Business leaders are bracing for a possible economic downturn as the U.S. Federal Reserve raises interest rates and pushes up borrowing costs to combat inflation currently running near a 40-year high. Continued supply chain problems and higher energy costs are creating additional uncertainty.
While most economists are still cautious about predicting a recession because consumer spending — the main driver of the U.S. economy — remains strong, the shifting economic outlook has refocused attention on technology that can improve efficiency, enhance business agility and address supply chain issues.
Company executives including CIOs — especially those who have experienced previous downturns — know that in order to thrive in a difficult economic environment they need to build resiliency and invest in technologies that provide them with greater insight into their business operations and enable them to react quickly to challenges and opportunities.
As a Harvard Business Review article noted, it is tempting to think of a recession as a time to batten down the hatches and play it safe. However, downturns actually appear to encourage the adoption of new technologies. That’s often because digital technology can make businesses more transparent, more flexible and more efficient.
“With all that’s unfolded in the past few years, businesses are acutely aware of the need to increase their resiliency,” says Eric van Rossum, chief marketing and solutions officer for SAP S/4HANA. “Technology plays a major role.”
He adds: “Cloud-based solutions, like those for ERP and supply chain, give businesses the insights and agility needed to, for example, quickly pivot to new revenue streams or predict and adapt to fluctuations in demand.“
van Rossum believes that cloud ERP is particularly important because it allows CFOs to see the current state of their financials and model future scenarios, giving them full control of their cost and revenue forecasts, which is critical during any crisis.