According to the latest forecast released by Gartner, Inc., worldwide IT spending is projected to total nearly $4.5 trillion in 2022, which is an increase of 4% from 2021. Many believe this trend will continue as businesses seek to improve flexibility and preparedness with ongoing risks and disruptions. In fact, a survey conducted by Info-Tech Research Group found that “two in five CIOs and CxOs project their IT budgets will grow between 6% and 15% in the next three to five years.”
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Some of the risk factors that are keeping business leaders up at night include inflation, talent shortages, and supply chain disruptions. In response, businesses are dialing up their technology budgets to focus on solutions that support seamless customer and employee experiences, analytics, cloud computing, and data security.
Furthermore, the Research Vice President at Gartner, John-David Lovelock, pointed out, “Digital tech initiatives remain a top strategic business priority for companies as they continue to reinvent the future of work, focusing spending on making their infrastructure bulletproof and accommodating increasingly complex hybrid work for employees going into 2022.” There is no question that the COVID-19 pandemic has changed the way businesses invest in workforce technology. More organizations are making it a priority to re-evaluate learning and recruiting technologies to address post-pandemic work requirements.
Four Major Reasons for Driving Investments in Workforce Technology
At the beginning of the pandemic, only 7% of workers had ever worked completely remotely even though an estimated 37% of all US jobs could be done remotely. Of course, that number is now much higher; Gallup research indicates that more than half of workers have performed their job remotely. Over the last two years, the pandemic forced the adoption of technology to support this way of working and acted as an incentive for leaders to embrace these tools.
As a result of this shift, HR expert Josh Bersin notes in a recent article that this has also caused a disruption in the workforce technology market. The “core” of HR technology used to be payroll and HCM (Human Capital Management), also known as the employee system of record or HRMS. He explains, “While core HCM systems are necessary to run a company, they are no longer the center of gravity they once were.” Instead, he points out that solutions that enhance employee experience and talent management are even more important. In his HCM Excellence studies, he has found that companies experiencing the most success with large HR tech projects focus on employees first, and technology second. Indeed, forward-thinking companies are taking stock of their operating models and leveraging technology to meet their goals.
Here are the top four reasons why businesses are increasing their investments in workforce technology:
Addressing New Needs of the Hybrid Workforce
To successfully support a productive and innovative hybrid workforce, business leaders are sharpening their focus on how to address collaboration equity. A recent article in Forbes defines collaboration equity as “when all workers have the ability to contribute and communicate equally, regardless of location, role, experience level, language, or device preference.” This is leading to greater investments in workforce technology solutions including cloud productivity, document management, workflow management, and communication tools.
Recruiting and Retaining Diverse Talent
Employers of all sizes have been dealing with pandemic-induced labor shortage and skills gap while at the same time learning new ways to successfully attract and retain diverse talent in a digital environment. It has been difficult for sure. A recent Employee Benefits News article reported 86% of HR professionals feel that recruitment has become more like marketing. Job seekers are also more interested in a company’s brand and reputation as a diverse and inclusive environment than ever before. This is leading to larger investments in technology that helps streamline the recruiting process and take the human bias out of the application and interviewing process. In fact, International Data Corporation (IDC) predicts that 70% of businesses will have extensively invested in DEI tools by 2024.
Driving the Best Employee Experience
As employers look to create a hybrid environment where everyone can thrive—whether in an office, at home, or a combination of both—business leaders will need to examine how employees connect, communicate, and collaborate. These are fundamental qualities of the employee experience. According to Harvard Business Review, “employees are 230% more engaged and 85% more likely to stay beyond three years if they have the technology they need to support their work.” To improve digital workplace experiences, businesses will invest in technology to help them understand experience data, communicate culture across the organization, support skill development, and provide a forum for employees to provide feedback.
Prioritizing Employee Wellness and Well-Being
The COVID-19 pandemic has exacerbated many mental health issues including stress, burnout, and anxiety. A study by consultancy, Willis Towers Watson (WTW) found that 86% of employers believe mental health, stress and burnout are still a major priority and 26% have already implemented a mental health well-being strategy. In addition to offering employee assistance programs, organizations are investing in technology to bolster psychological, social, physical, and financial wellness. Solutions include access to stress or time management training, apps that encourage physical well-being, online courses to advance financial education, and other platforms that connect employees to much-needed services.
How to Build Your Strategy for Workforce Technology Investing
To ensure you build a successful business case for HR technology investment, it is important to examine your organization’s overall business needs and see how HR technology fits into that vision. For example, is your organization downsizing workspace due to having more remote employees? If so, your organization should invest in user-friendly technologies that drive productivity and improve engagement. Leverage technology as an enabler o
f your business and operational goals. For six tips on how to build a future-ready HR tech stack with confidence, we invite you to read our Buyer’s Guide for Payroll & HR Software. Once you have decided where to invest, this article can help you build your business case.