With the prospect of the pandemic causing revenue to fall by 10% to 30%, many senior executives will pressure their chief information officers to cut technology spending this year by 5% to 15%, Forrester Research Inc. says in a new report.
But the area where Forrester advises companies to make the smallest technology budget cuts—or to maintain or even increase technology spending—is in ecommerce.
The report, “Where to Adjust Tech Budgets in the Pandemic Recession,” by Forrester analysts Andrew Bartels and Bobby Cameron, suggests cuts in many technology areas ranging from 25% to 90% for severely disrupted companies operating in “survival” mode because of the pandemic; for companies experiencing less disruption and adapting to the pandemic with continued sales, Forrester recommends more moderate but still expansive cuts of about 20% or more across most technology areas; for companies growing as a result of the pandemic, Forrester suggests reducing some technology projects while increasing spending on some others by about 5%.
Ecommerce tops four critical technology areas
The report notes four critical technology areas that should get the most attention in spending budgets this year: risk management, security, customer experience, and ecommerce. “Maintaining or increasing spending on security, risk management, ecommerce and customer experience may be essential,” Forrester says.
But while suggesting at least moderate spending increases in each of those areas, the one area where it suggests the most spending is in ecommerce.
Even companies in survival mode, the report says, should put a concerted effort on ecommerce projects. Although it suggests that such companies should cut their ecommerce technology budgets by 10% (compared with suggested cuts of 25% to 90% in other technology areas), Forrester underscores the importance of the ecommerce channel: “Even in survival mode, companies will still need to support clients and customers who have shifted to using online ordering. So, a high priority should be to expand (or only cut modestly) new projects that support ecommerce or online support. As much as possible, they should preserve new projects that, in the short term, will enhance and strengthen customer experience and loyalty.”
Forrester cautions, however, that longer-term projects by companies in survival mode “should be postponed.”
For companies adapting to the pandemic with continued sales, Forrester suggests they “maintain and explore” lower-cost ecommerce channels like marketplaces.
Reaching out to digital-first buyers
And for companies in a growth mode despite the pandemic, Forrester recommends they “expand by 10% to reach new digital-first buyers.”
In a complementary report released last month, “Essential Technology Solutions for Pandemic Management,” Forrester suggests how companies should emphasize technology deployment and usage across four general technology areas: Customer experience, risk and crisis management, employee experience and human capital management, and health and safety. It also lists several “sample vendors” providing technology applications for each area.
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