Australian companies delaying tech investments due to economy

09 January 2024 Consultancy.com.au 2 min. read
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The challenging economic conditions are leading Australian companies to delay their technology investments, a new survey from Endava has found, but the consultancy warns the response could stifle progress.

Less than one in every twenty Australian businesses believe they’ve reached the peak of their digital journeys according to a recent survey, with 40 percent stating that they had delayed tech investments due to current economic conditions.

Conducted by global digital consultancy Endava, the study also revealed that almost all of the local businesses surveyed were battling against inflation, with over three quarters passing on the increased costs to consumers.

Australian companies delaying tech investments due to economy

The analysis of Endava – which hasn’t been holding back in its own spending in the face of headwinds after picking up a trio of tech firms in a little over a year – looked at the impact of current macroeconomic conditions and digital maturity among businesses in eight critical sectors, including communications, education, health, energy, defence and financial services. The results suggest a widespread deprioritisation of the digital agenda.

With nine out of ten surveyed businesses struggling against rampant inflation, 77 percent overall have been forced to pass on rising costs to customers – in their entirety, in the case of half of all respondents. Some 40 percent had also postponed their tech investments in response, yet factors beyond the economic climate alone may also be coming into play, with only 4 percent believing they’d reached the optimal state in their digital transformation process.

Here, the survey found that basically half of all businesses don’t feel as if their current tech solutions are sufficient to fully support their business objectives, while less than 10 percent report a complete alignment between capabilities and goals. While an array of issues were identified in hindering earlier successes, Endava Australia managing partner Steve Harding warns that putting off further investments in response to economic pressures can hamper overall business.

“Delaying technology investments can stifle innovation and progress, so a better approach is to start small, test and prove the impact of technology, and then scale based on success,” Harper states. “The fact that most businesses are only partially satisfied with their digital investments, and expected earlier and better results, also suggests that many projects are not necessarily focusing on what is truly important or don’t have the internal support required.”

Despite possible hesitation elsewhere and a cautious approach, 57 percent of the companies also said they were planning to adopt artificial intelligence and machine learning technologies within the next 24 months as part of their future strategies, areas which were described as potentially offering real cost reductions or a significant increase in productivity. Big data platforms and zero-trust security were also cited as essential for achieving digital aspirations.