According to a major survey of technology leaders, UK companies are reducing their spending on new technologies such as AI, big data and robotic automation. But while 90% of respondents expect an economic downturn, overall technology spending is expected to increase as companies invest in established digital technologies instead.
More than half of tech leaders surveyed for the 2022 Nash Squared Digital Leadership Report anticipate rising tech budgets and investing in established technologies, with cloud inevitably the biggest winner, with 67% of UK respondents reporting widespread adoption.
The annual survey has been running since 1998 and collects responses from leading technology decision makers. This year more than 1,700 took part, including over 746 from the UK.
Despite a decline in overall spending on new technologies, the report highlighted that companies are realizing the potential that can be unlocked from data. Two-thirds of executives surveyed say big data and analytics will be the top two technologies to gain a competitive advantage, but only a fifth said they’re effectively using data insights to generate revenue, partly due to a lack of skills in this area and problems in recruiting people to handle data.
One of the most notable trends over the past year has been the increased risk of cyberattacks, with nearly half of large organizations saying they have been hit by at least one attack in the past year, with a third citing investment in the cloud as a cause of rising security concerns.
Of the UK’s largest organisations, 44% reported a major cyberattack in the last two years and half of all digital leaders in the UK fear an attack could come from a foreign government-backed group, versus 12% in the UK year 2018.
Nash Squared CEO Bev White said economic indicators are turning negative, but despite this, companies are still investing in technology, adding that it “remains critical” to maximizing efficiencies in such an unpredictable economy.
“There are signs that some companies are cutting back on investments in areas like AI and big data,” she said. “The reasons for this are understandable, but companies should be careful not to over-constrain – they run the risk of falling too far behind the pace to catch up and severely damaging their competitive position.”
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UK IT Spending: Cybersecurity is a priority
Nash also warned tech leaders to ensure they invest appropriately in cybersecurity as “the threat environment is highly charged and increasing concerns about foreign activity are conspicuous,” adding that “the world has become a more dangerous place in 2022.” UK businesses need to adopt robust defensive measures accordingly.”
Last year’s survey drew attention to an “unprecedented” lack of technical skills threatening the progress of digital transformation projects, with 67% of technology decision-makers saying it’s preventing them from keeping up with the pace of change. This is still a problem in 2022, especially among cybersecurity professionals.
A 2021 DCMS report found that the UK recruitment pool is short of around 10,000 cybersecurity professionals, increasing the overall threat. Only a third of executives who took part in the survey were confident that all appropriate risks were covered.
Beyond the cyber skills shortage, 68% of digital leaders in the UK said they are struggling to keep up with the pace of change, which is slightly faster than in 2021, due to the overall lack of technical skills. A little more more than half said they never have enough technical staff and two-thirds said the rising cost of living had made wage demands unsustainable.
Tech leaders also say government policy isn’t making this shortage any easier to address, with 78% of UK policymakers claiming that policy is “completely ineffective” at addressing skill shortages. In Asia, only 41% of decision makers had a problem with government policy on hiring IT staff.
Focus on skills shortage
When it comes to dealing with staff shortages, just 14% of the technology leaders surveyed say they plan to turn to AI and robotics to automate the problem, with most saying that hybrid working has had a greater impact in solving the problem , including simplifying Recruit from overseas and bringing people into the tech workforce who otherwise might not have been able to bring in parents. Thanks to hybrid ways of working, the number of female executives has increased to 15% from 12% in 2021, and a quarter of the tech workforce is female.
These skills shortages could worsen in 2023, as more than half of companies expect to increase their technology workforce despite the economic downturn. “Businesses depend on people – but the UK tech sector just can’t find enough of them,” said White. “While skill shortages in the industry are nothing new, there is concern that they are getting worse rather than better.”
She said there is evidence that companies are taking active measures to retain employees, including redesigning offices, enabling more remote work and turning to out-of-country employees.
“They have also stepped up their efforts to get more women into tech. I’m encouraged to see progress here: the industry is slowly moving towards the better gender balance it so desperately needs,” added White.
Remote and hybrid working models, which were rapidly adopted during the pandemic, will remain in place, according to the report, with 68% of UK executives reporting that work-life balance has improved among members of their team. But the news isn’t all good, as productivity gains made last year during the pandemic are slowing. Only four in ten say they’ve experienced a productivity boost from hybrid working, up from half last year.
White said: “It will inevitably take time for UK companies to find the optimal model for their recruitment propositions and talent strategies. Remote and hybrid work offer some real benefits, but there are signs these may diminish over time.”