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The U.S. reached two consecutive quarters of GDP contraction in July, a technical marker of a recession. While the job market remains strong, it added to existing economic concerns over high inflation levels and supply chain disruption.
Technologists are among the business executives watching for signs of the shaky economy pressuring their organization. With every business looking for ways to streamline operations, often the answer to executive pressure on performance is more, or better, technology.
"If technology is supposed to be so great, then this is the time to show how it actually helps the business do things better and without having to incur additional costs," said Hyoun Park, chief analyst at Amalgam Insights.
But technology's role isn't simply to improve existing processes. It can also help organizations reshape what they do and respond to the unknown if the situation quickly changes.
"We saw it again and again with businesses that said that they were ready for the pandemic: they were heavily invested in IT improvements," Jim Rapoza, VP and principal analyst at Aberdeen Strategy & Research, said during a LinkedIn Live webinar on Aug. 4. "I think that's the key takeaway: this isn't just about money. It's about putting in place a barrier for a coming storm."
Here is what four leaders said about whether technology executives should be concerned over economic headwinds — and how to contrast their roles with a complex market backdrop.
Paul Farnsworth, CTO at DHI Group: If you're a CTO or a CIO and you're connected to the overall performance of the business, you need to be concerned about the performance of your business. That's one answer…
The other answer is that overall, in the economy, we are seeing very high demand and we're continuing to see very low unemployment rates with technology people. If you're a savvy CIO or CTO, investing in automation or investing in tools to make the business more efficient, which often are technology oriented, starts to become a lot more attractive.
So, this is actually an opportunity for CTOs and CIOs to go pitch the projects which drive efficiency into the core of the business and, in some cases, stress businesses enough that they have to do things differently, like in the pandemic.
That means more digital interface as a way to acquire customers. I don't know if you read the news about GEICO essentially shutting down all their physical stores in California and I'm sure there's California state issues there. But they're continuing to serve their customers through digital channels. I wonder if that could be a harbinger for change in the industry, in the insurance industry, accelerated by external factors.
Lo Li, managing VP of Digital Customer Experience and Payments in Retail Bank Tech at Capital One: Capital One continues to invest in technology. As far as I can tell, that will continue to be the same. Obviously, with the market conditions as they are, there is plenty that is yet to be seen. We've all been keeping track of the economic signals.
Certainly, from where I sit, it's business as usual. I am doing my job in making sure that we are fiscally responsible, that we are looking after our capitalization and our operating expenses. That's job number one.
Ultimately, we're all technology companies, right? I am a technologist. I happen to look after a business that is a bank, but ultimately, we are all in the business of technology.
Jay Schneider, chief product innovation officer at Royal Caribbean Group: For us, coming out of a pandemic where we stopped operating, cost control is a key focus area. The goal that we get to is being better from a reliability standpoint and cheaper from an economics standpoint to run our business.
Every technology executive, in any role and in any corporation, should be thinking about value. And innovation is value-driving.
We own, as a company, more patents today than when I started the company because innovation is equally as important in what we do. Those patents unlocked things for us. The value was, in some cases, questionable at the beginning of it, and it paid off dividends when we needed it to during the pandemic.
Curt Garner, CTO at Chipotle Mexican Grill: What I would tell any CIO or CTO is: Develop your platform and your organization to be nimble. If it's not an economic challenge that you're going to face, it's going to be a competitive threat or a change in consumer behavior or expectation.
Or it could be a new technology that's coming out that could transform how your business operates or how consumers interact with you.
Once we get through this economic cycle, there'll be something else. This idea of elastic, scalable, responsive, nimble platforms and organizations, I think, is key to competitive success.
This article was written by Roberto Torres and Matt Ashare from CIO Dive and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to email@example.com.
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