Don’t let the doomsday news cycle mislead you: While some technology companies are having a turbulent year, the industry as a whole is on solid ground. Global IT spending is forecast to climb 5.5% this year and hit $4.6 trillion, according to Gartner. While consumers’ purchasing power and their demand for devices has softened, the business world’s appetite for data center systems, IT services, and software continues—with the software market segment alone expected to swell nearly double digits this year.
“Macroeconomic headwinds are not slowing digital transformation,” said John-David Lovelock, distinguished vice president analyst at Gartner, in the firm’s report. And KPMG’s 2023 “Technology Industry CEO Outlook” found that within the tech sector, nearly two in three CEOs are prioritizing investment in buying new technology, and 70% report having an aggressive digital investment strategy.
Still, economic and supply chain uncertainties and a stubborn skills shortage are undoubtedly reshaping C-suite priorities and pressures. “The definition of success has shifted,” notes Justin Joseph, senior director of product strategy at Workday. “It’s no longer about growing at any cost.”
As technology leaders look to confront near-term challenges while leveraging the full potential of emerging and tipping-point technologies, industry experts examine the trends that can help tech companies move to the front of the competitive pack.
1. Data Architecture Becomes the Great Differentiator
Growth remains the technology sector’s North Star, but companies are increasingly beset by pressure to pursue more measured, sustainable growth. In other words, technology leaders must balance the usual innovate-or-perish imperative against the pressing need to trim costs, amplify efficiencies, and stabilize cash flows.
Half of technology executives surveyed by EY say their companies lack the right operating model, given the external environment. At the same time, of the executives who made an operating change, 82% realized revenue growth as a result.
Across all corners of the industry, companies are busy seeding digital experiments, brokering new partnerships, testing emerging-tech use cases, and flirting with novel revenue streams. But connecting the dots between R&D and ROI demands data—specifically unified, real-time data that can power relevant decision-making across the enterprise.
That’s a far cry from industry norms, points out Workday’s Joseph. Technology organizations have a reputation for being eager early adopters of niche best-in-breed tools and nascent tech, grafting these slick solutions onto brittle legacy systems. The result is a labyrinth of fragmented data that requires resource-heavy manual interventions to analyze or even aggregate. Data visibility is sharply curtailed, cross-functional collaboration hamstrung.
For European mobile-app company Bolt, “purchasing all these disparate systems didn’t work the way we needed it to,” reflected Jacqueline Broderick, Bolt’s head of finance technology, at Workday Rising EMEA. “We needed to make a decision on how to move forward.” Replacing its patchwork data landscape with a unified, cloud-native platform slashed inventory analysis from weeks to hours, even as company growth accelerated. Teams no longer have to sit idle while numbers are updated and verified, because they have reliable, real-time data at their fingertips—the impact of which “has been phenomenal,” Broderick said.
Compare that enthusiasm to the data leaders surveyed by BCG earlier this year: More than half identified architectural complexity as a significant pain point. As industry calls for faster, more data-driven insights intensify, technology executives must reckon with the stark reality that the costly, complex status quo isn’t cutting it.
When Workday surveyed technology leaders about the investments they’re prioritizing to meet evolving business demands, the top trio of responses all have one thing in common: data. One-third of technology leaders ranked technologies to unify financial, people, and operational data at the top of their priorities list.
2. Technology Companies Turn to Skills-Based Talent Models
After years of aggressive hiring to meet feverish demand for technology products and services, economic headwinds have ushered in a new era of hiring slowdowns and layoffs for the tech industry. But workforce optimization isn’t merely a matter of adjusting headcount. Technology leaders recognize that they need to cultivate a dynamic mix of skills in order to spur innovation and weather contractions and competitive shifts with greater resilience.
Indeed, a late-2022 PwC survey found that—even as technology, media, and entertainment execs are more likely than their peers to reduce headcount and implement hiring freezes—the vast majority (88%) are focused on growth. And four in 10 industry leaders rank talent acquisition and retention as a serious risk to their companies.
“Especially for companies that are in tech, time to capability is a key competitive advantage,” says Todd Scott, director of the Workday Solutions Organization at Cisco Systems. “It’s critical that our workforce systems are positioned to keep up with those constant market transitions and how that impacts our people’s strategies.”
To escape the reactionary cycle of shedding employees one day, only to struggle the next to find the skills they need, technology companies have been some of the earliest to embrace skills-based workforce management. This data-fueled approach eschews the usual emphasis on rigid roles and jobs for a focus on discrete skills.
Research reveals the wisdom in this growing shift: According to Deloitte, organizations that focus on skills rather than jobs are more than twice as likely to place talent effectively and 98% more likely to retain high performers. Skills-based organizations are also far more likely to outperform their traditional counterparts in the arenas of innovation, efficiency, and adaptability.
Of course, for technology organizations to shake free of antiquated role-based planning, they need more than workforce data; they need unified, real-time data and panoramic visibility across their entire talent ecosystem. McKinsey estimates that upskilling in-house technology talent costs less than half as much as hiring, and many find the business case for investing in breakthrough technologies easy to make. Think: artificial intelligence (AI) capabilities that can help identify and promote growth opportunities to upskill workers and retain top talent, attract new talent to help fill the skills gap, and create personalized and engaging experiences for employees.