Navigating the economic downturn
Insights and strategies from Forrester's technology outsourcing report
As we approach the second half of 2023, businesses are bracing for the impact of the economic downturn. With tighter budgets and reduced spending, IT sourcing leaders face the challenge of strategically tightening or reducing spending on services without risking the business.
To help organizations navigate this situation, Forrester has prepared a comprehensive report on how to "Prepare Your Technology Outsourcing Program for an Economic Downturn." This report provides sourcing insights, vendor selection criteria, and vendor management tactics and strategies to help organizations succeed in this environment. I recently sat down with Bill for our recent FlexTalk webinar where we discussed the report, and he gave me his key insights.
1. Vendor selection
One of the key insights is the importance of vendor selection criteria. In an economic downturn, it's critical to work with vendors that can provide high-quality services at a competitive price. The report recommends that organizations look for vendors with a track record of success, strong references, and a reputation for delivering on their promises. Additionally, organizations should look for vendors that are willing to be flexible and work with them to find cost-effective solutions.
2. Vendor management
Another highlight is the importance of vendor management tactics and strategies. In an economic downturn, it's critical to manage vendors effectively to ensure they deliver high-quality services at a competitive price. The report recommends that organizations establish clear expectations and performance metrics for vendors, establish regular communication channels, and establish a contingency plan for failure.
At Flexential, we understand the challenges organizations face in navigating an economic slump. That's why we're committed to providing our customers with the resources and guidance they need to succeed. We believe the insights and recommendations outlined in this report can help organizations prepare their technology outsourcing program for the economic downturn, helping them to strategically tighten or reduce spending on services while defending the areas of the services budget critical to the business.
3. IT sourcing
In addition to vendor selection criteria and vendor management tactics, the report provides insights into the impact of the economic downturn on IT sourcing decisions. According to Forrester, services decision-makers had planned to increase spending by 5% or more in the next 12 months across various services. However, the economic uncertainty has led to delayed or canceled discretionary projects, requests for billing-rate cuts, and an instinct to outsource non-differentiating activities. Services companies have also felt the pinch, with demand for services cooling off from the frenzied post-COVID-19 environment.
Forrester analysts recommend that organizations focus on cost optimization and vendor consolidation to defend the areas of the services budget critical to the business. By doing so, organizations can reduce costs while maintaining the quality of services they require to keep their operations running smoothly.
4. Digital transformation
Another key recommendation of the report is to prioritize digital transformation initiatives that can drive business value and improve operational efficiencies, such as cloud migration, automation, and cybersecurity enhancements. By prioritizing these initiatives, organizations can position themselves for success in the long term while weathering the economic downturn in the short term.
At Flexential, we offer a range of solutions and services to support your digital transformation goals and help you navigate the economic downturn. We believe that by prioritizing digital transformation initiatives, organizations can achieve long-term success while adapting to the current economic environment.
To learn more about how your organization can prepare for the economic downturn, we encourage you to download the full report from Forrester. It provides valuable insights and recommendations for organizations looking to navigate these challenging times with confidence. Together, we can work towards a successful hybrid IT journey for your business.
In conclusion, the economic downturn presents significant challenges for organizations of all sizes across industries. However, by following the recommendations outlined in the Forrester report, organizations can navigate these challenges with confidence. By prioritizing cost optimization, digital transformation, and vendor management, organizations can position themselves for success in the long term while weathering the economic downturn in the short term.