt the sales system, delay shipments, and cause widespread frustration for customers.

Adding to this complexity is the increasing reliance on third-party providers. Many companies now depend heavily on hyperscalers like AWS or Azure for cloud services, large language models for AI-driven operations, and various vendors for critical business functions like payments or logistics. While these partnerships are essential, they also create a network of dependencies. For instance, if a cloud provider suffers downtime, it doesn’t just disrupt internal systems ... it can bring an entire e-commerce site offline, leaving users unable to access services. Or consider the risk in relying on multiple vendors for a financial transaction - if one fails to process payments due to an API issue, the whole system breaks down, leading to lost revenue and customer trust.

Together, these interconnected systems and external providers form a web of risks. When one part of this network falters, the ripple effect can cause unexpected and widespread outages, demonstrating how fragile even the most advanced setups can be.

For CIOs planning their 2025 agenda, it’s essential to elevate resilience and flexibility across their technology ecosystems. While steps have been taken, many organizations haven’t gone far enough in reinforcing their infrastructures to handle future challenges.

One key focus should be on designing distributed application frameworks that can maintain functionality across multiple regions, ensuring operations are insulated from localized disruptions. Complement this with a multi-tiered recovery strategy that activates different levels of protection, guaranteeing critical systems can be swiftly restored under various circumstances. To stay ahead of emerging risks, routine stress testing and in-depth contingency planning should become standard practice, allowing organizations to anticipate and prepare for worst-case scenarios.

CIOs should also implement gradual rollout strategies to minimize the impact of new deployments, reducing the chance of widespread outages by rolling out changes in stages and reacting to early feedback. Lastly, investing in intelligent, autonomous cloud systems that can detect and resolve issues without manual intervention will be crucial. These adaptive solutions will ensure that systems can recover quickly and efficiently, empowering businesses to maintain continuous operation in an increasingly unpredictable digital environment.

The road ahead for CIOs is complex, but by focusing on cost efficiency, embracing AI/ML, and ensuring strategic alignment with business objectives, they can drive significant value in 2025 and beyond. With careful planning and execution, IT will continue to be a catalyst for organizational success.

ABOUT THE AUTHOR

Niklas Scipio is a tier-1 strategy consultant specializing in Tech/IT value acceleration. His work focuses on designing and driving mission-critical IT initiatives for global corporations.

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