Despite businesses around the world tightening their belts in the face of a looming global recession, rising inflation and soaring energy costs, research indicates that they will be channelling an increased proportion of their available funds into technology investments.
The 2023 State of IT annual report, compiled by Spiceworks Ziff Davis (SWZD), notes that more than half (51%) of the 1 400 respondents in North America, Europe, Asia-Pacific and Latin America plan to take precautionary measures to prepare for an economic slowdown this year by increasing their tech spend. This compares to just 6% who anticipate cutting their investment in IT.
The SWZD report states that since the start of the COVID-19 pandemic, “technology has proven to be a worthwhile investment. Even facing a likely recession, businesses no longer see technology as a cost centre. Rather, IT has become an enabler that’s critical to success. As businesses look to maximise efficiently during an economic slowdown, technology will help companies do more with less.”
The question, however, is where all that increased IT spend should be directed.
Reasons provided by SWZD respondents for boosting their IT budgets include the need to update outdated infrastructure, rising security concerns and increased priority on IT projects largely for operational and productivity reasons.
Denis Bensch, CIO of FlowCentric Technologies, concurs and points to five key indicators that systems are reaching the end of the road.
- Security vulnerability – outdated systems are largely unsupported by vendors, opening a window for potential hacks, malware infiltration and security breaches.
- Software incompatibility – legacy systems that don’t allow for integration or scalability, being unable to upgrade these systems or the supporting operating systems for fear of the application failing.
- Compliance issues – being forced to entrust critical and sensitive customer data to insecure applications thus running the risk of breaching privacy and other compliance requirements.
- High operating costs – facing mounting costs for simply maintaining the system and fixing bugs.
- Application failure – poor performance, decreasing reliability, increasing downtime are all indications of looming total application failure.
However, Bensch maintains that in today’s economic climate, rather than ripping and replacing their ageing systems, companies could be best served by optimising their existing investments in technology in ways that increase productivity.
“Technology is available that allows companies to extend the lifespan of their outdated systems. For example, a company can choose to extend an existing system by adding workflow and business process management functionality to the system’s current feature set, thereby improving the efficiency of the system,” he says.
In addition to outdated systems, companies run the risk of application overload. As companies grow, so too does their application landscape. Users will eventually become frustrated by the number of applications, or the complexity of the applications, they are expected to use to fulfil their daily tasks.
“Again, technology is available that allows companies to simplify their employees’ experience by creating a single standardised user-friendly interface that can speak to these backend systems. This approach reduces the cost of training staff and ensures that all employees execute tasks consistently and according to the rules defined by the business,” says Bensch.
“This approach helps ensure that people don’t need to enter the same data multiple times or bounce between numerous applications to perform their work, ultimately resulting in fewer errors, call-backs, returns and redos – saving time and money.”
Alternatively, investing in a mature, well-supported workflow and process automation platform can open a world of possibilities to companies prepared to invest the time and effort into developing custom systems. With the right platform in place, companies can rapidly build and deploy custom business applications that meet their requirements, are centrally accessed and managed, and are able to evolve with the company.
Even in the face of tough economic conditions – which is compounded in South Africa by load-shedding – technologies like cloud services and process automation can help businesses to keep moving forward,” Bensch adds.
The SWZD survey found that cloud spending remains the highest single expenditure item in overall IT budgets, having risen from 22% in 2020 to 26% in 2022 as remote work became the norm during the pandemic. With more employees returning to the office, spending on cloud services has declined slightly, but remains a key element in respondents' productivity toolset.
As a result of ongoing load-shedding in South Africa, users don’t have consistent access to the national power grid and are forced to either work around these schedules or invest in alternative power supplies. However, prolonged load-shedding can cause network disruptions, which lead to poor network connectivity, thereby significantly impeding productivity.
These challenges may make South African businesses hesitant to increase their investment in cloud, opting instead for on-premises installations. This is something that companies looking to invest in technology should keep in mind before committing to an ill-fitting strategy.
Despite these difficulties, there are steps businesses can take to ameliorate their risks: large cloud service data centres typically have multiple backup power sources and businesses should similarly have a backup power plan, which could include a UPS, solar power, battery storage or – depending on the location of the organisation – plugging in to a microgrid.
“Load-shedding is going to be with us for some time, but that shouldn’t prevent business from adopting technologies that make sense from a productivity perspective while at the same time ensuring that their older infrastructure is brought up to speed as quickly and as cost-effectively as possible,” Bensch concludes.
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