Gartner: Tech CEOs set the path in redirecting to new realities

How tech CEOs are facing their new reality in the face of COVID-19.

This is a contributed article by Rene Buest, Research Director Analyst, Gartner.

 

Economic instability and the ongoing uncertainties stimulated by COVID-19, has seen a shift in how CEOs of small and midsize technology and service providers operate, with the pandemic now dominating the strategies of organisations. As a result, these Tech CEOs (recently surveyed by Gartner) are now transitioning into a phase of new realities following the initial ‘react and respond' to COVID-19.

Redirect to new realities

As organisations exit the first response phase after external events changed the way they operate, disrupting customers and altering strategies, organisations will now enter phase two, redirecting to new realities.

This phase calls for a need to stabilise the everchanging and volatile environment following public health orders and restrictions on organisations, having ripple effects on the economy. As the market is still in decline, with uncertainty remaining, ongoing pressures will require organisations to redirect and refocus resources, working now to achieve two goals: remain financially and operationally viable and improve its position for future recovery.

To help tech CEOs successfully navigate this recovery phase and in the redirection of resources, tech CEOs should implement the following major actions:

  • Focus and redefine for revenue: Concentrate on earning as much revenue as feasible by redefining current products and services to be consistent with new customer and buyer realities and priorities.
  • Rethink the organisation's goals: Set a new "north star" to lead the organisation forward, assess progress and make future decisions.
  • Reallocate the portfolio and product investments: Redirect operations and investments in response to these realities and reassign resources for the new products needed for when demand recovers.

 

This phase starts once the organisation regains its operational stability, while the end is bookmarked with the initial revival of customers and their renewed demand for solutions. Whilst the ending of this phase might seem to correlate with the end of recession, this is only the beginning of the recovery. This could take a few months to a few financial quarters. However, in a disruptive crisis, it is possible for companies to remain in Phase 2 longer than some or even return to a recessionary posture, that is, a double-dip recession.

 

Tech CEOs put strategic changes into action

 

As markets and industries change, tech CEOs are replicating these changes to endure the impacts of COVID-19. A majority of tech CEOs report that their organisation has implemented a variety of changes to remain financially and operationally viable and improve its position for future recovery:

  • Added/increased remote work: 90% (35% are implementing short-term, while 55% plan to implement long-term)
  • Adding/increasing flexible working hours: 81% (39% are implementing short-term, while 42% plan to implement long-term)
  • Adjusting sales model towards remote selling: 84% (39% are implementing short-term, while 45% plan to implement long-term)

Additionally, whilst a third (32%) made no changes to their offering, more than a third 39% created new products, 32% adjusted pricing to existing products, and/or 29% added free trials to better meet customer needs.

With this also comes adaptions to demand generation efforts, as tech CEOs reveal they will put greater focus on existing customers (55%). And when it comes to new clients, rather than broad targeting of prospects, over half (55%) of tech CEOs will be more precise in targeting specific prospect types, saving time and resources in the challenging market.

For most organisations trying to remain afloat, the strategies implemented during this period will be temporary fixtures. Despite this, almost a third to half of tech CEOs plan to keep these changes in the long-term.

Leaders must bounce forward

Based on lessons learned during the pandemic, many tech CEOs have made mid to long-term strategic changes to focus on existing and new clients as well as to their policies around employees and remote work.

Given the uncertainty, tech CEOs need to redefine the ambitions of their organisation and lead the business to reallocate and reinvestment where the most revenue is generated. In addition, if tech CEOs cut back on areas facing weaker customer demand, their organisation can successfully achieve the two goals set out; remain financially and operationally viable and improve its position for future recovery.


Rene Buest is a Senior Director, Analyst in Gartner's Technology and Services Provider (T&SP) organisation. His primary research coverage is infrastructure services and digital operations with a focus on professional services, managed services, cloud computing and digital business. He brings over 20 years of experience for business development, go-to-market strategies and technology marketing.