Despite a seemingly never-ending list of headwinds, the CEO word of the year for 2023, according to IDC’s Study, is “growth.” Many CEOs are expressing an appetite to invest strategically prior to the economy stabilizing and, in some cases, capitalize on having the first mover advantage among their competitors. One CEO we spoke with during our interview series stated: “Investing when money is free and everything is growing is easy, but investing in times where stuff is really tough…you’re probably the only one, but once you get out… [once the economy recovers] you get a bigger market share.” CEOs are confident that technology is a powerful tool to transform, scale, and optimize businesses. 87% of CEOs stated that they are looking to sustain or increase technology spending in 2023.
Feedback from 395 CEOs across the globe will help technology vendors understand risks, spending priorities, expectations from the role of the CIO, and expectations from strategic technology partners. More will be discussed in an upcoming webinar.
IDC’s study shows that there are 4 priorities for the forward-thinking CEO in 2023.
- Remain agile in the face of economic uncertainty by doubling down on digital business initiatives and strategies.
When asked to identify the three risks that will have the greatest impact to their organization in 2023, CEO respondents pushed economic pressures to the top of the list. This included challenges from both persisting inflation and the looming threat of a potential recession. As many of us wait with bated breath for the soft-landing pledged by central banks, it is still unclear what mid- to long-term impact aggressive quantitative tightening will have on regional and global markets.
This is perhaps why when asked the same question about risks in two years, the top answer from CEO respondents, economic pressures, does not change. CEOs are evidently buckling up for a turbulent economic time – one that is unlikely to go away overnight. In the face of this uncertainty, many CEOs are implementing agility in their organization’s IT budgeting process. Most CEO respondents have identified macroeconomic scenarios that would result in budget adjustments at some point this year.
The exogenous nature of economic uncertainty also led many CEOs in our interview series to underscore the importance of focusing on factors within the organization’s control. While the economy is unpredictable, the case for digital business strategies is largely in the hands of the executive team. This was reflected in the second most prevalent risk highlighted by CEOs in the two-year time frame – digital business execution gaps. In other words, CEOs understand investment in digital business initiatives is necessary and that the roadblocks to operationalization severely threaten to impact the organization’s long-term viability. Technology investments are under close watch from the executive layer and the direct connection to measurable business outcomes is non-negotiable. In fact, two-thirds of CEO respondents articulated that a critical technology initiative in 2023 will be focusing on using technology to drive more revenue generating activities.
- Raise the profile of the CIO to a strategic decision-maker
The role of the CIO must also expand to reflect the strong emphasis on using technology to drive revenue generating activities. In 2023, most CEOs expect the CIO to focus on achieving better business outcomes, improving business agility, and leading DX to create new revenue streams. This does not mean that the CIO should forgo the responsibilities of managing cost and risk. Rather, what it does reflect is that CEOs want CIOs to step beyond an operational focus and help drive measurable business outcomes – whether the target is a financial or quantifiable benefit.
This elevation of the role of the CIO can be observed in organizational reporting lines. In the 2023 study, well over half of CEOs indicated that their organization’s CIO reports directly to them. In the past, many CIOs reported to their organization’s CFO, hindering a direct connection with the CEO. As organizations become increasingly digitally focused, technology permeates every functional area. It’s in the best interest of the CIO to take this opportunity to collaborate across the C-Suite and orchestrate the use of technology across end-to-end business processes.
- Balance business growth and technology efficiency
According to IDC’s study, CEOs are prioritizing technology spending on security and compliance, infrastructure and operations, and workplace solutions. While it is undeniable that technology investments are vital to growing a digital business, 2023 will not follow the same lavish spending on technology seen during 2021.
The downside risk of a major security breach materializing can threaten business critical operations, and the negative press associated with such an event is too great for CEOs to ease up on security and compliance spending in 2023. This spending priority aligns well with the CIO sentiment.
The interest in infrastructure and operations includes cloud spending, which has been a key foundation to enabling digital business. Whether an organization is developing a mobile application or ecommerce site, or the using SaaS products to standardize, automate, and/or expedite business processes, infrastructure and operations is behind the scenes making these things possible.
There is however, increasing concern over cloud technology costs. Like many of us are overwhelmed with the cost of subscriptions and utilities in our own personal household budgets, so are the CIOs when planning for and paying the bills for their organization’s cloud consumption. While CEOs are focusing on growth, CIOs have expressed focusing on efficiency.
A focus on growth and efficiency provides a much-needed balance in the C-Suite. Growing without regard for cost is unsustainable. At the same time, there is a limit to how much you can optimize. Both strategic growth and cost optimization are required for a healthy business.
- Build organizational resiliency with a focus on people and skills
Over half of CEOs believe that diversity, equity, and inclusion need major improvements, or a complete overhaul at their organization. Mohamad Ali, CEO of IDG discussed in one of our interviews why Diversity Equity and Inclusion is really important. He emphasized that when trying to solve hard problems, the best solutions are often at the intersection of various disciplines. A diverse workforce has a great advantage by offering different perspectives, which is critical for innovation.
In addition to lived experience that informs perspectives, which in turn drive innovation, the lack of digital skills across the organization, such as software engineers, data scientists, machine learning and AI specialists, were highlighted as the second most pressing challenge for the C-Suite, relating to digital business initiatives. While automation can help augment the work of existing employees, the digital skills gap has been top of mind for many business leaders. In 2023, 39% of CEO respondents indicate that spending will increase on attracting and retaining the best talent and skills.
The forward-looking CEO knows that people are their organization’s biggest asset. They focus on what they can control by establishing strong executive sponsorship for digital business strategies, while adapting to economic uncertainty, and they move forward seeking opportunities to generate profitable growth.
