How Cloud Technologies Can Help in Times of Recession
As Harry Truman eloquently put it, “It’s a recession when your neighbor loses his job; it’s a depression when you lose yours.” With the last pangs of the pandemic dissipating, and the Russian-Ukraine invasion raging on, coupled with a decline in the third quarter due to a slowdown in consumer spending, many experts in the financial community are ready to declare the U.S. is already in a recession.
Speculators, analysts, and even central banks are divided on whether or not there’ll be a worldwide recession. Two years ago, businesses used technology to survive the global pandemic, and now, businesses are looking to technology for help navigating the murky waters of the impending recession.
Most companies are going through some sort of digital transformation. They’re looking to use digital leverage to accelerate the adoption of technology in their company operations.
With a litany of challenges to take into consideration, manufacturers need to invest in the right digital initiatives—at the right cost. Challenges include:
- Updating IT infrastructure
- Supply chain challenges
- Improving customer satisfaction
- Industry compliance
- Getting products to market quicker
For businesses to improve the experiences of their employees and consumers, they must innovate quicker, implement low-code/no-code solutions, and leverage the Cloud.
What makes digital sense to your business?
Industry experts are advising business leaders to invest in technology to boost efficiency and sales as they brace for a recession. Despite the economic prognosis, firms aren’t cutting back on technology spending.
According to CNBC, companies are not pulling back on technology investments despite the economic outlook. The CNBC Technology Executive Council survey revealed that more than three-quarters of tech leaders expect their organizations to spend more on technology in 2022.
Here are the top technologies that can help in times of recession:
- Artificial intelligence (AI) and machine learning
- Cloud technology
- App development
- Digital twins
- Data science and data engineering teams
- Digital business analysis tools
- Remote and hybrid work technology
- Cloud applications
- Workflow and management digital solutions
- Customer and brand experience technology
- Augmented reality (AR) and Virtual reality (VR)
It’s essential to pinpoint the parts of your business that require a digital boost if you want to beat the competition. Making the necessary financial investments in digital projects will help to alleviate the short-term negative effects of economic pressures and establish a long-term competitive edge.(1)
Keegan Warren, VP of Global Sales for Arena, a PTC Business says, “Some companies are strategically investing in technology. These companies realize that investing in cloud technology like Arena will ultimately make them more efficient and save money. As things tighten down, they need to ensure they are maximizing their resources by freeing them from non-value-added work that comes when you’re not digital. Those tasks are error-prone and can be extremely costly. Companies can’t afford costly mistakes with a pending recession.”
According to Gartner, cloud spending driven by digital technologies is becoming mainstream. Global cloud revenue is expected to total $474 billion in 2022, up from $408 billion in 2021. Gartner asserts that 56% of CEOs say digital improvements have led to increased revenue.(2)
This might be the best time to invest in technology, especially in Cloud
It might be more important than ever to interact with your customers and prospects as many businesses begin to cut back. Having less competition and a greater emphasis on raising customer satisfaction could potentially result from this. The top businesses get along well with their cloud provider so they can work together to create new services when the business climate shifts.
As companies review their IT budgets, they need to consider critical questions on how to keep the business running, how to identify the goals that need to be achieved, and how technology can help better facilitate.
Before the widespread adoption of cloud-based solutions, investing in technology required a large capital commitment for the acquisition of infrastructure and hardware. Technology investments transitioned to a pay-as-you-go model when cloud-based services became more prevalent, eliminating the significant upfront capital expense.
In economic uncertainty like today, these configurations offer significant advantages to businesses. By implementing this concept, businesses may create flexible usage-based pricing plans and pay for services based on usage without needing to make a sizable capital investment. And, since cloud solution providers typically offer extra capabilities and functionality (such as security and data storage), businesses do not need to set aside extra resources to create and maintain those capabilities even if demand declines.
Reduced IT expenditures will most likely encourage businesses to employ the pay-as-you-go model and probably lead to the migration of many traditional enterprise systems to the Cloud, accelerating the adoption of cloud-based solutions during the impending recession.
“Companies naturally hedge their bets when the skies grow dark. Budgets get cut. Hiring is frozen. The flexibility of cloud-native solutions will still allow these companies to invest in necessary infrastructure by starting with a low upfront investment and then scale into that investment as the market needs dictate,” says George Lewis, VP of Strategic Business Development for Arena, a PTC Business.
Wielding the power of uncertainty
Concerns over the impending recession have been fueled by the high demand for cloud integration services. It’s predicted that the present transition would lead to an increase in cloud services as work-from-home policies have increased the importance of cloud software or services.
Lewis says, “Cloud-native solutions have become a critical way for companies to add flexibility to their business. The global pandemic allowed companies to seamlessly shift to remote work. When faced with challenging macro conditions, like a potential recession, cloud-native allows businesses to drive value with minimal overhead, but it also allows for flexibility in subscriptions and scale up or down as business needs dictate.”
No matter how long the impending recession lasts, it is important to note that the slowdown will have no impact on cloud computing services. It’s because many businesses have already been able to establish and work on their internet presence and manage the business procedures correctly thanks to the months of lockdown.
Cloud-native solutions are much more adaptable and simpler to implement than the company’s data centers or on-premises software infrastructure. During the Great Recession of 2007-2009, cloud computing services got stronger and turned into a hub for IT solutions. Cloud solutions are sufficient to support any business, whether it is new or well-established, in its operations and production of goods.
Whether Truman’s quote resonates or not, it’s hard to predict the future. It’s even harder to predict the present. Are you planning to implement cloud technology to help your business during these times of uncertainty?
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