It could be a difficult 2023 for technology budgets. Forrester’s recently released US Tech Market Forecast, 2022 To 2027 says that US year-over-year tech spend will grow only 5.4% in 2023, down from 7.4% growth in 2022. Slower growth means leaner budgets. In response, tech-centric companies like Google, IBM, Microsoft, and Salesforce are laying off staff.
But don’t be too aggressive in trimming staff and costs — it will be a mistake in the long term. Technology is always vital to serving customers, even more so in a downturn. And how long will the downturn last? Most forecasters think the economy will rebound in the second half of the year. Thus, in 2023, technology executives should make the right decisions that position their company and technology for the future. It all starts with optimizing budgets — but done right with customer and employee experience as the North Star. Here’s a peek at three actions we recommend in our new report, Navigating The 2023 Downturn: Technology Executive:
- Build bench strength as competitors slash too deep. Avoid layoffs in the technologies and skills that keep you resilient and the ones that allow you to differentiate. Cutting there can backfire quickly: You lose the benefits of these technologies, and your most valuable talent will show itself the door and prove hard to refill when the market rebounds.
- Rationalize your cloud strategy. You likely have chaos and overspending in the cloud: It’s time for the great decluttering. To start, create an owner for cloud costs and embrace FinOps cloud financial management. Use cloud cost management and optimization solutions to find unmanaged resources, shut down redundant assets, remove unnecessary access, and refine billing.
- Shift your innovation to resilience that will provide long-run market advantage. You cannot abandon innovation — it is the lifeblood of your growth and differentiation. Instead, plan to prioritize your innovation spend to deliver greater resilience. Investing in resilience (including technologies such as AIOps) will better prepare you for the next “black swan” event and will provide the solid foundation you need while chasing new opportunities.
And if you want more suggestions as you plan, check out these resources:
- TIER: Use Forrester’s Tech Insights And Econometric Research To Succeed In 2023. Learn how Forrester’s TIER — research focused on labor, investments, budgets, and productivity — can help execs calibrate strategy to unfolding market conditions and adapt with predictive, option-oriented actions to yield stronger results.
- TIER: Technology Is An Engine For Growth, So Budget Accordingly. Learn how to avoid becoming the next Southwest — that is, how to create a budget that maximizes future outcomes given current cost constraints.
- Use a Skills-Based Strategy to Address the Tech Talent Crunch. Learn the pitfalls that organizations encounter when managing talent and how they can find, measure, and develop the skills that workers need to support companies’ strategic aims.
Forrester has been helping clients manage tricky waters for many years, so please reach out with any questions you may have.