• Layoffs and economic events are making enterprise buyers think about their technology spending.
• Its not time to cut off technology spending on core systems to help the business and to help IT.
It was announced that Disney has laid off its entire metaverse team of about 50 individuals as part of a much larger layoff strategy. Layoffs at tech companies, or companies that are heavily invested in tech such as Disney seem to be happening a great deal recently and it has induced some level of uncertainty regarding tech and the larger economy in general.
Much of that uncertainty is justified, especially in the light of recent bank failures. For now, it is not a time to panic for tech. Many of the layoffs in tech have happened in overhyped areas such as the metaverse, or are driven by stronger scrutiny of product and services strategy. Enterprises don’t have to worry about most of their preferred vendors right now, especially the larger and established ones. Overall spending should continue apace, with emphasis on security and automation to increase efficiency and reduce operational costs in both IT and the business in general. These kinds of technologies tend to have reasonably fast and justifiable ROI and stand in line with good economic practice regardless.
The places to where enterprises have risk in technology purchasing is around small startups and of course investment in technologies such as metaverse and quantum computing. The payout for those two technology areas is at best uncertain, but will almost assuredly be longer than most predict. Speculative spend like this is necessary, but is more flexible when economic factors begin to exert pressure. If there must be a pullback in technology spending, it should be in these areas, with an eye for restarting these efforts at a later date. For example, the layoff of Disney’s metaverse group does not mean that Disney has no plans for the metaverse, or intending to simply partner for metaverse technology. What it means is that Disney is choosing to reduce or eliminate spend that has an uncertain or slow return.
Enterprise buyers need to stick with purchasing strategies that provide value in the short term if there is a wider economic downturn. But it’s far from the time to slow investment in technology that can serve the business or help IT serve the business.