Continued spending on people and skills is high on the agenda of CXOs.
Economic headwinds coupled with unexpected trends in employment will make planning and budgeting for 2023 trickier than normal, but most leaders agree that talent and technology are priority items on the strategy list. Those who come out on top in 2023 will prioritize investments that maximize revenue growth, profitability, and resilience while cutting spending in areas prone to waste. They also will maintain experiments with emerging technologies that show growing value; reconfigure their supply chains to factor in geopolitical tensions, and focus on automation to make their organizations fluid and adaptable to rapidly changing scenarios.
Continued spending on people and skills is high on the agenda of CXOs, despite the current challenges talent challenges faced by all organizations, according to a Forrester report on planning for 2023. Despite some high-profile hiring freezes and layoffs at firms like Alibaba, Klarna, Meta, and Microsoft, leaders say they’re unlikely to drop spending on talent — both internal hires and external services. In fact, on average, 60% expect to increase spending on personnel, and 62% expect to increase spending on external services.
Creating digital experiences
Technology is the other critical aspect that comes out of the report. There will be more spending on crucial technologies. Leaders across functions don’t want to slow down tech investments either, with 67% reporting expected budget increases in technology. Category standouts for the most significant expected increases are digital experience software, privacy tools, and cloud security.
It’s true that the best way out of a downturn is to continue investing — but only if one picks the right areas. CXOs are therefore prioritizing investments that maximize revenue growth, profitability, and resilience. This includes targeted and coordinated investments in technology, talent, and insights that help drive customer value and will help accelerate differentiation coming out of the downturn. Insights should reveal patterns so that problematic processes or service weaknesses can be identified and fixed. This needs to be done seamlessly instead of bolting on additional analytical reports or solutions.
Insights-from-Data is the key to success
Eighty-eight per cent of C-suite respondents to Accenture’s Business Futures research say using forward-looking data is key to their success. At the same time, many companies are democratizing their data. This enables people on the edges of the organization to access data and make critical decisions while staying in sync with corporate strategy. This approach helps companies get ahead of changing customer trends and market volatility by boosting speed and agility.
The coming year is unlikely to look like the 2020 shutdown or any past recession, rendering many assumptions about customers and their behaviour useless. Investing in more relevant and reliable customer data to help sharpen audience targeting strategy and shifting budgets to higher-yielding tactics with proven financial value will, therefore, be high on the agenda.
Prioritizing investments in normalizing and augmenting data from disparate systems and sources, as well as customer analytics and tools like experience research platforms that democratize and accelerate customer research, will prove to be critical in staying relevant and moving up the competitiveness scale. Organizations will also need to recalibrate messaging to address new or evolving customer needs and focus on post-sale experiences that drive loyalty, cross-sell, and upsell opportunities among existing customers.
Technology optimization for resilience
Unlike the pandemic-induced need for tech for new digital experiences and anywhere work, the current economic headwinds will demand more focus on tech tuned for optimization and resilience. For example, a cloud cost management and optimization tool can help wrangle escalating cloud spending. But this doesn’t mean companies should turn their back on digital experience innovation.
Keep pushing forward, but prioritize investments that also reduce operational costs. Document extractions, robotic process automation (RPA), and agent assist apps can bolster well-designed self-service experiences with smart escalations to live agents that drive loyalty. And they save money, as self-service channels are less expensive than staffed ones.
Economic headwinds growing stronger
C-suite executives are also keeping a close watch on things they cannot control, such as global economic trends and rising geopolitical tensions, and yet which have significant influences on their businesses. According to Euromonitor, the global economic outlook has worsened for 2022-2023. In the baseline scenario, global real GDP growth is expected to decline to between 1.7-3.7% in 2022 and 1.8-4.0% in 2023.
As a result, inflation in advanced economies is reaching levels not seen since the 1980s. This spike has resulted in a reduction in household purchasing power and forced central banks around the world to tighten financial conditions. The continuing war in Ukraine and economic sanctions on Russia are causing ongoing uncertainty in food and energy markets. This has created considerable uncertainty around the supply and pricing of energy across Europe, leading to further complications for the approaching winter season in the region.
Global inflation is expected to increase between 7.2-9.4% in 2022 before declining to 4.0-6.5% in 2023. Demand-side inflationary pressures have prompted central banks to rely heavily on monetary policies; however, this means the global economic slowdown is intensifying. With higher interest rates, business and household demand are likely to slow down towards the end of 2022.
Rising energy and food prices will particularly hurt low-income markets which are dependent on imports and could trigger social unrest and tensions in developing economies. Across most markets, rising prices are undermining real income growth and consumer confidence while threatening a cost-of-living crisis. Furthermore, supply chain issues due to the war in Ukraine and China’s zero-Covid policy are likely to remain for the rest of this year and most likely spill into the first half of 2023.
(Abhijit Roy is a technology explainer and business journalist. He has worked with Strait Times of Singapore, Business Today, Economic Times and The Telegraph. Also worked with PwC, IBM, Wipro, Ericsson.)
(Disclaimer: The views expressed in the article above are those of the author’s and do not necessarily represent or reflect the views of Autofintechs.com. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.)