Wait and see: That seems to be the prevailing business strategy when it comes to digital transformation this year. But it’s not due to a lack of urgency. With the continued acceleration of tech and undeniable potential of generative AI, there’s plenty companies could (and, arguably, should) be doing.
However, it takes significant financial investment and skilled IT talent. In today’s volatile economic climate and labor market, both are hard to come by. As a result, many companies have paused non-critical IT projects until they see more positive economic indicators.
The Cost of Pausing Digital Progress
Today’s cautious approach is in stark contrast to the COVID-induced heyday of digital transformation these last few years — but it comes at a cost. Three of them, in fact.
Loss of digital momentum. Today, every company is a technology company. The challenge with stepping on the brakes is the risk that the competition won’t. Pausing digital modernization efforts can put companies at a disadvantage fairly quickly, given the accelerated pace of innovation. It’s an opportunity cost in terms of everything from operational efficiencies to critical customer insights that only technology affords.
Missed business opportunities. In weak economic environments, many companies have no choice but to triage their spend. While there’s real value in migrating away from legacy applications, there’s less appetite to undergo significant (and expensive) operational shifts in an uncertain market. However, less risk-averse investors and stakeholders understand that doing the opposite and doubling down during a recession gets them exponential return on that investment.
Reputational damages with talent. Companies who pause their digital initiatives are putting their employer brand reputation at risk. Whether or not they lay off talent, IT team morale suffers when they’re forced to put initiatives on hold. And when it comes time to hire again, attracting new talent could be difficult with a reputation as a company that doesn’t prioritize digital innovation.
Tips for Building Digital Teams in 2024
Economic pundits aren’t in agreement on what will happen this year. What we do know is that while IT industry layoffs dominated headlines in 2023, a significant number of unfilled IT positions remain. When it’s time to hire this year, businesses will have their work cut out for them. So, what should companies be thinking about?
First, IT leaders should think of needs in the context of skills, not roles. This is true regardless of whether a company is building up their team or re-building after a layoff. Today, so many initiatives are software-specific, requiring knowledge and experience within a particular tech environment.
Second, think of costs not in terms of the financial investment, but as the return on investment. ROI is a much stronger measure of value. Sometimes cutting corners on talent will cost more in the long run. This is true whether you’re paying extra for a highly experienced consultant temporarily or investing in the training of early-career developers.
Third, IT leaders can create a stronger, value-driven culture by building an environment of growth. In 2023, many companies laid off mid- and senior-level talent — those let go averaged 11.9 years of work experience. A top-heavy team doesn’t necessarily equate to more value. There’s more to gain by bringing in high-potential talent and training them or partnering externally to do so.
We’ve reached an inflection point in the business world. The companies that find ways to continue harnessing digital innovation regardless of the economic environment will find themselves on top. There are ways to drive progress while still being mindful of financial pressures — and how IT leaders build out their teams has a lot to do with it.