This conversation has been edited for length, clarity and continuity. A longer version of this interview is available here. It also was excerpted in the Forbes CFO newsletter.  

About how much does your average company spend on tech that they don’t need, like outmoded programs, updates, unused logins?

Ravin: I would be surprised if you didn’t see at least 30% wastage—or more—in the IT budget. We believe even we have 30% we can take out. About 30% to 50% could be cut and streamlined in the years ahead.

How do companies rack up so much in IT contracts that they continue to pay for and don’t need? 

Ravin: Most of it is because you have a bunch of different IT groups, and because a lot of this stuff is SaaS now, you have someone in a department who charges a new piece of software on a credit card. It doesn’t even go through IT. IT departments are chasing down purchases that they didn’t even authorize. They’ve had a hell of a time pulling it all together and figuring out what it is. 

We just went through an exercise, Michael and his team, to say: We know what the IT budget is. How much are we really spending on IT? We went department by department and sure enough, we found about 30% more than the actual budget as IT. We have a plan with our new CIO. He’s restructuring IT. We’re going to go ferret out all the individual IT stuff. We’re going to pull it together, streamline it. We’re going to do exactly what our work with our customers is. 

Every software company right now is asking its customers to do big migrations and upgrades. If you’re Salesforce, I want you to put in Lightning and our AI agents. If you’re SAP, I want you to mandatorily upgrade to S/4HANA for potentially hundreds of millions in costs. Microsoft wants you to do Windows 11 across 27,000 workstations. They’re sitting there with hundreds of applications and there’s literally not enough people, time and money to do everything every one of these vendors wants you to do. 

The reality is for most companies, these changes are work projects. They really don’t change the trajectory of the company. If I change out my payroll system that’s working, are my employees going to be happier because the direct deposits somehow come from a different company? They don’t care. If it’s working and it’s accurate and it lands in their account on time, then they’re happy. So what are you going to get out of the change for millions of dollars of the payroll system if it doesn’t actually improve your business in a way that makes you more competitively advantaged or helps drive your costs down? There’s so many of these projects being asked of the CIO and the CFO, their heads are spinning.

Perica: What he just described was the normal operating procedure—and the challenge—prior to “Liberation Day.” To shift the supply chain—and I did it in a prior CFO chair—the IT organization is a critical component. To have even one major upgrade project that’s not going to have impact on operation, other than disruption, because it’s forced by the vendor, is just going to be compounding in this environment where one needs to be flexible. The IT organization has to be in lockstep with the operation side to be flexible, to assist with scenario analysis and be ready to move swiftly when there is a plan that has been decided at the C-suite and board level on how to manage one’s supply chain.

We’re at the dawn of bringing AI into businesses, and everything that I’ve read from analysts and experts has said the same thing about bringing AI to the enterprise level: Companies that get AI and get IT entrenched in it will be the ones who move ahead. If you don’t, you’re going to be catching up. As IT budgets are going down, how can businesses cut costs and bring AI into their systems?

Ravin: There is only so much people, time and money. That’s the only three ingredients we have in it to bake a pie. They’re all limited things, and most CIOs would love to do every upgrade known to mankind. It’s their nature. They want the latest, greatest of every piece of software and everything else. 

But then the reality of the world sets in. There’s only so many people. There’s only so much time and there’s only so much money, so they reluctantly have to make decisions. The point we’re at right now is if you try to follow the roadmap of all of your software vendors, you couldn’t possibly do the innovation you need because you’d be busy doing upgrades to stuff you don’t need. This is a moment for Rimini Street’s smart path methodology, which is really just saying, look, we’re going to have to make some tough decisions.

You’re going to have to say, ‘I’d love a new car every three years, but you know what? This car is good for 15 years. I’m going to have to drive it maybe for 10, and I don’t get a new car every three years because I’m going to spend my money on some of this new AI technology instead.’ 

You have to be willing to make the tough decisions. And I really think if I were to distill down the lesson for your article, the lesson is you’re going to be making more tough decisions in IT than you have ever had to make. This is a time when you have to have the strength of CIOs and CFOs who are really the backbone on this. The CFO, their nature is everyone’s ripping me off. Do we really need to spend money on that? It’s the nature of your role. It’s who you are.

In today’s situation, how important is fast ROI on your tech systems?

Ravin: You go through these cycles. We were through the 2001 dot-com bubble, the 2007 meltdown, the 2021 pandemic. Even though our smart path is a 1, 2, 3: cut costs, reinvest them, streamline systems, and then buy the new technology [with the savings] and use that money, so you don’t spend any more than your full budget today. 

Depending on the company, there could be some that want to jump immediately to that transformation because there’s really something there that can help. One of our clients just implemented [robotic process] automation. They automated one task, and they went from 130 people doing one job down to 80. How many guys out there in this market and environment wouldn’t love to see things happen like that in their business? And that comes from transformation. 

Some companies will want to race through, so they’ll want to quickly cut costs, quickly streamline and then move immediately to get that done. Others which are just super cost sensitive, like retailers with their 1% margin, may linger more on the savings for now. They may say, ‘Right now, we just have to cut costs in order to be viable. And so we’re going to do the cost cutting. We will slow-play a little bit on the system streamlining and doing the next phase of transformation.’ 

I think people will move at different paces depending on which layer they think will generate the best returns for them. But the No. 1 thing: You always have to have an immediate return, even if that is just cost savings. 

Perica: There’s been so much investment, so much promise of the medium and long term. We all see the business analysis, and usually it misses. 

The time is now, as Seth noted, that the actions have to lead to definitive near-term savings with these automation tools and the need to utilize properly and efficiently what I’ve already put in place. On top of that, never has there been a better time to achieve an immediate ROI, not only from your existing assets that you are running. It can run better. Trust us. 

Ravin: It may not be a fun time for a lot of people in the workforce. I’ve been traveling the world and doing a lot of meetings with various leaders of major companies. I’ll tell you, even governments like in Malaysia and Indonesia, they recognize now that AI with agents can replace people doing tasks on this administrative layer. People who keep the wheels turning, move the papers, do the approvals, 40% could come out of the workforce with the technology we already have. It’s stunning. It’s like another industrial revolution.