Why investing in digital is key during a recession
Economic uncertainty on the horizon has business leaders thinking that leaner, harder times could be on the horizon. The actions you take before and during an uncertain period are critical to your success during a downturn and beyond. Here’s why you will reap the benefits of persistent investing in digital innovation leading up to and during a recession.
Spark your growth prospects by investing in digital
According to Gartner, high interest rates, scarce talent and lagging digital investments are the 3 main factors weighing on enterprises' growth prospects in 2023.
In times of crisis, it's natural for businesses to start thinking about cutting costs. However, the initial reaction of slashing budgets can be counterproductive and harm your long-term prospects.
Investing in differentiating digital initiatives that will drive business success is crucial to negate the effects of economic pressure and build a long-term competitive advantage.
Digital leaders are making decisions now to put themselves in a better position in the future, bringing colleagues and other stakeholders along with them. Many are making the case that by investing in upskilling and technical tools to support employees and customers, they will be able to outperform competitors and heavyweights in their industry financially.
According to a 2022 PwC study, 65% of the top digital leaders invest in the cloud, compared to only 33% of other executives. Currently, 40% of digital-first leaders use new technologies internally to spark their growth when the economy changes, compared to only 25% of non-digital-minded executives.
Build resilience through smart planning
To signal to your company and employees that you are consciously dealing with current challenges while being mindful of the future, you need to set a smart but ambitious budget for digitisation.
The focus should be on building a culture of resilience for harder times to come. These include operational resilience, cyber resilience and data resilience.
Research has shown that companies that embrace digital transformation are better able to respond to unexpected events. For example, a McKinsey study found that companies that used digital technologies to improve their supply chain resilience were able to reduce their lead times by 50%.
A study by the Boston Consulting Group found that companies that invested in digital technologies during the 2008 financial crisis were more likely to outperform their competitors in the years following the crisis. Specifically, they found that these companies experienced higher revenue growth as well as higher profit margins.
Counter the scarcity of talent
Scarcity of talent and skills is a major factor in the need to automate within your operations and processes. Investing in digital in a time of recession is now more necessary than ever. Companies must walk the line between prioritising with a smaller budget and digitalisation. All while harnessing valuable company knowledge by retaining the right employees.
Accelerating your digital efforts not only suggests that your company is going in for the long run, it also makes employees feel that they can not only survive, but also thrive.
While businesses should consider digital investments such as moving to the cloud, automation or improving an e-commerce workflow, they should not overlook the people and processes behind those systems.
Know and nurture your customers
Part of a good customer relationship is constantly adding value and not just at the point of sale. During a crisis, many customers develop new needs and even require guidance and advice. Responding to the changing nature of customer interaction is key to staying ahead of the game.
A study by McKinsey shows that companies have responded to Covid-19-related changes much faster than they ever thought possible before the crisis. The most obvious aspect is that organisations responded 43 times faster than expected to the increase in remote working and collaboration.
What's even more remarkable and was observed across all sectors: companies implemented changes due to increasing customer demand for online goods/services and changing customer needs drastically faster than expected - 27 and 24 times, respectively.
The same study found that experimentation and investment in digital technologies played a key role in helping companies successfully weather the crisis. About 70% of the companies that reported highly effective changes to mitigate the impact of the crisis said they were the first in their sector to experiment with new technologies during the crisis. The same number of respondents invested more than their industry peers in digital initiatives.
Whether you're looking to accelerate your move-to-cloud efforts to better support your employees, or need a custom application to improve your customers' experience, it's crystal clear that persistent investment in digital innovation is the way forward.
At Endare, we are passionate about end-to-end innovation and understand today's challenges of a fast-paced, ever-changing environment. Feel free to contact us to see how you can improve your digital performance!
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