14 June 2023

Beating the 7% curve

Beating the 7% curve

The Australian Bureau of Statistics (ABS) has recorded the year-on-year consumer price index (CPI) – a record of inflation – to be 7% in June 2023. This measure, along with a range of other market factors, will impact IT across all market sectors.

So what are the factors surrounding this increase, and what can your organisation do to beat the 7% curve?

Note: the factors driving inflation are broad and complex – too much so for this article. If you’re interested in learning more, you can read the ABS report here.

Factors impacting IT

With a 7% increase in inflation, your organisation may find that the average costs of IT across the board are growing. But 7% isn’t a blanket rule, and some areas in IT are likely to feel the effects of these – and other market forces – more acutely than others.

Staffing – Increased cost of living usually necessitates higher wages. Any changes in costs associated with salary tend to lag behind changes in hardware and software, as these changes take time to be approved. However, the 7% curve has arrived at the same time as a shortage of skilled labour – especially in areas like cybersecurity. These staffing shortages can be attributed to border closures, reduced levels of immigration, and the after-effects of the COVID lockdowns inspiring a boom in demand for technology services that enable businesses – and experienced staff to manage these technologies.

Hardware and software – these mainstays of IT are usually the first to be impacted by inflation, with suppliers increasing costs to cover production and distribution. Additionally, the prices of resources from solution providers located in the USA (especially SaaS providers) are influenced by foreign exchange rates. While these can fluctuate rapidly, the current trend has lowered the purchasing power of the Australian dollar, which can affect the total cost of IT resources from overseas.

Cybersecurity is in high demand – as mentioned earlier, cybersecurity personnel are in hot demand by Australian organisations right now. Several high-profile breaches have made it apparent to the consumer that their data is at risk if the organisations they rely on don’t do everything they can to shore up their defences. With the potential additions of new data retention laws and fines, the cost of improper data management and information security failures has never been higher. This shift makes cybersecurity personnel a hot-ticket item. In-house experts are in high demand, so it pays to get in early on any outsourced security projects you may have in mind.

How can you respond?

With the factors above in play, it’s clear that some IT-related resources may fluctuate in availability, with costs playing an essential role in business planning activities.

So what can you do to help your organisation build a resilient IT budget that enables you to get ahead of these challenges? What can you do to get ahead of the curve?

Reframe IT as an investment, not a cost centre – your business may be used to looking at IT as a significant “back office” cost – a business function that helps keep the lights on – instead of using it to enable automation, digital customer experiences, e-commerce, digital marketing, data analytics, or efficiencies in business processes. Investing in those will lead to cost reductions elsewhere, especially when automating repetitive yet time-consuming tasks, and reframing IT as a growth enabler may help secure better funding.

Plan ahead – The most straightforward way to mitigate future IT spending is by planning ahead. The sooner you know what you need, the sooner you can start looking for resources that match your needs and budget. If you can lock in a good deal sooner rather than later, inflation will have less of an impact on your spending moving forwards. This rule applies to everything IT – hardware, software, staffing, projects, and sundries.

Be prepared to move quickly on purchases – Although hardware and software are easily impacted by inflation, we’ve recently seen that supply chain issues from COVID lockdowns are improving, and stock is now more readily available. Now could be an excellent time to buy up before inflation increases prices.

Monitor your staffing options – knowing how much value your IT department generates and the costs involved is essential when making informed budget decisions. This requirement means you must factor in training and recruitment costs and the efficiencies and growth they enable – not to mention the impact that can result from operating at reduced capacities while filling a role. With a dollar value in hand, you can make the financial case to increase wages when the loss of an employee may cost your organisation more than a payroll increase. Or you can investigate IT outsourcing services to fill in gaps in either short or long-term availability where it makes sense to do so.

Shore up your remote work arrangements – a remote working environment does more than just support team members who spend time on the road. An attractive remote-work offer can help you attract and retain staff and is already a standard part of modern salary negotiations. In 2021, more than 40% of Australians with a job worked from home at least once a week, up from 24% the previous year. And it’s easy to see why it’s popular. Team members get to eliminate regular commutes and return any money spent on daily travel back to their pockets – and your organisation can do the same with office overheads. Remote work also lets you cast a wider net for recruitment, accessing expertise from regional areas that might be out of reach if you were to focus solely on hiring workers within driving distance of your office.

Embrace a more global workforce – the next logical step from a hybrid workplace is a globalised workforce. By utilising your IT environment to enable true work-from-anywhere arrangements, your organisation can engage with a broader talent pool, reaching regions where labour costs are lower and Australian companies are highly sought after.

Asynchronous work models – with the speed of modern business, ensuring team members can perform their tasks quickly is a key differentiator that helps organisations weather turbulent times. Asynchronous work models let teams get on with work without direct handovers, using standard IT tools such as instant messaging, multi-editing content platforms, and video training sessions to get the information they need.

Training – get more from your existing IT investments by developing in-house champions who know how the systems work and can help others get more from your IT investments. Training helps your teams generate more value in the long run by helping your team members perform their tasks more efficiently and securely – improving output while also mitigating risk. Depending on the training, it may also form an incentive or perk that attracts and helps retain key staff members. At First Focus, everyone has one day a month, a dedicated “training day,” where they can participate in whatever education or training activity they feel will help their career progression.

Invest in cybersecurity – when it comes to data security, there is a substantial difference in costs between breach recovery and breach protection, with some sources reporting that the average cost of a breach for Australian organisations was as high as $2.92 million in 2022. In addition, legislation may soon hold Australian business leaders accountable if they haven’t taken appropriate measures to protect stakeholders from data breaches – similar to those in Europe and parts of the USA. Because the cybercrime landscape exhibits ongoing changes – with frequent emergence of new threats, technologies, and vulnerabilities – what you did a year ago could already be outdated. This speed of change means that your cybersecurity efforts need to be a string of continuous improvement projects rather than one-off cost-centres – with new business opportunities and projects also requiring careful cybersecurity consideration as part of their ongoing budgets. Investing early and consistently in security can help protect your organisation while reassuring your customers.


Australian businesses must consider the potential impact of a yearly change of 7% inflation on IT costs and capacities. As we have discussed, rising wages, increased costs of IT resources like hardware, software, and SaaS solutions, and the growing demand for cybersecurity and professional IT services can lead to significant challenges for businesses.

However, by proactively addressing these issues, Australian organisations can start to mitigate the effects and ensure a smoother transition in this rapidly evolving landscape. By thinking ahead – embracing remote-work strategies, optimising your returns from IT investments, and constantly planning early – you can help your businesses adapt to the changing economic environment while maintaining your competitive edge.

By staying informed, being proactive, and fostering a culture of continuous improvement, your organisation can build a resilient and future-ready IT ecosystem that helps you navigate the challenges posed by inflation.