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Digital Retooling >Turbulence and Recession

By Mark P. McDonald | June 08, 2022 | 2 Comments

TechnologyManagementLeadershipEconomy

When the current economic and political turbulence turns into a formal recession is anyone’s guess. Enterprise IT spending will remain relatively strong.

Enterprises will continue to invest in digital technologies despite a recession

Turbulent times are turning toward global recession which increases uncertainty. Normally enterprises would pull back on spending. However, enterprises can be expected to continue IT investments in digital technologies. Gartner and others expect enterprise spending on IT to remain strong.  The logic of continued  spending relates to the following:

  • Enterprises need to retool and put themselves on a digital footing. Enterprises started that retooling during the pandemic and need to complete it. Being half digital is the worst option. It creates a mutation not a hybrid – that is costly, rigid, and ineffective.
  • Spending on digital technologies give leaders better tools to manage in a downturn. Cloud-based solutions increase IT cost elasticity and scalability. This is a plus in the face of variable demand.
  • Digital enabled channels support deeper customer relationships and engagement. The deeper the engagement, the more likely customers are to remain loyal. These channels offer deeper interaction to extend the value of the relationship.
  • Insight, generated by analytics and AI, give the organization a clearer picture of actual demand, operations, costs, quality etc. The more you know the better you can navigate turbulent times, particularly the unique turbulence we current face.

The Dilemma Facing Buyers

Spending now in the face of a near term recession presents a dilemma for IT buyers, primarily the CIO and Procurement. They need the benefits of digital retooling, but they want the flexibility to manage that spend in case of a severe downturn.  Remember being half-digital is worse than not being digital at all.

Business leaders are compressing digital transformation schedules, knowing that the only thing certain is now and the longer they wait the more exposed they are to uncertainty.  This is a factor driving accelerated IT spending, particularly for IT Services. Acceleration comes at a premium in terms of costs and operational disruption.

We can expect more traditional IT buyers to want to accelerate as well, but without the cost or disruption. More on that in the next post.

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Turbulent Times Turning Toward Global Recession ?

Technology’s Evolving Covenant with Business

 

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