Technology leaders have been investing in transformation programs for a decade, coinciding with the economic boom. Should tech leaders overcome spending gaps or transformative initiatives more important than ever?
There is growing debate over whether the US economy will enter a recession, with the traditional definition of two consecutive quarters of GDP decline coming. However, a strange cauldron of historically low unemployment and historically high inflation makes the situation less clear. Regardless of the economic definition applied, most company directors believe we are in a recession or towards one, which shows that many of our bosses believe in a shrinking economy that will ultimately affect tech leaders’ budgets and focus.
These economic clouds are impacting tech leaders and many are looking at Where to cut spending?. Digital transformation initiatives are often big line items in technology leaders’ budgets and need to be scrutinized as economic circumstances change.
Define digital transformation
According to Morgan Stanleya survey of CIOs indicates that almost 10% plan to increase spending on “Digital Transformation” by 2022, down slightly from 2021. Although this means digital transformation not only relevant but also top three even during an economic downturn, but depending on the classic problem of the term “digital transformation”—everyone has a different definition.
While there’s no need to argue about how digital transformation is defined, tech leaders should dig deeper into their transformation initiatives to prepare for tight budgets. Generally, initiatives that count as digital transformation fall into one of three categories:
- Reduce costs through new technologies (e.g. cloud migration or automation)
- Improvements of existing products or services through digital technology (e.g. an app combined with a physical product)
- Create operational flexibility (e.g. hybrid/remote tools)
If you currently spend heavily on the third category, recessionary pressures could reduce demand for new services. Similarly, if all of your transformation initiatives are focused on reducing costs through new technologies, you may be missing out on growth opportunities that could exploit your competitors’ weaknesses. competition brought about by the changing economy.
Digital transformation initiatives should be a strategic element of a technology leader’s portfolio, and the combination of cost reduction and new revenue generation should reflect the broader strategy of the technology leader. company. If nothing else, revising your portfolio of Digital Transformation initiatives should be the topic of discussion the next time you meet with colleagues outside of IT.
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Exit strategy
That’s great news for the broader economy as we haven’t seen a broad-based recession in over a decade. However, that makes these economic headwinds a new test for everyone from executives to employees in the early years of their careers.
In most organizations, technology leaders should have a newfound reputation for helping their organizations overcome the challenges of moving the majority of their workforce to a remote environment. and in some cases, bring those workers back to the office. You may have gained new respect as a competent operations leader, as well as someone who can enable and activate broader corporate strategy.
Use what you’ve learned and relationships built during the pandemic to help prepare for and respond to changing economic conditions with technology. A portfolio of Digital Transformation initiatives is one of the key tools in your arsenal and should reflect your interpretation of how to best implement the broader corporate strategy to meet your needs. meet these times.
