Editor’s note: This article is part of an annual four-part series on trends impacting small and midsize businesses. In Part 1, we study technology trends for 2023.
The combination of pandemic-induced economic crises, Russia’s invasion of Ukraine, supply chain disruptions, record-breaking inflation, food shortages, and fuel price hikes have been the impetus for a restructuring of the global economy. Dramatic wage inflation at the bottom of the scale is providing incentives for companies to automate routine activities.
Management teams are in a conundrum as they contemplate growing IT budgets against a backdrop of a 2023 slowdown. While 86% of decision-makers expect a recession, they are poised to spend more on technology. While 6% of companies will pull back on spending next year, 51% expect to increase spend by an average of 21%.
IT modernization including hardware, software, cloud and managed services will further support the “remote work revolution.” Vistage IT departments are trying to balance competing demands of internal infrastructure needs and business opportunities presented by AI, machine learning, cloud computing and IoT (Internet of Things). They also take on the risk of greater technology debt, as solutions such as AI introduce more variability and risk.
Other 2023 trends
AI will play a key role in almost every sector and function
Routine tasks will be automated by AI and machine learning in almost every industry. There are prospects of significant AI improvement in three areas: deep learning, autonomous decision-making, and human speech processing.
One of the most ubiquitous trends in 2023 for SMBs (small and midsize businesses) will be the adoption of AI as a service. Transformative AI applications are now accessible via monthly subscriptions that can often be purchased at relatively low costs:
HR: AI is omnipresent in recruiting. Tools such as Spark Hire replace the phone interview screen and create a reel of applicant responses on video for a low monthly cost.
Manufacturing: IBM has reported that the use of AI in commercial manufacturing will see a rise of 40-80% within three years.
Sales and marketing: Tools such as Seamless.ai provide companies the opportunity to mine for prospect contact information for less than $150 a month. Content creation industries will also see a rise in AI-driven technologies in 2023: i
- Adobe, the global leader in photo and video editing, has launched its 2023 edition of Photoshop and Premiere elements with many AI-driven features.
- Meta has made progress in AI-driven video creation in 2023 through its Make-A-Video project. It is poised to revolutionize the content creation industry as GPT-3 did with AI-driven writing in 2020.
- AI will substantially benefit the retail and consumer goods industries. Companies will increasingly use AI to create custom offers and promotions for customers.
- Digital arts may become more prevalent in 2023, with AI powering exceptional-quality digital avatars and NFT art for use in the Metaverse and other Web3-based virtual realities.
With the prospect of more utility of artificial intelligence, also comes the need for more testing to validate the integrity of the data it produces. Technology research and consulting firm Gartner has coined the term “modelops,” to describe the governance requirements required to manage the AI lifecycle.
Members are building out new IT infrastructure
Today, members are building in-house resources while relying heavily on managed services. Amidst the economic crisis, technologists are focused on making continuous innovations and efficiency improvements. Industry analysts have forecasted that the IT professional services market will maintain stable growth throughout the next decade, with a global CAGR of 11.2% from 2022 to 2030.
Companies are also adopting “vertical industry cloud platforms” as a means to bring traditionally separate cloud services under an adaptable, pre-integrated system that can be used across an industry, such as a medical records platform.ii
Unlike a conventional ERP (enterprise resource planning) system that integrates within an organization, these solutions integrate within an industry to provide software, platform and infrastructure capabilities. This kind of ecosystem could lead to more agility in handling workloads and ultimately accelerate industry-wide change and efficiency.
Vistage member IT departments are moving from providing technology hardware and bundled office suites to developing custom applications. For example, Vistage member SCA Claim Services, based in Burbank, California, has created AI-enabled tools to expedite cycle time in their auto appraisal business through alerts and notifications built into their systems.
Advanced network connectivity will expand the global GDP by at least $2 trillion
McKinsey has reported that economies will realize the benefits of superior connectivity networks in 2023. There will be substantial development and refinements of existing technologies such as Wi-Fi 6, 5G cellular networks, and low-earth-orbit (LEO) satellite-based communications.
Some of the developments we will likely see starting in 2023 over the next few years include:
- Global annual data creation may increase by 20-25% due to higher network connectivity speed.
- Telecom companies may see a 10-20% revenue increase from 5G network connectivity and B2B services.
- The total number of IoT-connected devices may rapidly increase, thanks to Wi-Fi 6 and its smooth, low-latency connectivity.
Faster network connectivity may boost the global GDP by at least $2 trillion. Industries most likely to enjoy the benefit are automotive and assembly, health care systems and services, aerospace and defense, and retail.
Despite great potential, a few technologies like 5G deployment and LEO adoption may struggle to garner the enormous capital investment they require in 2023.
Investment in robots and automation
Given the rapid escalation in the cost of labor, companies are expanding capital investments in automation. Industrial robot spend is expected to double by 2030. Automation projects have been slow to implement, given supply chain issues (particularly in Europe) and a shortage of engineers.
Attention is shifting towards “cobots” (robots that work alongside humans) in warehousing and other environments, in an effort to replace boring, laborious and unsafe activities. For example, fulfillment centers are utilizing exosuits that augment human activities.
For more information, see the State of Automation Report.
Cybersecurity takes center stage
Gartner has reported that the cybersecurity mesh practices will lead the information security sector. The technology emphasizes securing a network through multiple security checkpoints.
With technology coming more embedded in products, technologists are more active in product development, including embedding security within products (such as IoT devices).
The highest cyber spending is expected in managed security services (30%), network security (22%), mobile security (9%), and web and email security (8%). Some of these trends that will proliferate in 2023 include:
- Multiple identities and access management protocols
- Implementing a staff matching pool
- Broad adoption of zero-trust security networks
- Quick deployment of security features
- Inclusion of a higher number of tech-savvy members on executive boards
- Higher compliance and security testing requirements for many products and services
- More collaboration among information security companies to implement standardized security features
Vistage members must continue to invest to ensure that technology is not only enabling the success of their business but is the foundation for competitive advantage.
ii Top 10 strategic technology trends for 2023: Gartner
The 7 Biggest Mistakes CEOs Can Make
These seven fails can be especially damaging to a business in a downturn. Here's how to avoid them.
Jan 13. webinar: Trends for 2023 and beyond [Register in the blue box]