Tough economic times are expected this year, and talent layoffs are the first cost-cutting defense some businesses will be inclined to take, but that response sometimes comes at the expense of customer delivery. With that in mind, a new report titled “Navigating the 2023 downturn” from Forrester advises technology executives to take six actions to position their companies for market leadership when the rebound comes.“History shows, however, that winners will make smart decisions today to optimize their technology budgets so they can invest in areas that drive growth both now and when the market rebounds,” the report said.
Forrester is forecasting a 5.4% increase in U.S. tech spending this year. The report stresses that technology is a critical component of customer success — engagement, revenue and experience.
“Traditional tech execs play the game of waiting and watching, ”the report observed. “Future-fit tech execs will strike as competitors retreat.”
Here are the six actions Forrester recommends tech execs take in 2023.
- Be smart when making cuts
- Prioritize short-term investments with clear customer and employee experience outcomes
- Invest in a strong cloud strategy
- Shift from innovation to resilience for long-run market advantage
- Optimize service provider portfolios and capture pricing opportunities
- Position tech leadership at the highest levels of the organization
Be smart when making cuts
Tech executives should focus on using tech where possible to do the job, and then zero in on skills and capabilities that maximize their ability to deliver the talent needed.
“Avoid layoffs in the technologies and skills that keep you safe and resilient and the ones that allow you to differentiate,’’ the report stated. “Cutting there would backfire, as your high-performing talent shows itself the door and proves hard to refill when the market rebounds. Future-fit tech execs will leapfrog the competition by investing in talent now and preparing for the future.”
Prioritize short-term investments with clear customer and employee experience outcomes
Tech executives should understand the critical technology touch points along customer and employee journeys to identify and prioritize where to make commitments that realize growth effectively.
The COVID-19 pandemic vividly demonstrated to businesses that there is no substitute for great customer and employee experiences. The report advised that tech executives “invest in monetizing data assets to strengthen customer outcomes and dedicate resources to automation and open-sourced tools to increase employee productivity.”
SEE: Hiring kit: Data scientist (TechRepublic Premium)
Invest in a strong cloud strategy
Tech executives should create an owner for cloud costs, embrace FinOps cloud financial management, and use cloud cost management and optimization solutions to find unmanaged resources, shut down redundant assets and refine billing.
“These solutions cover public and private cloud and forecast cloud spend for greater efficiency,’’ the report said.
SEE: Hiring Kit: Cloud Engineer (TechRepublic Premium)
Shift from innovation to resilience for long-run market advantage
Forrester found that 87% of business and technology professionals at future-fit organizations strongly agreed innovation was critical to making their organizations more resilient.
“The fact is that you cannot abandon innovation — it is the lifeblood of your growth and differentiation,’’ Forrester said.
Instead, Forrester advises organizations to plan to prioritize their innovation spend to deliver greater resilience.
“Resilience done right delivers more than risk mitigation — it provides competitive advantage for all stakeholders,’’ the report said.
Investing in resilience, including technologies such as AIOps, will better prepare firms “for the next black swan event and will provide the solid foundation you need while chasing new opportunities,’’ the report maintained. “Be pragmatic with innovation, focusing on flexible technology that enables quicker changes to intended business behavior.”
Optimize service provider portfolios and capture pricing opportunities
Most large firms typically have hundreds of professional and outsourcing service providers and 10 or more on any single large project, such as a packaged app implementation, the report said. A best practice for a Global 2000 company is to have up to eight primary providers that can help with end-to-end work and bring a large portfolio of expertise and capacity.
“Augment these major providers with a few dozen specialists and boutiques as needed,’’ the report advised.
Citing the example of a global life sciences company, Forrester recommends that firms inventory their current providers, prioritize co-innovation partners and begin the tough internal negotiation on which providers to keep.
“Then leverage those future partnership agreements to negotiate on pricing, commitments and contracts aimed to grow through the downturn,” Forrester said.
Firms can expect to trim 3-5% of their total services spend with this approach.
Position tech leadership at the highest levels of the organization
It shouldn’t take a crisis to recognize that rapidly translating technology decisions into business value has never been more important.
“Continuously increase transparency with how you plan, execute and communicate tech’s value to your C-suite peers,” Forrester said. “Demonstrate how each decision directly impacts top and bottom lines, reinforces sales and operating margins, and puts the company in a position to be stronger beyond 2023.”
Further, the report suggests tech leaders leverage governance practices to “thoughtfully challenge the intent of funding, policy, risk management and performance decisions so that each choice aligns with the strategic business objectives across the organization.”
This requires tech leaders to work closely with the CEO and the broader C-suite to ensure that tech is a differentiator, not an enabler, the report stressed.
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