March 01, 2023
March 01, 2023
Contributor: Jackie Wiles
Coupling radical efficiency with innovation to drive business resilience, growth and profits requires shrewd investing in digital.
Smart budget trade-offs, savvy talent strategies and optimal digital investments will all be key to success this year as organizations focus on:
Driving margin improvement
Increasing productivity of people and assets
Capitalizing on new growth opportunities with fewer resources.
“Business resilience and growth demand that you invest in differentiators that will drive success over the long term,” says Alex Bant, Chief of Research for the Gartner finance practice. “If you don’t invest effectively in digital in 2023, you’ll increase your technical debt and let competitors out-innovate you on digital products and services and scoop up the talent you need.”
See Playbooks: Recession Advice for Executives and their Teams
Whether the global economy heads into recession or not, organizations must still navigate the impact of trends like inflation, scarce talent and global supply constraints that emerged in 2022. Certain conditions have changed, however, so building resilience means tackling three variables that threaten to weigh down growth and profits in 2023:
Reduced demand and economic slowdowns threaten organizational growth.
Higher funding costs reduce ROI.
Funding is harder to get and justify as investors prioritize investments that generate short-term profitability and cash flow over those that drive future growth.
Critical talent, especially those with digital skills, remains expensive and in short supply, despite the slew of layoffs in the tech sector. In the U.S. more broadly, the overall unemployment rate was just 3.4% in January 2023, a 53.5-year low.
Inflationary pressures have worsened talent retention and complicated strategies to pay more to attract new talent.
Gartner research shows that 89% of boards agree digital is an implicit part of growth strategy, but 81% report they have not made progress toward or achieved their digital business transformation goals.
Boards and CEOs now expect to see top- or bottom-line benefits from digital investments, but many CIOs still struggle to demonstrate the business value of IT.
The recession playbook of nine winning actions that Gartner recommended in mid-2022 holds true in focusing on three sets of actions for executives:
Manage resources and spend strategically.
Be agile in securing digital talent.
Accelerate key digital and technology initiatives.
We have updated the individual initiatives, though, to focus even more on the need to be proactive.
Alexander Bant is the Chief of Research for CFOs at Gartner, where his business insights are used by 45,000 leaders at a majority of the Global 500. His research teams quantify and share what the top companies and their leaders do differently to maximize their people, processes and technology.
Join your peers for the unveiling of the latest insights at Gartner conferences.
Recommended resources for Gartner clients*:
Navigate Inflation and Recession Resource Center Primer for 2023
Quick Answer: How Do I Discuss Cloud Costs With My CFO?
HR Leaders Should Plan for Multiple Scenarios to Ensure Resilience in Times of Economic Downturn
Grow Revenue and Reduce Recession Risk by Clearing Technology Debt
Digital Business Ambition: Transform or Optimize?
*Note that some documents may not be available to all Gartner clients.