The IMF has warned that half of the European Union and a third of the world face recession in 2023. This means that economic headwinds such as energy costs and currency fluctuations are forcing organisations to reassess budget decisions.
In our recent Future Enterprise Resilience and Spending Survey (December 2022), IT leaders said they expect inflation to impact spending decisions. IT cost price increases stemming from inflation and currency changes is expected to have the greatest impact on IT spending plans in 2023.
C-suite concerns are related to IT and technology challenges. In our Worldwide C-Suite Tech Survey (August 2022), 60% of European C-suite concerns about the impact on their IT and digital spending was related to challenges coming into sharper focus as macroeconomic conditions worsen. This includes IT price increases stemming from inflation.
So how can tech vendors navigate these issues and thrive?
Planning Is the Foundation for Success
According to research by the Harvard Business Review, companies that not only survived recessions but thrived afterwards were those that were prepared and agile — those that didn’t just slash costs but invested strategically.
Strategy is essential to know where to plan resources, to determine which projects you are going to prioritise and which you are not, and to know how you are going to identify and target the opportunities that will give you the best return.
Download eBook: Essential Building Blocks for an Effective Growth Strategy
A good strategy should help you align with business conditions, so that you can be agile enough to deliver short-term savings without impacting long-term growth.
Informed Decisions
Data becomes more important in volatile and uncertain economic situations. Economic conditions can impact regions and industries differently. Knowing the factors that might impact the market(s) you are selling into is crucial.
Those who are buying tech is changing, with European tech spending moving from the IT department to the C-suite. In Europe, 47% of IT spending is now C-suite funded (source: IDC Worldwide IT Spending Guide: Line-of-Business Forecast, January 2023, European forecast).
Download eBook: Speaking the Language of the C-Suite: Selling Beyond the IT Department
This is an example of how data can give you insight into your customers and how they are buying. Knowing who is buying, where they are spending and what is impacting spending decisions will help you build an effective strategy.
Data-supported decisions are key to effective resource management both internally and externally.
This means you need to know who is buying in your market. Which markets or industries are more resilient? What are their drivers and challenges?
Adapt and Invest
Times of economic uncertainty can also be a time of possibility. Microsoft, Instagram and Airbnb, for example, were all formed during or just after a recession.
Technology is an area where businesses tend to continue or increase spend. 66% of European C-suites believe that IT budgets will increase, even during an economic downturn (source: IDC Worldwide C-Suite Tech Survey, August 2022).
According to our Digital Executive Sentiment Survey (October 2022), European organisations now expect more than 50% of their revenues to come from digital business models on average in the next three years.
Technology is often seen as a critical business differentiator to better deliver business outcomes, increase resilience and accelerate revenue growth. So while caution may continue while the economic outlook is uncertain, investments in projects that improve efficiencies are continuing. According to the Harvard Business Review, prioritising digital transformation and digital technology can help cut costs and improve efficiencies.
In an economic downturn it can be harder to achieve growth, as you have to do more with less. It can also be harder to get customers to spend, so you must ensure that you are targeting the opportunities with the best chance of success.
But there are opportunities. So what you do and where you allocate resources becomes increasingly important.
You need results. To be proactive rather reactive, but still agile enough to pivot to changing market conditions. An effective strategy is essential to that.
Visit our website for more information on how we can help you build for growth.