Making the Case for Digital Investment in a Recession

Mrunmayee Honrao | July 14, 2022 | 1580 views | Read time: 01:56 min
MAKING THE ARTICLE
Given the current state of the economy, industrial executives may be asking their CTOs, "Why do a digital transformation and risk diluting our margins when our EBIT numbers are excellent?"
  • Our competitors will do it if we do not.
  • Customers have requested it, and we must comply.
  • The world is becoming more digital, and we must adapt.
  • To increase our total addressable market, we must diversify our business portfolio.
  • All of these digital and technological investments have been made to support this strategy.

All of these are valid reasons to get started and keep going. However, there aren't enough to persuade a CEO and CFO to "swallow the fish “and invest in low-return innovations. This becomes even more complicated when your performance is exceptional and you are growing. Furthermore, most companies have reported record profits since the pandemic and are now facing what could be a major recession.

In the context of the impending economic slowdown, there is a better way to persuade these executives to support your digital initiatives and invest in recurring business models.

First, you must alter the overall narrative of your business cases and investment requests. Profitable growth must be prioritized over explosive growth at any cost or growth that is not supported by convincing evidence of success. SaaS providers and tech start-ups with a manufacturing component are currently facing an investment crunch and have begun to cut costs and focus on profit. So, referring to successful unicorns and the rule of 40, for example, would not be a clever idea today! Second, in order to make the case for investing in digital innovations, you must change the overall arguments.


Five critical considerations for your business case presentation:

  1. Maintain focus and reinforce the current business model
  2. Prioritize high-profit margin areas
  3. Concentrate on differentiation and high-value innovations
  4. Ascertain that your sales enablement program is well-executed
  5. Involve finance to obtain profit and loss projections

The pursuit of growth for the sake of growth is no longer an option. The new strategy is to grow to support the core and increase profitability. This may necessitate changes in the way your digital organization operates, is

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