Part 1: Investment & economy

Investment & economy

One of the biggest pressures facing business leaders is keeping up with the pace of technology change and knowing where to prioritise investing IT budgets.

The turbulent global economy teetering on the brink of recession, changing ways of work in the wake of the global pandemic and evolving workplace expectations from staff and businesses alike have created a storm of uncertainty when it comes to key business focuses including hiring and technology.Despite the Covid-19 pandemic ushering in a new era of IT-enabled remote working, our research revealed that around half of respondents (48%) say they are back to ‘full time in-office’ working schedules, with CEOs (64%) leading the charge on a return to the office agenda, at odds with tech leaders for whom it was a priority for only 42%.

This area also showed one of the greatest disparities between markets, with 64% of US respondents saying they are expected to be physically present five days a week, compared with just 37% in the UK and only 33% in the Netherlands. It would seem there is at least a partial reversion to pre-Covid working practices in the US, and with high profile organisations such as X and Amazon publicly stating return to the office policies, perhaps execs at other US organisations have felt more able to follow suit than their European counterparts.Our research revealed that 50% of respondents admitted that their tech department had faced budget pressures due to the turbulent economy. When ranking by country, US businesses topped the list with 56% saying their budgets had been reduced, compared with 51% in the UK, 41% in the Netherlands and just 39% in Germany.

Why do you think that some tech leaders are driving a “full time in-office” schedule?

Collaboration
Accountability
Presenteeism
Efficiency

However, despite overall budgets being cut, 81% said their company had increased tech investment over the last year. This could reflect expenditure in new technologies like AI, with the goal of boosting overall operational efficiency through tech that gives them the best return on investment. Many companies were also positive about increasing their investment in tech during the year ahead, with once again 81% saying they were planning to do so. There was broad alignment between the countries featured in our survey, with the US again topping the list at 86%.

The findings also uncovered a broad consensus around strategy synchronisation, with a notable portion of US respondents (82%) saying their business and technology strategies were aligned, compared to 76% in the UK, 74% in Germany and 67% in the Netherlands. The main focus for the boardroom’s technology strategy is value creation, against the backdrop of a turbulent economic climate, with 69% focusing on creation over value optimisation. With the widespread innovation and adoption of new technologies, 78% are looking to prioritise investment in automation in order to cut costs and boost efficiencies for the year ahead.
Overall, the executives polled felt that technology was successfully driving transformation across their business, with 79% feeling it was effective. Of this figure, 84% of US respondents agreed, with 80% in the UK, 76% in Germany and only 66% in the Netherlands.

“Budgets are tightening but the criticality of tech capability is increasing. So how do organisations secure the talent they need? There’s a belief that when economies weaken, hiring gets easier. In fact the opposite is true; hiring becomes more critical than ever as the quality of hire has to be spot-on. Those that are able to attract AND select the best will outperform competitors now and, crucially, when the economic landscape improves. In short, now is the time to prioritise HOW you hire the best talent in the market.”

David Procter, Head of Advisory, Caraffi

For the year ahead, our focus group revealed that driving growth was their main technology priority as organisations look to overcome the uncertain economic outlook. Increasing customer engagement, improving decision-making through data and piloting innovative technologies are central to this focus. Cutting costs and driving efficiencies through automation, reducing duplication and improving the supplier ecosystem, are other areas of focus for the boardroom, as well as increasing overall business agility.

“Technology has consistently delivered value for our business, enabling growth, driving productivity, simplification and future-proofing our company. Our priority investments are in digitising our route to consumers and unlocking the value of AI through a secure digital backbone of integrated and standardised data and business platforms.”

Breno Gentil, Regional CIO, Heineken

What we're hearing…

“A critical takeaway from the survey is the emphasis on technology as a key driver of economic growth and operational efficiency. Despite reported cuts in tech department budgets, overall tech spend has increased, underscoring a shift towards investing in transformative technologies and capital expenditures outside traditional IT departments. This indicates a broader recognition of the role of technologies in enhancing business capabilities and the competitive positioning of the firm.”

Prof Alexeis Garcia Perez

Professor of Digital Business and Society, Aston Business School, Aston University

“We are making significant technology investments as we are clear that technology creates value and will help enable our business transformation. It is also critical to getting the basics right to drive our AI/ML agenda.”

Sandeep Seeripat, GM & Global Business Transformation & Technology Officer, TwiningsOvo

“Where CIOs are facing budget cuts they must use the opportunity to do the basics that always get put off, such as system consolidation and decommissioning. They must also form an alliance with the CFO to root out shadow IT and duplicate capabilities, and look for use cases for efficiency-driving technology such as AI and machine learning.”

Vicky Higgin, Group CDIO, CityFibre