Arming yourself with this knowledge — that nothing is guaranteed — through a business lens can prove to be immensely helpful in taking your organizational strategies from reactive to proactive. Sure, being able to pivot is necessary, but what if you could put certain measures in place that helped reduce company blindspots and illuminated insights from the get-go? (Not to get too ahead of ourselves, but this is entirely possible.) With 2022 in the rearview mirror, we can shift our focus to taking the lessons last year gave us, and apply them to our strategies and processes going forward.
A recent article from Harvard Business Review, “Innovating in Uncertain Times: Lessons from 2022,” inspired us to reflect on our own lessons from last year. It’s a great jumping off point for introspection, as well as an overview of some emerging themes for the year ahead. This blog post will cover the article’s main takeaways and share how Terzo’s learnings aligned or differed from HBR’s.
“This past year we’ve seen tech giants fall due to mismanagement, recklessness, economic turmoil, a lack of innovation, or some combination of unforeseen circumstances,” explains HBR writer Chris Howard. “Yet simultaneously, new leaders have emerged: companies that have found opportunity in our world of perpetual uncertainty, seizing the moment, and taking a risk to move ahead.”
If you’re interested in seeking new opportunities for growth and taking those calculated risks to get ahead in 2023, keep reading.
Lesson 1: Economic Uncertainty Demands Strategic Digital Investment
We all know that inflation and recessionary economic conditions are throwing a wrench in everyone’s business plans. Everybody is slashing budgets, and decision-makers are tasked with cutting costs in every department. However, Howard notes, a Gartner report predicts that IT spending will continue to increase throughout 2023.
Howard writes: “Technology is deeply integrated into the global economy and must play a part in responses to economic turbulence, potential recession, and recovery. In the 1990s when IT was strictly ‘back office,’ it was a cost that could be cut. Today, IT generates both efficiencies and revenue and cannot be cut without damaging business performance.”
But this doesn’t mean technology is exempt from potential budget cuts. What it really boils down to is speed-to-value for digital investments. If a SaaS tool isn’t delivering results quickly, it’s a prime candidate for the chopping block. You can still invest in technology, but it must be more intentional. This simply isn’t the time for exploratory solutions. But if a certain product has demonstrated the ability to provide near-immediate cost savings opportunities to your organization, that’s another story.
For instance, Terzo customers find significant cost savings opportunities (around 10-15% of total contract spend) in relation to their supplier contracts within just 90 days of deployment — in one instance, this figure of identified potential savings was a whopping $6M.
Lesson 2: Labor Market Volatility Inhibits Innovation
A number of issues have created the perfect storm for volatility in today’s world of work. The lingering effects of the COVID-19 pandemic coupled with new challenges leave organizations fighting tooth and nail for some semblance of stability. Talent retention has been a major issue for a few years now, and such constant disruption causes innovation to fall from the priority list.
“From the Great Resignation of 2021 and beyond, to massive layoffs at digital giants that have dominated news headlines in recent months, it seems that the tech workforce is constantly being upended,” says Howard. He goes on to list a few ways organizations are trying to mitigate the talent volatility problem, but we’ve found another solution: staff augmentation.
Leveraging the right tech solutions with built-in staff augmentation can help business leaders rest assured that their projects are properly staffed, leading to a much higher chance of hitting profit goals. When the job market is this volatile (and Forbes writing that the year ahead holds continued uncertainty), looking to a team of built-in professionals provided by SaaS tools you already pay for does more than help you cut overhead costs — it can help you actually get ahead.
With headcount continuing to decrease, making the most of the services your technology provides is the epitome of working smarter, not harder.
Lesson 3: Sustainability Must Be a Top Priority
Everyone is talking about sustainability — and for good reason, too. The political and bureaucratic solutions to climate concerns are continually unclear or put on pause, leaving individuals and businesses to play a major role in addressing and mitigating such concerns.
Howard shares the results of a recent Gartner survey, stating that “87% of business leaders expect to increase their organization’s investment in sustainability over the next two years.” It’s no surprise that this was a top trend or lesson from the past year, as the conversation surrounding sustainability (i.e., how tech giants like Google are planning to do their part) has only continued to grow.
There’s also incentive — beyond saving the planet — for companies to invest in sustainability. That same Gartner survey found that “86% of business leaders consider sustainability as an investment which protects their organization from disruption.” They’ve also already found that such investments or initiatives have directly yielded value for their organization via optimizing processes and reducing costs.
But sustainability goes far beyond measuring your organization’s carbon footprint. Since sustainability is only one prong of ESG, it’s about more than just the environment. Take your supplier ecosystem, for example. Are your vendors meeting federal, industry, or organizational ESG standards? Do they engage in practices that could reputationally damage your organization? Is there a designated person or team on their end who’s responsible for maintaining ESG guidelines?
