Investments in digital transformation will increase further in 2023

As companies seek to pivot their business models to become more resilient in anticipation of a global recession, digitalization is high on the boardroom agenda in 2023. Six in ten large business leaders therefore expect to increase their digital transformation spending despite economic headwinds.

Despite the deepening recession, several reports underline the confidence of large companies around the world in their ability to succeed. Much of that confidence appears to hinge on companies maintaining their current levels of spending on technology and innovation — fronts that executives say will open up new opportunities for their businesses to grow revenue.

The latest report to suggest so comes from the Boston Consulting Group (BCG). The strategy consulting giant surveyed more than 2,700 executives around the world, with about half of the managers surveyed working for companies with more than 5,000 employees. Among this group, two-thirds said they intend to spend more on digital initiatives in 2023 than in previous years, while only 4% will reduce technology spending.

Diederik Vismans, Managing Director and Partner at BCG X, explained: “Transforming quickly and with impact using technology is one of the biggest challenges facing businesses today. Digital transformation is crucial for companies that want to win.

Even as executives reduce their spending on ESG and sustainability initiatives, the potential returns from digital investments mean that executives are committed to increasing their investments in them. In fact, some see this innovation as helping to make their business model greener; with the development of digital capabilities that can help achieve sustainability goals, proving to be one of the most popular goals for digital spending, among respondents.

However, when it comes to what kinds of technology are getting the most attention – not necessarily the most money – some very familiar trends top the list. BCG found that artificial intelligence, blockchain, and the Internet of Things (IoT) were of most interest to executives; as they have been for most of the last decade.

And while technology such as blockchain has actually delivered muted results en masse – at least compared to the levels of hype it has received – many leaders remain convinced that this time will be different. Nine in ten expect to achieve substantial and impactful digital transformation in the coming months – which BCG warns may be easier said than done.

According to Christoph Schweizer, global CEO of BCG, many of the CEOs it speaks to are “struggling with the challenge of realizing their business strategy through major digital transformations,” which the company’s research confirms. A previous BCG survey already shows that only a third of digital transformations are currently successful.

Seeking to help leaders improve those numbers, BCG’s latest report also explored how to navigate the many pitfalls of digital transformation. The biggest stumbling blocks he notes are making the right choice in disruptive technologies, successfully scaling the technology within the wider organization from a pilot project, and finding/attracting the right tech talents to implement digital transformation. At the same time, the streamlining of business ecosystems cannot be underestimated, with 85% admitting to being currently concerned about cumbersome coordination with their suppliers, which could hinder transformation efforts.