A data center.
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The chances of a recession are still being debated and inflation appears to be stubbornly high for at least the rest of this year, but when it comes to technology spending for businesses, it is moving full steam ahead.
A new survey from the CNBC Technology Executive Council finds that more than three-quarters of tech leaders expect their organizations to spend more on technology this year. No one said they would spend less.
Tech leaders say if they’ve learned anything from past recessions, it’s that technology isn’t a cost, but rather a business driver.
The areas they focus on investments include cloud computing, machine learning and artificial intelligence, and automation.
“In other cycles we’ve seen in the past, technology investment has been one of the first casualties,” said Nicola Morini Bianzino, chief technology officer at professional services giant EY. “But after the pandemic, people realized that in a downward or even potentially recessive environment, we still need to maintain our technology investments.”
Danny Allan, chief technology officer at data protection firm Veeam, said: “If you look at what has happened over the past two years, it’s clear that technology is the sustainable differentiator that sets businesses apart.”
That was certainly the message from veteran investor, LinkedIn co-founder and Greylock partner Reid Hoffman, who was recently a guest speaker at a CNBC Technology Executive Council town hall.
“In this environment, we are competing for the most and longest term value for our companies,” he said. “So ask yourself: where do I have a competitive advantage and where can I play offensively?”
Guido Sacchi, chief information officer for Worldwide payments, said for many companies that the tech agenda and the business agenda have become one and the same. In his conversations with business unit leaders at Global Payments, he says no executive has suggested that cutting technology spending is the right way to respond to a potentially sharp economic downturn.
“Everyone understands what technology brings to the table,” he said. “Not one of them wants to cut anything,” he said.
Global Payments is particularly focused on cloud-native products and platforms, analytics, AI, and machine learning, areas he describes as critical to “driving positive business outcomes.”
In working with customers, Sacchi says it’s clear that technology is deeply intertwined with everything its customers do to keep moving forward. The company partners with many top fast service restaurants that have relied on AI and other advanced technologies to enable faster deliveries and drive-thru recognition patterns for their customers.
The same goes for its healthcare customers who turned to telemedicine during the pandemic when patients couldn’t see their doctor in person. “The pandemic accelerated the deployment of so many of these new technologies and now companies are not willing to back down,” Sacchi said.
The recent annual survey by JP Morgan’s Chief Information Officer confirms this. It collected the spending plans of 142 CIOs responsible for more than $100 billion in annual corporate budgets and found that IT budgets grow even when they don’t keep up with inflation. For this calendar year, the surveyed CIOs see IT budget growth of 5.3% and 5.7% in 2023. That’s a big turnaround from the time the survey was conducted during the pandemic and IT budgets shrunk by nearly 5% .
Despite the uncertain economic environment, well-funded, cash-flow-positive companies are in a particularly good position to create even more distance between themselves and competitors, Allan said. “This is what separates the good from the great leaders, those who can recognize this time and take advantage of it,” he added.
His company’s technical releases focus on modern data protection. “What could be more important in an economy so reliant on technology and data than making sure you can protect that data,” he said, adding that companies that continue to make the leap from traditional infrastructure to cloud infrastructure need to ensure that their data is not vulnerable to attack from cyber and malware attacks.
And when it comes to AI, Hoffman advises companies to stay invested but do their homework. “Not everything is AI,” he said at the recent TEC Town Hall event. “Take the time to know where to apply it, how to make it work for you, and why it’s being used.”
And even if AI investments can’t be part of the current budget, Hoffman says it’s smart to stay on a learning curve with the technology and revisit it later.
“You’re sacrificing the future if you opt out of AI completely,” he said.