More than ever, investors and stakeholders want thorough ESG reporting that encompasses the entire organization — including third-party suppliers — and being able to produce said reports is becoming non-negotiable. Ensuring that your own sustainability practices, along with those of your vendors, can be made much easier with the right technology.
“Sustainability investment offers a ‘two for one’ by supporting responsible consumption while simultaneously benefiting the business,” says Howard. “Tech can be the driving force behind these efforts.”
Lesson 4: Cybersecurity Becomes Increasingly Complex in a Fast-Moving Business Environment
As organizations have embraced a global, cloud-based, digital structure, cybersecurity has become a top priority for businesses everywhere. Cybersecurity poses a major threat, particularly within IT, and many organizations are starting to invest big bucks into protecting their information.
But as cybersecurity measures evolve, so do the threats. These days, there are risks associated with a lot more than just traditional security breaches (open-source code, social media, and digital supply chains to name a few.) The question is, if fighting cybersecurity feels like an overwhelming or endless challenge, where can organizations begin this initiative?
For starters, they can choose quality over quantity.
Instead of trying to protect against every possible threat out there, businesses need to prioritize their spend on areas that protect business outcomes. A strategic approach is necessary, rather than a frenzied attempt to thwart both new and unknown risks.
Howard explains: “Cybersecurity is a choice. Organizations get to choose their levels of protection and their investments to achieve a balance between the need to protect and the need to run the business. Managers outside of IT must understand and accept the responsibility that security is a context and consequence of decisions they make for their teams and the business every day.”
We’ve found that mismanaged supplier contracts pose a major risk to organizations. Many businesses simply keep their contracts “organized” in spreadsheets or digital filing cabinets, with their information ripe for the taking. The security measures around this information are weak at best — and that’s assuming the information is even accurate or up to date.
Beyond external security risks, these contracts have the potential to damage an organization if they aren’t monitored correctly. From financial risks to compliance conflicts, the threat of not properly storing contracts and/or not truly owning your contract data and insights can create setbacks that most organizations can’t afford to take on.
If you aren’t sure whether or not your current CLM stands up to cybersecurity threats, ask yourself the following:
- Are your people mapped to your cybersecurity providers so you can review and escalate issues quickly?
- Are you running real-time risk against specific vendors in your cyber stack?
- Are you alerting on periodic reviews and InfoSec refreshes with your cyber vendors?
Using the correct contract intelligence tool, the chances of these risks are significantly reduced, if not eliminated altogether. Knowing that renewals aren’t being missed, negotiations are completed on time, and critical contract terms are indexed correctly provides a level of security that spreadsheets just aren’t able to offer.
Lesson 5: Responsible Investment in Emerging Technologies Will Pay Dividends
“Too many leaders succumb to fear of missing out (FOMO) when new tech trends emerge and demand that something — anything — using the new tech be implemented immediately,” Howard observes, referencing emerging technologies such as NFTs, the metaverse, and generative AI.
“This leads to wasted investment, missed opportunity and disillusionment about the new landscape. Emerging technologies are critical and demand attention and investment, but managers must exercise patience and avoid falling victim to the hype. Responsible exploration is key.”
Returning to our first lesson in this post, it’s time to get serious about what new technologies you’re thinking about bringing into your organization. Taking current solutions and upgrading them to a version that’s faster, integrative, and features a better user interface can save a business time, money, and even stress. Because branching out to try something completely new is all well and good, but why not focus on optimizing the current, necessary business operations you’ll be carrying out no matter what? For example, supplier relations and third-party contract management.
Decision-makers want to see a fast ROI when it comes to SaaS tools, but it’s more than that — they want to streamline and optimize what the business is already doing, not embark on a new tech venture that may or may not yield results. Taking a process as universal as contract or vendor management and elevating it to a contract intelligence platform will only increase the value that the VMO provides to the organization.
(For those interested in learning more about the cross-functional governance aspect of using Terzo, our recent webinar with Prevalent and DHI group is available to stream here.)
All things considered, the past year offered a lot of valuable insights and key learnings to grow from. Despite some new and returning challenges, adaptability reigned supreme, and we among many others in the tech space figured out how to make adversity work for us.
HBR’s top lessons of 2022 showed a few themes, not the least of which being the importance of having a grasp on your relationships and technology supporting third-party vendors and the supply chain. The right tools and services have changed the conversation completely, from digital investment to sustainability to cybersecurity tactics. Vendors and customers are more interdependent than ever before, with business relationships having evolved into critical partnerships. Strategy topics have shifted from an internal focus to including things “outside your four walls,” so to speak.
Because while you can’t be clairvoyant, you can be prepared. And that’s about all you can try to be in the uncertainty of today’s business sector.