As global unrest, supply chain instability, rising inflation, the aftermath of the pandemic and an economic slowdown continue to dominate, the IMF forecasts global economic growth to slow to 3.2% this year, from 6.1% in 2021. Tech companies are laying off employees and freezing hiring processes. IT executive investment planning for 2023 will be difficult as overall spending is slow and employment trends are turbulent and unpredictable.
Business and technology decision-makers across functions announce their 2023 budget plans in Forrester’s Budget Pulse Survey. Most executives expect overall spending to increase in 2023. Despite hiring freezes and layoffs at leading tech companies, executives say they won’t cut spending on talent. On average, 60% of executives expect to increase spending on staff and 62% expect to increase spending on outside services. Executives don’t want to slow down technology investments. 67% expect budget increases in technology.
Forrester investment planning guidelines for IT leaders
IT leaders can’t just cut spending without thinking about it. They need to be more careful and consider where to invest. Some things can be worth investing in, while others should be trimmed. IT leaders need to plan carefully to make wise investments.
Where should leaders invest in 2023?
IT leaders should invest in the areas that will help their business grow and generate more revenue. This includes technology, talent and insights that help better understand customers. These investments will allow the organization to differentiate itself from the competition in difficult times.
Customer Insights and Retention: Improve audience targeting and get better results by investing in more reliable customer data. Prioritize investments in normalizing and enriching data from multiple sources, as well as customer analytics and experiential research platforms. Focus on your customers’ post-sale experiences as this can lead to loyalty, cross-selling and up-selling among them.
Technologies that improve customer experience and reduce costs: Current economic conditions require us to focus on technologies designed for optimization and resilience. Technologies such as document extraction, robotic process automation (RPA), and agent support apps can help create well-designed and more reliable self-service experiences. They also save money because self-service channels are cheaper than busy channels.
Cybersecurity Solutions: Prioritize security solutions that protect data that is important to customers and data that is critical to industries like utilities, energy and transportation. IT leaders should also defend their investments in cloud modernization and adopt Zero Trust. Investing in crisis simulations and Purple Team drills ensures preparedness when a breach occurs.
talent and productivity: IT leaders don’t have to give up the things they’ve done this year to improve talent acquisition and retention. Instead, they need to focus more on improving productivity. For example, sales managers shouldn’t rely too heavily on a few good sales reps or hire more people. They should invest more in things that are easy to do, like processes powered by data and insights.
Where can investments be cut?
Bloated software contracts: Some software markets are unstable due to economic uncertainty. Established companies struggle to live up to their values, and newcomers struggle to survive. This is a good time to renegotiate prices, fine-tune terms, and consolidate contracts.
Technical Debt: In 2023, leaders must reduce the number of legacy investments and tools that are duplicated or underutilized across the technology stack. You also need to consider early cloud deployments as candidates for technical debt reduction.
Low quality outsourcing: IT leaders must continue to work with external partners who help the organization grow. Only work with companies that can help improve customer relationships and provide a future-proof solution. You also need to consider bringing more innovation into the business, which can save money and retain talented employees.
Underperforming Markets and Customers: Leaders need to focus on high potential customers and market segments. However, you can run lower-cost nurture programs with buyers in segments affected by the economic challenges.
Investments in emerging technologies from 2023
Even if there are real trade-offs to be made, leaders cannot refrain from experimenting with new technologies. Such experiments help differentiate companies, and they also help in deciding whether to invest further in this technology.
- Edge Intelligence brings analytics directly to the customer. Edge Intelligence will help create better digital customer experiences as it can process large local datasets and generate personalized interactions.
- Intelligent Agents (IAs) make experiences more human. IAs are software capable of making decisions or performing a service based on their environment, user input, and experiences. They are often referred to as bots, chatbots or digital workers.
- Extended Reality, the Metaverse and Web3 offer immersive experiences. These new technologies could offer great experiences linked to token-based ecosystems using cryptocurrencies and public blockchains. Consumer goods companies should experiment with platforms like Roblox and Decentraland to find new customers. And all industries need to consider people-centric experiments to drive collaboration, remote support, training, and onboarding.
- TuringBots write your own code. These are AI-powered bots that can enhance developers’ ability to design, build, modify, test, and refactor software in an automated and autonomous manner.
- Privacy Preserving Technologies (PPTs) help protect data. PPTs enable companies to protect customer and employee data during processing. It unleashes the potential of powerful AI models while meeting privacy, ethics, and other regulatory requirements.
Investment planning for 2023 comes with pressure, but also an opportunity to focus on what is important, create differentiation and make your customers happier.
For a deeper dive into the 2023 planning guide, download the report here.
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