Over the past few months, inflation and a worrisome economic outlook have affected everything from grocery bills to gas prices. This combination of pressures also influences the sectors in which business leaders choose to invest and those in which they plan to cut costs.
In June, technology analyst Gartner conducted a survey among 128 CFOs and business leaders to find out which investments they plan to cut first in the face of rising inflation, staff shortages and supply constraints.
Of the 128 CEOs and CFOs surveyed, 41% said mergers and acquisitions (M&A) were the investments most likely to be canceled first. Investing in sustainability and reducing environmental impact comes in second with 39% of the vote.
Ecology aside, but not technology
According to Randeep Rathindran, vice president of research at Gartner, the choice to cut M&A could be linked to rising interest rates, which significantly increases the cost of financing these operations. However, the latter believes the cuts in sustainability are more surprising as companies have made the area their top strategic priority in 2022. The growing concern of consumers and employees for the environment has forced companies to take these goals more seriously.
But investing in technology, workforce and talent development are not areas where CEOs or CFOs plan to cut costs. In fact, only 23% of respondents say technology is one of the top two ways to cut costs, while 46% say labor and talent development costs are the end result.
Investments in technology are unlikely to decline due to their positive impact on efficiency. According to Randeep Rathindran, these investments are necessary. “Digitalization in a way that enhances the productivity of labor, assets and working capital will be a necessity going forward,” he said in a statement.
As inflation continues and CEOs and CFOs reassess their priorities, it looks like investment in product and technology innovation is here to stay, at least for now.