What's next for tech: A technology industry outlook

8/7/2023
What's next for tech: a technology industry outlook

The technology industry continues to innovate to drive advances throughout the economy, but it’s also preparing for what’s next on the horizon.

A couple of key developments this year have unsettled the technology industry:

  • A parade of layoffs at technology companies, ranging from startups to the most recognized enterprises
  • The slowing pace of investments in enterprise and consumer technology
  • The swift and sudden collapse of a large financial institution with a major presence in the tech space as well as subsequent bank liquidations of other tech funding sources

While these events have many technology companies more focused on operational resilience in the near term, they might not be the signs of doom and gloom some observers take them for. Layoffs at many tech businesses, for instance, could be seen as a return to trendline growth rather than a sign of future instability.

Additionally, the innovative solutions generated by the technology industry remain critical for organizations in practically every sector. Whether it’s increased investments in artificial intelligence (AI) within the insurance space, data analytics in healthcare, or internet of things in manufacturing, interest in advanced technologies remains high in most industries.

As the tech sector continues to adjust to significant changes in the months ahead, we expect three areas to be focal points.

Automation

Find efficiency with advanced technology.

Probably the biggest impact of advanced technologies like AI for tech companies’ operations is in automation. Most tech companies have a good level of understanding about how the technology side of this works, but our specialists have found many of them don’t always use automation as much as they could within their organizations.

This gap is particularly true as automation has moved beyond management of one or two steps within a process and taken over most or all of entire processes within some organizations. This next-level automation doesn’t simply make things move faster. It also drives improvements in efficiency, error reduction, data analytics, and other critical areas.

Another benefit of AI-driven automation is that, if implemented correctly, it only gets better as you use it. Pairing machine learning with the right inputs can help train your AI system over time to run processes even more optimally.

Tech companies also increasingly use responsible AI frameworks to mitigate known risks and potential issues that might arise. Responsible AI frameworks among tech companies include aspects of strategy, control elements, responsible practices definition, and standards for AI validation and monitoring.

Technology, media, and telecommunications expertise
Get the support you need to execute at industry-leading speeds.

Supply chain

New tech may not be the answer for all.

Automation technology is affecting supply chains in interesting and valuable ways. One recent application is the “industrial metaverse,” which takes metaverse and Web3 technologies and uses them to virtually map out a supply chain end to end. In this way, it can project the timing, flow, and bottlenecks of supply chains.

Cutting-edge technology isn’t always the answer to supply chain problems, however. Using existing platforms or performing relatively simple integrations to improve how you plan, predict, and communicate can be the better way to go both strategically and financially. This approach requires a pragmatic view and a focus on how tech can impact the proficiency of the people and processes that run your supply chain.

For many organizations, there won’t be a single silver-bullet tech solution to all their problems. Often, the fixes needed are related to governance, data management, or business intelligence – like whether they have the correct ordering parameters to right-size inventory, for instance, or if they’re focused too much or too little on certain SKUs. These kinds of enhancements can be driven by activities like checking in with customers more often or anticipating certain seasonal trends further in advance.

Focusing on issues like these can ultimately provide heightened visibility overall and more of a real-time window into what’s happening. Using technology thoughtfully will help you optimize movement of inventory, enhance your supply chain efficiency, and respond more quickly and proactively when unforeseen developments emerge, such as port closures or political upheaval.

ESG

Gear up for new rules and regulations.

Environmental, social, and governance (ESG) issues aren’t “new” for the technology industry in the same way they are for, say, the financial services sector. In many important ways, tech has been an ESG standard bearer for several years. That said, the regulatory picture might be evolving, and tech companies are finding they have ESG information gaps, especially if they rely on third-party data sources.

The biggest near-term ESG questions for tech companies will be:

  • When will the Securities and Exchange Commission release its final rule on climate-related disclosures, such as greenhouse gas emissions?
  • What specific requirements will that rule lay out – and how quickly can companies respond?

The final rule is expected to roll out some time this year, but many investors are already requiring that publicly registered companies reveal how they consider climate risks and the potential environmental effects of the goods and services they provide. So even in the absence of a final rule, tech companies – particularly publicly traded ones – shouldn’t remain flat on climate disclosures in the meantime.

More broadly, how ESG aligns to their mission and values will continue to be important for tech companies. And as new regulatory requirements emerge, investors and venture capital will drive a more rigorous approach to ESG issues. Over the long term, the biggest ESG challenges for tech companies will be prioritizing what needs to be done now versus later and building up the capabilities needed to address evolving ESG standards.

Despite shifts in the economy and regulatory environment, innovation continues to hum along. Advanced technologies that continue to revolutionize most other industries also can enhance many areas of tech businesses’ operations and provide a clearer view into the challenges and opportunities ahead – no matter what’s happening in the market.

We know tech. We know the trends. Now we want to get to know you.

The tech industry changes constantly. We want to be by your side as you navigate those changes. From ESG and supply chains to automation, risk, and compliance, our team of professionals has its finger on the pulse of tech.
Tony Klaich
Tony Klaich
Managing Partner, Technology, Media & Telecommunications
Ray-Cheung-225
Ray Cheung
Partner, Technology, Media & Telecommunications Innovation Leader
Wil-Knibloe-225
Wil Knibloe III
Managing Principal, Supply Chain

Stephen-Wiley-Social
Stephen F. Wiley
Principal, Manufacturing Advisory Leader
Daniela Arias
Daniela Arias
Advisory
Rebecca Miller
Rebecca Miller
Advisory