Steps tech leaders should be taking during the economic downturn

This requires maximizing the use of technology, avoiding tech layoffs, and emphasizing employee and customer experience outcomes, according to a newly released report.

Stock market chart next to a $1 bill (showing former President Washington).  The red trend line indicates the recession in the stock markets.
Image: Corlaffra/Adobe Stock

Difficult economic times are expected this year, and talent layoffs are the first cost-cutting measure some companies will be inclined to take, but this response sometimes comes at the expense of customer satisfaction. With that in mind, a new report titled “Navigating the 2023 downturn” by Forrester advises technology leaders to take six actions to position their companies for leadership when the downturn arrives. “But history shows that today’s winners will make smart decisions to optimize their technology budgets so they can invest in areas that drive growth both now and when the market recovers,” the report said.

Forrester forecasts a 5.4% increase in US technology spending this year. The report emphasizes that technology is a critical component of customer success – engagement, revenue and experience.

“Traditional tech managers play the game of wait and watch,” the report noted. “Sustainable tech leaders will strike as the competition retreats.”

Here are the six actions Forrester recommends for technical leaders in 2023.

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Be smart when making cuts

Tech leaders should focus on using technology wherever possible to get the job done, then focus on skills and abilities that maximize their ability to provide the talent needed.

“Avoid laying off the technologies and skills that keep you safe and resilient and those that allow you to differentiate,” the report said. “Cutting there would backfire as your powerful talent shows the door and proves difficult to refill when the market recovers. Future-ready tech leaders will outperform the competition by investing in talent now and preparing for the future.”

Prioritize short-term investments with clear outcomes for customer and employee experience

Tech leaders should understand the critical technology touchpoints along the customer and employee journey to identify and prioritize where to make commitments that effectively realize growth.

The COVID-19 pandemic has vividly shown organizations that there is no substitute for great customer and employee experiences. The report notes that technology leaders are “investing in monetization of data assets to improve customer outcomes and dedicate resources to automation and open-source tools to increase employee productivity.”

SEE: Recruitment Kit: Data Scientist (TechRepublic Premium)

Invest in a strong cloud strategy

Tech leaders should create an owner for cloud expenses, embrace FinOps cloud financial management, and use cloud expense management and optimization solutions to find unmanaged resources, shut down redundant assets, and refine billing.

“These solutions cover public and private clouds and forecast cloud spend for greater efficiency,” the report states.

SEE: Settings Kit: Cloud Engineer (TechRepublic Premium)

Shift from innovation to resiliency for long-term market advantage

Forrester found that 87% of business and technology professionals in future-ready organizations believed innovation is critical to making their organizations more resilient.

“The fact is, you can’t give up innovation — it’s the lifeblood of your growth and differentiation,” Forrester said.

Instead, Forrester advises companies to prioritize their innovation spend to achieve greater resilience.

“Resilience, done right, offers more than risk reduction – it creates competitive advantages for all parties involved,” states the report.

Investing in resiliency, including technologies like AIOps, will help organizations “better prepare for the next black swan event and provide the solid foundation they need as they pursue new opportunities,” the report said. “Be pragmatic about innovation and focus on flexible technologies that enable faster change in intended business behavior.”

Optimize service provider portfolios and take advantage of price opportunities

Most large companies typically have hundreds of professional and outsourcing service providers and 10 or more for every single large project, such as: B. the implementation of a packaged app, says the report. Best practice for a Global 2000 company is to have up to eight key vendors who can help with the end-to-end work and bring a large portfolio of expertise and capacity.

“Add a few dozen specialists and boutiques to these large vendors as needed,” the report advised.

Citing the example of a global life sciences company, Forrester recommends that companies take inventory of their current vendors, prioritize co-innovation partners, and begin the tough internal negotiations of which vendors to keep.

“Then use those future partnership agreements to negotiate pricing, commitments and contracts designed to weather the downturn,” Forrester said.

Businesses can expect to save 3-5% of their total service spend with this approach.

Position technical leadership at the highest levels of the organization

It shouldn’t take a crisis to realize that quickly converting technology decisions into business value has never been more important.

“Continuously increase visibility into how you plan, execute, and communicate the value of technology to your C-suite peers,” said Forrester. “Show how every decision directly impacts sales and earnings, strengthens sales and operating margin, and positions the company to be stronger beyond 2023.”

In addition, the report suggests that technology leaders use governance practices to “reasonably challenge the intent of funding, policy, risk management, and performance decisions so that each decision aligns with strategic business objectives across the enterprise.”

This requires technology leaders to work closely with the CEO and the broader C-suite to ensure technology is a differentiator, not an enabler, the report stressed.

Continue reading: Year-round IT budget template (TechRepublic Premium)

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