With two straight quarters of a shrinking economy, experts say business leaders should prepare for a recession by investing in technology to boost sales.
Apple, Microsoft, Spotify, Lyft, Coinbase, Tesla, Twitter and Uber — the list of tech companies that have halted hiring and are taking the brunt of the recession continues to grow. Bloomberg reported that even “usually invincible companies like Apple and Amazon can’t escape the slowdown.”
Two years ago, companies turned to technology to overcome the global pandemic. Today, they are once again turning to technology for solutions to navigate the perilous waters of the looming recession.
What can technology leaders and executives do?
On July 22, 2022, Forbes reported that technology leaders and executives should answer the recession question knowing that business and technology are interconnected. Technology leaders should take an offensive approach and take the economic downturn head-on by making business decisions, even though they are not related to technology, Forbes said.
According to the Forbes article, companies should:
- Engage executives in creating risk optimization plans.
- Be prepared to make adjustments to the business strategy.
- Consider rebalancing your financial portfolio.
- Cut costs if necessary.
- Look for investment opportunities to create a stronger competitive position.
- Maximize value by focusing on top products, projects and investments.
These analyses, which used to be done manually, are now powered by AI and machine learning models to complement, enhance and deliver faster reports to create better strategies.
AI is also used in modern business performance management solutions. They can collect and analyze big data, provide managers with real-time insights, eliminate biased performance conclusions, and provide insights into new opportunities.
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The best technology to use in a recession
Managers looking at the costs of different departments may be tempted to reduce investments in technology and IT. However, this could be a big mistake.
“In other cycles that we’ve seen in the past, technology investment has been one of the first casualties,” said Nicola Morini Bianzino, chief technology officer at EY, via CNBC. However, since the pandemic, companies have noticed that investing in technology is not an expense, but a business driver and differentiator.
According to CNBC, companies are not backing away from technology investments despite the economic outlook. The CNBC Technology Executive Council survey revealed that more than three-quarters of technology leaders expect their organizations to spend more on technology in 2022.
According to leading experts from CNBC, Gartner and more, the top technologies that can help during a recession are:
- Cyber protection
- AI and machine learning
- Cloud technology
- Application development
- Digital twins
- Data science teams and data engineers
- Digital Business Analytics Tools
- Remote and hybrid technology for work
- Cloud applications
- Digital solutions for workflow and management
- Customer and Brand Experience Technology
- AR and VR
“Investing in the right digital initiatives at the right price can blunt the negative effects of economic pressures in the short term and build a long-term competitive advantage,” Gartner said.
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Digital tools can: automate processes, reduce costs, increase risk detection and opportunity discovery with AI, address disruptions in supply chain requirements with digital twins, and reimagine omnichannel and customer experience to drive sales.
Gartner says there are nine ways to play digital crime during a recession:
- Trade-offs: Create a prioritized list of resource trade-offs. Have a clear narrative that communicates it to stakeholders.
- Cloud Migration: Migrating to the cloud can reduce infrastructure costs, energy and maintenance costs, and staffing requirements. The cloud also opens up endless new tools for business opportunities.
- Rethink workflows: Changing work environment platforms and systems can reduce costs and drive productivity.
- Secure Digital Talent: Be open to outsourcing or offering remote, hybrid or flexible work options to align with global talent demand. Workers are your greatest asset, empowering them with the right tools and resources is critical.
- Employee Value Proposition: Clarify your EVP to attract and retain the right digital talent. Creating an engaging work culture that retains and attracts talent and accelerates collaboration and efficiency.
- Digital Talent: Make sure you secure digital talent that can leverage your technology investment and weather the recession with digital tools.
- Customer experience: Digital technologies are used to rebuild digital, virtual and in-store sales channels. Investing in customer experience will not only drive sales, but also modernize your company.
- Predictable and autonomous: Invest in predictive and autonomous digital projects that make your organization faster and more economical, including in decision-making.
- Digital indicators: Narrow down the metrics you use to measure digital initiatives and track their progress to ensure you’re focusing on the few that align with results.
Every business and organization is different and must respond with different recession strategies. There is no one-size-fits-all solution when it comes to technology tools that can turn a recession into an opportunity. Benchmarking plans and asset prioritization can create high-value returns even in the worst crises.