This article is written by Alexander Bant Chief of Research for CFOs at Gartner. We thought this may be of interest as this article highlights what his research team share with the top companies, to maximize their people, processes and technology.

Coupling radical efficiency with innovation to drive business resilience, growth and profits requires shrewd investing in digital.

Smart budget trade-offs, savvy talent strategies and optimal digital investments will all be key to success this year as organizations focus on:

• Driving margin improvement
• Generating cash
• Increasing productivity of people and assets
• Capitalizing on new growth opportunities with fewer resources. 

“Business resilience and growth demand that you invest in differentiators that will drive success over the long term,” says Alex Bant, Chief of Research for the Gartner finance practice. “If you don’t invest effectively in digital in 2023, you’ll increase your technical debt and let competitors out-innovate you on digital products and services and scoop up the talent you need.”

See Playbooks: Recession Advice for Executives and their Teams

Higher interest rates, talent scarcity, lagging digital transformation lead 2023 challenges

Whether the global economy heads into recession or not, organizations must still navigate the impact of trends like inflation, scarce talent and global supply constraints that emerged in 2022. Certain conditions have changed, however, so building resilience means tackling three variables that threaten to weigh down growth and profits in 2023:

1. Higher interest rates:

• Reduced demand and economic slowdowns threaten organizational growth.
• Higher funding costs reduce ROI.
• Funding is harder to get and justify as investors prioritize investments that generate short-term profitability and cash flow over those that drive future growth.

Watch now: 3 Proven Ways for CXOs to Drive Growth in Uncertain Times

2. Lack of available talent:

• Critical talent, especially those with digital skills, remains expensive and in short supply, despite the slew of layoffs in the tech sector. In the U.S. more broadly, the overall unemployment rate was just 3.4% in January 2023, a 53.5-year low.  
• Inflationary pressures have worsened talent retention and complicated strategies to pay more to attract new talent. 
• Employee demands are changing, directly affecting labor supply (both retaining employees and attracting new candidates). Human-centric employee value propositions and flexible work models are widely in demand.

3. Lagging digital transformation:

• Gartner research shows that 89% of boards agree digital is an implicit part of growth strategy, but 81% report they have not made progress toward or achieved their digital business transformation goals.
• Boards and CEOs now expect to see top- or bottom-line benefits from digital investments, but many CIOs still struggle to demonstrate the business value of IT.
• Two-thirds of CFOs plan to up corporate IT budgets in 2023, with 29% planning an increase of 10% or more. But digital funding will lag if CFOs and CIOs don’t work together to take an enterprise-level view of how to measure the outcomes and success of digital strategy.

What’s next: How to differentiate performance in 2023

The recession playbook of nine winning actions that Gartner recommended in mid-2022 holds true in focusing on three sets of actions for executives:

• Manage resources and spend strategically.
• Be agile in securing digital talent.
• Accelerate key digital and technology initiatives.

Source: https://www.gartner.com/en/articles/how-executives-can-drive-business-resilience-growth-and-profits-in-2023

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