Technology spending will increase next year. And this old favorite is still the top priority

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Some argue that the recent drop in Big Tech’s stock prices is a sign that the golden age of digital growth is drawing to a close.

But while investors might get nervous at the prospect of hyped trends like the Metaverse, Nash Squared CEO Bev White says engaging in tech spending is still high on the boardroom agenda.

“This is a wave of change that will not reverse,” she says. “Change has begun and people are open to it. As we continue to evolve, digital leaders must continue to transform the way businesses operate.”

Proof of that sentiment is Nash Squared’s Digital Leadership Report. The annual survey of 1,800 digital executives, produced by the executive search firm in partnership with CIONET, suggests global technology spending is expected to grow at the third-fastest rate in over 15 years.

SEE: What is digital transformation? Everything you need to know about how technology is changing business

More than half (52%) of digital leaders expect their tech budgets to increase over the next year — even though 87% of respondents expect an economic downturn.

White explains this growth by saying that digital transformation projects over the past two years have sparked executive interest in technology.

As a result of the coronavirus pandemic, businesses have had to find technology-enabled ways to do things differently, whether it’s moving processes to the cloud or creating new digital platforms to help customers interact effectively.

But the board’s interest in all things digital isn’t just looking back at recent successes; White says that even in the post-COVID era, companies continue to invest in technology because they believe it will help them deal with what’s next.

In short, digital leaders believe that an investment in technology – be it on-demand IT, data analytics or automation – will help their organizations cope with an already tremendously challenging business environment.

This is also reflected in Gartner’s technology forecasts for 2023. The analyst says that digital leaders who want to improve their company’s financial position in times of economic turmoil must seek new forms of operational excellence while further accelerating digital transformation.

White says the tremendous macroeconomic pressures around the world are causing executives to think much more carefully about how to get closer to customers, fuel growth and potentially reduce costs from the business.

She also points to the pressure on supply chains. Leaders have seen the disruptions caused first by the pandemic and then by Russia’s invasion of Ukraine, and are now looking for tools to respond flexibly to fluctuations in supply and demand.

The solutions to many of these challenges, White says, will likely come through technology. And for many organizations, the starting point for that response is an ongoing investment in cloud computing.

Likewise: What is cloud computing? Everything you need to know about the cloud explained

This focus on on-demand IT may come as a surprise. After a decade or more on the IT agenda and a few years of targeted investments due to the pandemic, one might assume that a move to cloud computing was yesterday.

However, the Nash Squared survey shows that interest in the cloud is still very much in the foreground today.

“It’s still growing and evolving as a market with a fairly young set of technologies and capabilities,” says White.

Nearly two-thirds (63%) of Digital Leaders say cloud is being used extensively, and half of those surveyed expect it to provide a competitive advantage over the next 12 months.

“Growth will come from people continuing to move to the cloud,” she says. “The very large organizations still have large legacy platforms. At some point in the future, these platforms will also have to be switched and moved.”

So commitment to the cloud remains strong — and White says that’s because leading digital companies want to recoup their sunk investments in on-demand IT before launching a slew of new initiatives focused on new technology areas.

She gives an example: “When you’re in retail, it’s a very different kind of experience as an employee than it was two or three years ago. Right now, people just want to anchor that change a little bit before moving on to the next big wave.”

The next focus for many digital leaders is likely to be data, which the report describes as “the jewel of the digital economy.”

Nearly two-thirds (64%) of digital leaders believe that big data and analytics will be among the top two technologies for gaining a competitive advantage over the next year.

However, research also suggests that polishing these data jewels remains a challenge for most organizations. Only a fifth (21%) of digital leaders believe their companies are very or extremely effective at using data insights to generate more revenue.

As organizations recognize the power of analytical insight, reports suggest that the complexity of managing big data is beginning to take its toll.

A major challenge is getting the right skills – almost half (43%) of digital leaders are hampered by skills shortages in big data and analytics.

Likewise: Finding a mentor can give your career a boost. Here are 5 big benefits

Another explanation for the loss of trust, says White, is that many companies are still fixated on realizing the potential benefits of the cloud.

Digital executives and their business peers often take a wait-and-see approach to big data, which means the market needs to mature before pouring the money into emerging areas like artificial intelligence (AI) and machine learning (ML).

“Often these AI and ML initiatives start with small projects,” she says. “Enterprises are still directing their IT investments towards large, sustainable changes, such as underlying cloud infrastructure and applications.”

However, digital leaders and industry professionals must be careful not to lose sight of the ball. While investing in a flexible cloud platform is critical to delivering digital transformation, they must continue to explore the potential for data-driven change.

“An investment in AI and robotics means companies can be more efficient, which means they can start thinking about taking on some of the day-to-day costs in their organizations,” she says.

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