Innovation-starved companies stuck in today’s slow-growth economic environment can look forward to better days ahead, because tech spending is going to pivot quickly to unleash their full potential in ways that many executives don’t yet realize.
Before I get to how things will change, however, let me describe the current environment. Globally, economic growth is mediocre – at best. Strip out China and a few other countries and growth is actually negative. Yes, 2015 corporate earnings grew by 5% for the average Fortune 500 company, but revenues grew a skimpy 1%. That means earnings have come mainly through spending cuts and belt tightening – not new business opportunities and innovation.
In cases where IT budgets were protected, they have remained flat. In today’s global environment, where social, mobile customers switch loyalties faster than the time it takes to change a profile picture, under spending on IT-driven innovation is not the path to success, yet that’s where many companies now find themselves.
Today’s CEOs have to navigate the treacherous straits between constrained budgets on the one side, and on the other, the challenge of finding new ways of identifying and delighting new customers, all while transforming their organizations into the digital powerhouses they need to become in this digitally intensive age.
But the near-term future can be much better because of some massive changes that cloud computing is triggering in the global economy, and I’d like to share my views on some of those megatrends and what they mean for business. That’s why these three predictions are so important, and why they should bring smiles to the faces of CEOs.