Well it’s a new year, and I’ve been longing to read a tech blog about the year ahead that doesn’t mention crypto, NFTs, or the metaverse. After a month of that, I decided to write my own. What follows is my view on five main moving macroeconomic pieces that affect businesses globally, and how it all drives change in technology markets this year.
- The “Great Resignation” Puts a Spotlight on Employee Experience (EX). While EX was already a growing focal point before the pandemic, the lightning rise of work-from-anywhere corporate policies in response to a two-year-long pandemic quickly put EX on the list of CEOs’ top priorities. This, in turn, puts pressure on CIOs to recalibrate their IT infrastructure, networking, security, and enterprise software for a hybrid workforce. There is general consensus among other technology research firms that this will drive an increase in tech spending in 2022. Software and services get the lion’s share, but keep in mind that it’s not all sourced under the traditional IT budget. Having covered marketing and advertising technology since 2009, I’ve seen business-driven transformation efforts spread an ever-increasing portion of tech budgets to software and services that are funded out of HR, marketing, and customer experience departments. In other words, the role of “IT decision maker” has been decentralized for some time now.
- Supply Chains Will Remain Challenged into 2023. Sorry, no surprise prognostication of a return to normalcy here. Plenty of ink has already been spilled over this crisis, and it spans international markets as well as local ones. The inconvenient truth is that COVID-19 continues put a strain on labor, disrupt the production of goods, and gum up the shipping and logistics industry. This has affected everything from microchips to raw materials to groceries. I don’t see this changing much in 2022, and the uncertainty of future variants and vaccine efficacy against them will keep the supply chain vulnerable. Some estimate another two years of this dilemma. Whether it’s another 12, 24, or even 36 months, it’s clear that businesses dependent on the production and movement of physical goods will be strained for the foreseeable future. This will fan the flames of innovation in autonomous transport for the trucking industry, but we’re still many years away from widespread commercialization of driverless trucking. In the meantime, my colleague Christine Dunne recently wrote about how printer manufacturers can adapt to our new supply chain reality.
- Higher Prices Are Here to Stay. Currently at 7%, inflation in the US is the highest we’ve seen since the end of the Carter administration over 40 years ago. But inflation is a global problem, and it currently plagues most countries around the world to varying degrees—with notable exceptions in Japan and China. Will 2022 bring positive change? Probably not. Inventory shortages and a tight labor market combined with “easy-money” fiscal policy (at least, here in the US) all exacerbate the inflationary dilemma. Globally speaking, so long as demand remains high while supply chains are bogged down, prices for goods and services will continue to increase even with the expected adjustments in governmental monetary policy. For tech markets, expect double-digit increases on spend in enterprise software and services. This year, healthy corporate earnings abound in spaces like Unified Communications-as-a-Service (UCaaS), marketing automation, and cybersecurity.
- Venture Capital (VC) in Tech Will Cavitate as Public Markets Come Back to Earth. VC spending accelerated in 2021 like a Tesla Plaid in track mode. The flavor of the year was (unsurprisingly) HR Tech, in which we saw VC funding grow 4x from the prior year. Additive manufacturing—or 3D printing companies—also saw a record year with several companies like Markforged and Velo3D going public via SPACs in 2021. Other historically hot markets like FinTech and Artificial Intelligence (AI) enjoyed a two-time funding increase from the prior year as the second year of a global pandemic fueled a private funding frenzy. Already in 2022, the tech markets have shown signs of cooling as the Nasdaq entered correction territory earlier this month. With sustained inflation, struggling supply chains, and an imminent change in monetary policy signaled by US Federal Reserve, 2022 is sure to be a volatile year in public and private technology markets. So, will anyone enjoy some tailwinds this year? Expect continued smooth sailing in categories fueled by pandemic-induced change. This includes HR tech, additive manufacturing, extended reality (XR), and artificial intelligence.
- Mainstream Automation Isn’t Hyper, Robotic, or Artificially Intelligent. I’d be remiss if I didn’t address all the hype about “hyperautomation” or “robotic process automation (RPA)” or “intelligent automation”. In fact, I thought about adding these terms to my opening and mashing them in with crypto, NFTs, and the metaverse. But automation in general deserves a callout this year. Why? Because it’s expanding across IT departments and businesses everywhere in response to the labor and supply chain challenges discussed earlier. As such, it will remain a key driver of increased technology spend for years to come. With that said, unless you’re Boston Dynamics or a global manufacturer using robots in an assembly line, automation for most is just an incremental change and efficiency play for most businesses. It’s evolution, not revolution. It’s using software to automate the manual—moving a process from paper-based to digital—or perhaps using machine learning to predict scenarios and automate tactical decisions. And while most software companies claim to have artificial intelligence (AI) baked into their platforms, remember: It still requires actual human intelligence to build, test, and refine the algorithms. So, for us commoners out there, necessity remains the mother of invention and that will drive increased business investments in automation at scale this year.
This represents my view of the economic environment we find ourselves in, and how technology markets will respond this year. For a deeper look at how this all plays out in the print markets we cover, be sure to check out our upcoming podcasts for an outlook on production print markets, and this webinar for our 2022 predictions in office technology (client access required).
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