Despite 90% of digital leaders in the UK expecting an economic downturn, tech spend this year is set to grow at its third fastest rate in over 15 years,

More than half (52%) of digital leaders in the UK expect their technology budget to rise, and only around one in seven expect their budget to fall, according to the world’s largest and longest running survey of senior technology decision makers.

But the Nash Squared Digital Leadership Report, in collaboration with CIONET found that investment has slowed in emerging tech like AI, RPA and Big Data in the UK, threatening opportunities to innovate through global economic instability. Although investment remains strong in cloud (67% reporting large-scale usage in the UK), companies are cutting back their investment in Big Data and RPA that are key to innovation and to gaining a competitive advantage.

Almost half of large organisations in the UK hit by a cyber attack

Amidst the huge investment in the cloud, over a third (41%) of digital leaders in the UK are reporting that the cloud is creating security headaches due to the complexities it can create, especially for large distributed organisations. Almost half (44%) of the largest organisations in the UK (total IT budget >$250m), report a major cyber attack in the last two years. Meanwhile, global unrest and a growing awareness of the politicisation around cyber warfare has led to almost half of digital leaders in the UK (45%) fearing an attack from foreign powers – shooting up from just 12% in 2018.

The report also found:

  • Shortage of cyber talent continues to be a significant issue for digital leaders – Cyber continues to be one of the most sought after technology skills in the UK. A DCMS report in 2021[1] found that the UK’s cyber security recruitment pool has a shortfall of 10,000 people a year. This shortage and the increasing cyber threat has left only a third (32%) of digital leaders in the UK feeling confident they have all reasonable risks covered.
  • The war for talent, and keeping pay demands reasonable, emerges as a big challenge – 68% of digital leaders in the UK state that a skills shortage prevents them from keeping up with the pace of change; the largest proportion ever recorded. 57% think that UK organisations will never have enough technology staff and almost two thirds (63%) feel that the rising cost of living has made salary demands unsustainable.
  • Government policies aren’t working on tech skills – A staggering 78% of digital leaders in the UK feel that government’s policies are completely ineffective at tackling the tech skills shortage. This compares unfavourably to Asia where the figure is almost half, at 41%.
  • Robots, a way to plug the gap in the tech talent market – On average, digital leaders in the UK plan to use digital labour to automate around 1 in 7 (14%) of their workforce over the next five years.
  • Hybrid/Remote working boosts women in tech and access to global talent – Hybrid working is now commonplace in tech, with 2 to 3 days a week in the office the average requirement. This is starting to help have a positive impact on the number of women in the UK’s tech sector: female leaders are up to 15% in the UK (from 12% in 2021), almost a quarter (23%) of the tech team is now female, and 27% of new hires in the last two years have been women. The pipeline is slowly but surely improving. The report also found that a quarter (25%) of digital leaders say that remote working has enabled them to start recruiting talent from overseas.

Bev White, CEO of Nash Squared said: “Economic headwinds are gathering and indicators are turning negative – but despite or even because of this, UK businesses know that investment in technology remains crucial. Both to maximise the efficiency of what they already have and to become more agile and responsive in highly unpredictable conditions, technology is the key enabler.

“But while technology investment intentions stand at their third highest level in over 15 years, nevertheless there are signs that some businesses are reining back on investment in areas like AI and Big Data. The reasons for this are understandable, but organisations should be careful not to cut back too deeply – they run the risk of falling too far off the pace to catch up again, leaving a long-lasting dent to their competitive positioning.

“Meanwhile, another area that truly demands ongoing investment is cyber security. The threat environment is highly charged, and the rise in concerns about foreign power activity is striking. The world has become a more dangerous place in 2022. UK businesses must take robust defensive steps accordingly.”

With investment intentions remaining high and 56% of organisations in the UK expecting to increase their technology headcount in 2023 against a backdrop of widespread skills shortages, White added: “Businesses run on people – but the UK’s technology sector simply can’t find enough of them. While the skills shortages afflicting the sector are nothing new, it’s a concern that they’re worsening rather than getting better. However, what we see in our research is that organisations are taking innovative steps to ease the challenges – redesigning their employee offers to attract talent and, increasingly, looking beyond our own borders to access bright minds internationally, working remotely. They’ve also been increasing their efforts to attract more women into tech. I am heartened to see progress here: the industry is inching towards the better gender balance it so badly needs.”

Sustainability needs a reboot

Sustainability in tech was expected to play a greater role this year, but little has changed. A fifth of digital leaders in the UK (20%) think sustainability has only a negligible or no part to play in 2022, and only a similar number (22%) are using technology to measure their carbon footprint to any great extent. The report asks whether digital leaders have their heads firmly in the sand – or is the board not focusing them on this? Does the move to the cloud mean that organisations are viewing energy usage in running tech as somebody else’s (the cloud provider’s) problem?

Realising the potential of data

One of the other challenges highlighted by the report is realising the potential from data. Although two-thirds (67%) of digital leaders in the UK think that big data and analytics will be in the top two technologies to deliver competitive advantage in the next year, only a fifth (22%) feel that they are ’very’ or ‘extremely’ effective at using data insights to generate more revenue. Both figures are down compared to last year’s report, suggesting that ‘Big Data’ is getting bigger in all senses of the word, including its complexity. Another challenge is getting the right skills, with 42% of digital leaders in the UK hampered by a skills shortage in this area.

Making remote and hybrid working work

Remote and hybrid working models rapidly deployed during the pandemic are here to stay, and although a much-improved work/life balance for the tech team is the biggest gain from hybrid working (68% of digital leaders in the UK reporting an improvement), it seems that the good news story around hybrid working has become more complicated:

  • Productivity down – While four in ten report an increase in productivity from hybrid working, this is in decline from last year’s results where half of digital leaders saw a boost.
  • Mental wellness rises – Already considered to have been made worse by hybrid working, mental wellness remains an issue, but digital leaders report that it has marginally improved in the UK compared to last year.

White concluded: “Amidst so much change, it will inevitably take time for UK organisations to find the optimal model for their people proposition and talent strategies. Remote and hybrid working are delivering some real benefits but there are signs that these may be moderating as time passes. The mental wellbeing challenge also remains very real. This all means that employers must continue to really think hard about their working models, to find the right balance between the flexibility of remote working and the in-person creativity and engagement of asking people to be in the office. Many organisations are redesigning their offers including enhanced benefits packages and even unlimited holiday policies – the businesses that are truly open-minded about what’s needed are most likely to find solutions that work both for them and the talent they rely on.”

Tags: budget, diversity, research, spending

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