CIOs and the State of the Economy
Written by Liz Ramey
NOVEMBER 15, 2022
Thriving through uncertain times has been a theme over the past few years, and the current state of economic turbulence has executives once again shifting their growth strategies to stay ahead. As CIOs are in the crosshairs of increased demand for digital technologies and economic headwinds, they are eager to find a balance. CIOs in Evanta communities will be tackling this issue at CIO Executive Summits around the world this fall.
According to Gartner research, executives are experiencing a unique triple-squeeze of compounding pressures from persistent high inflation, scarce expensive talent and global supply constraints. But, there is hope for technology leaders. The research states, “The actions you take at the beginning of a contractionary period are critical to your success during a downturn and beyond.”
We asked CIOs in our Evanta communities about the economic factors and pressures they are facing and how they are adjusting their investments to set themselves up for a lucrative future. Here are 5 key findings from our Community Pulse Survey of nearly 200 CIOs on the state of the economy.
1. Are economic headwinds stifling business?
Despite widespread economic disturbances, most businesses are in “growth mode.” CIOs indicated the top economic factors impacting their businesses are inflation (74%), rising wages (63%) and expectations of an economic downturn (60%). Yet, they are not letting these circumstances hold them back from driving growth and innovation. Almost two-thirds (62%) of respondents stated that they are in growth mode, while only 5% said that their business is in decline.
Additionally in the comments, many CIOs cited how they are working to improve operational efficiencies to help drive innovation, especially since many are working with budgets established years ago before inflation spiked. One CIO shared advice on how to keep a positive trajectory through these challenges. He stated, “Evangelize the message: don't make a recession a self-fulfilling prophecy. Look closely at your data and not subjective sentiment.”
2. Are CIOs shifting their investments?
When asked if they plan to adjust their investments due to the economic environment, responses affirm that most of the CIOs surveyed are focusing on growth and expansion. Approximately half of CIOs indicated that they will be increasing investments in technology acquisition and expansion (55%), business growth and innovation (52%) and product or service expansion (49%).
A few CIOs provided insight into how they are prioritizing technology investments in 2023. One stated that they are centering on “innovation and digital transformation to ensure we evolve at the same pace as the market.” Another shared that they are focusing on “realizing the promise of recent technology investments, enhancing the customer experience through technology.”
3. What economic pressures are CIOs facing now and in the future?
Overall, CIOs are facing some budget pressure due to the state of the economy, and they expect economic pressures to increase in 2023. Two-thirds of CIOs are enduring pressure to reduce spending, and about one-third of CIOs indicated they are expecting to focus on cash, experience slower growth or face changing consumer or client preferences.
In contrast to their plans to increase investments for growth and innovation, the number of CIOs expecting slower business growth jumps from 35% in 2022 to 46% for 2023. One CIO commented how economic pressures are infringing upon their ability to achieve their intended goals, stating, “We are under increasing pressure, which requires us to deliver more value for the same spend. Can we add value fast enough while also reimagining our digital engagement channels and expanding our portfolio of services?”
4. What is the economic outlook for CIOs?
Over the past three years, technology leaders have withstood - and many have grown - during unpredictable times. As this period of uncertainty does not show any signs of slowing, 44% of CIOs have reported either a somewhat positive or very positive economic outlook. Another 26% of technology executives cited neutral thoughts on this issue.
When asked when they believe the economy would stabilize, however, they believe it will take time to recover. Forty-one percent of respondents believe it will recover within one to two years. Another 24% believe it will take two years or more.
5. What’s top of mind for CIOs in 2023? Talent.
Although investments in human capital will remain steady for half of respondents (48%) in 2023, many CIOs are still seeing the economic effects of the talent crisis - the topic of our community pulse survey this past summer - and they are looking to make improvements in the new year. We asked executives an open question about what is top of mind for them moving into 2023, and 30% of responses explicitly named talent as an area they need to address - from recruitment and compensation to retention and upskilling. Here are some of their responses:
The job market and skills to address the future needs of employers, along with how we can readily improve student skills quicker to increase their employability sooner.”
Finding quality people to fill open positions.”
Think outside the box to recruit, retain and build longer-term relationships with talent for today and into the future.”
To learn more about the survey results, check out the infographic, or find an upcoming gathering to discuss mission critical priorities, such as the economy, with CIO peers.
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