British companies are cutting back on how much they spend on emerging technology including AI, big data and robotic automation, according to a major survey of tech leaders. But although 90% of those polled expect an economic downturn, overall tech spend is set to grow, with companies investing in established digital technologies instead.
More than half of the tech executives surveyed for the ‘2022 Nash Squared Digital Leadership Report’ say they expect technology budgets to rise and are placing their investment into established technologies with cloud, inevitably, the biggest winner, with 67% of UK respondents reporting large-scale usage.
The annual survey has been running since 1998, gathering responses from senior technology decision makers. This year more than 1,700 were involved, including over 746 from the UK.
Despite a drop in overall spend on emerging technology, the report highlighted companies are realising the potential to be gained from data. Two-thirds of the leaders surveyed say big data and analytics will be the top two technologies to deliver a competitive advantage but only a fifth said they were effective at using data insights to generate revenue, in part due to the lack of skills in this area and issues recruiting people to handle data.
One of the most notable trends of the past year has been the increased risk of cyberattack, with almost half of large organisations saying they were hit by at least one attack in the past year, with a third citing the investment in the cloud as a cause of rising security problems.
Of the largest UK organisations, 44% reported a major cyberattack over the past two years, and half of all digital leaders in the UK are worried an attack will come from a foreign government-backed group, up from 12% in 2018.
Bev White, CEO of Nash Squared said the economic indicators are turning negative, but despite this companies are still investing in technology, adding that it “remains crucial” to maximising efficiency in such an unpredictable economy.
“There are signs that some businesses are reining back on investment in areas like AI and big data,” she said. “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.”
UK IT spending: cybersecurity is a priority
Nash also warned tech leaders to ensure they invest properly in cybersecurity as the “threat environment is highly charged and the rise in concerns about foreign activity is striking,” adding that “the world has become a more dangerous place in 2022. UK businesses must take robust defensive steps accordingly”.
Last year's survey drew attention to an "unprecedented" lack of tech skills threatening the progress of digital transformation projects, with 67% of technology decision-makers saying that it was preventing them from keeping up with the pace of change. This is still a problem in 2022, particularly in the realm of cybersecurity professionals.
A Department for Digital, Culture, Media & Sport report in 2021 revealed that the UK recruitment pool was about 10,000 short in terms of cybersecurity professionals, increasing the overall threat. Only a third of leaders responding to the survey felt confident they had all reasonable risks covered.
Beyond the cyber professional shortage, 68% of digital leaders in the UK said the overall tech skills shortage left them struggling to keep up with the pace of change, which is slightly higher than in 2021. Just over half said they never have enough technology staff and two-thirds said the rising cost of living has made salary demands unsustainable.
Tech leaders also say government policies aren’t making this shortage any easier to rectify with 78% of UK decision-makers claiming policies are “completely ineffective” at tackling the skills shortage. In Asia, only 41% of decision-makers had a problem with government policies on IT recruitment.
Focus on lack of skilled employees
When it comes to dealing with staff shortages, 14% of tech leaders polled say they plan to turn to AI and robotics to automate the problem, with most saying hybrid working has had a bigger impact on tackling the issue, including making it easier to recruit from overseas and bring people into the tech workforce that may otherwise not have been able to including parents. Thanks to hybrid working the number of female leaders is up to 15% from 12% in 2021 and a quarter of the tech workforce is now female.
This skills shortage could worsen in 2023 as, despite the economic downturn, more than half of organisations expect to increase their technology headcount. “Businesses run on people – but the UK’s technology sector simply can’t find enough of them,” said White. “While the skills shortages afflicting the sector are nothing new, it’s a concern that they’re worsening rather than getting better.”
She said there is evidence of companies taking active measures to retain staff including redesigning offices, allowing more remote work and turning to staff outside of the country.
“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,” White added.
Remote and hybrid working models rapidly deployed during the pandemic are here to stay, the report declared, with 68% of leaders in the UK reporting improved work/life balance among team members. But the news isn’t all good, with productivity gains made last year during the pandemic slowing down. Just four in ten say they’ve seen a productivity boost from hybrid working, last year it was half.
White said: “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.”