The top 10 opportunities for technology companies in 2023

Sponsored by EY

As part of a series of reports from EY that look to address how companies can best address risks and capitalize on opportunities in the year ahead, I have just read this publication which guides tech businesses on how they can support growth in the next 12 months.

. Overall, EY predicts appetite for tech deals will return in 2023, despite the potential for adverse conditions.

Let’s dive into the top 10 ranking and understand what it means for businesses across the tech industry and beyond.

With every risk, comes an opportunity. The Japanese explain this with the following characters: 危機. Using the Roman alphabet, we would call it ‘kiki’. Both symbols in the Japanese alphabet (Kanji) mean ‘Crisis’ and ‘Opportunity’. The two characters look different but are pronounced the same and have different meanings – yet they go together. This is what we find in our post-pandemic world: many companies have identified current risks and have put strategies in place to resolve them. With high inflation, energy crises, financial volatility, decreasing consumer confidence and other geopolitical risks, there is a lot of work ahead for businesses that want to reach and fulfil new opportunities. Companies that suffered the least during the global pandemic by adopting disruptive growth strategies are those that are the delivering the best results today. Being bold is often rewarded. On the other hand, many companies have reacted to the current situation by streamlining operations and raising prices, potentially contributing to the inflationary spiral we are seeing today. 

In order for tech companies to overcome these adverse conditions and continue to position themselves as the drivers of economic growth, they need to invest in digital transformation and new business models, as outlined throughout EY’s shortlist of the biggest opportunities for 2023 .

Most notably, EY believes that adopting an active M&A (mergers and acquisitions) strategy is the biggest opportunity on the horizon for tech businesses in the New Year. While M&A has showed some signs of slowing, and with many investors starting to pull out in the current landscape, the report forecasts that the deal market will in fact make a comeback. Companies with a strong balance sheet, strong products and a clear vision, will gain a strong advantage over competitors if they are bold enough in this domain. However, time is of the essence and companies will need to move quickly as the deal market hots up.

No. 2 on EY’s shortlist is the opportunity to look at platform ecosystems that will create new distribution channels. Companies found themselves in the same situation when the internet started. Ecommerce was in its infancy and companies that understood the real potential of the opportunity early are the ones that succeeded. Today, the Metaverse and web 3.0 are the tech propositions that have truly transformative potential, while blockchain technologies enabling NFTs (non-fungible tokens) present a new and evolving way to do business. It is, however, very important to realize that these disruptive technologies will probably disrupt existing business models and very often could put them in competition with their own legacy business. This infrastructure is not easy to put in place and requires strategic thinking to sustain the main revenue stream while operating innovative and disruptive businesses that will ultimately become mainstream in 3 to 5 years. For these new businesses, organizations will recruit different people and will sell and support customers in a new way, making it easier for new and legacy businesses to operate together.

Doubling down on supply chain localization features in third place on EY’s ranking. In today’s climate, businesses are increasingly looking to find solutions that can decouple the supply chain by adopting nearshoring and reshoring strategies. This could be the best option to reduce businesses’ dependency on geopolitically unstable geographies.

In fourth position, EY recommends that tech businesses take steps to prioritize environmental sustainability. Indeed, the report predicts that the tech sector will be impacted by environmental sustainability more than ever before in 2023. For example, running data centers on renewable energy or lowering the environmental footprint of their hardware will lead to a competitive advantage (with lower emissions across the entire supply chain) for tech companies. This will also please environmentally conscious customers.

And the fifth action shortlisted is to introduce pay as you go to attract complementary revenue streams. By also introducing new platform ecosystems and business models, companies can introduce new forms of payment and new consumption-based business models.

The other 5 opportunities listed in the report are:

– Leveraging analytics tools to optimize revenues

– Investing in edge ecosystems to improve operations and experiences

– Strengthening data protection by optimizing cyber security investments

– Driving an agile strategy to match resources with company needs

– Preparing for global minimum tax reform

In conclusion, this report helps tech companies strategize and prioritize their vision, operations, technology, support and delivery for their business. The paradigm is ever-changing and only companies that plan ahead and preempt customer needs will succeed. Understanding both your business’s biggest challenges and opportunities will help you become more efficient, stay ahead of the competition and bring your customers closer to your brand. 

Take a look at the full report from EY here.