Predictions and strategic advice for 2024...

If 2023 was the year of consolidation, what about 2024? Let’s start with the good news.?

I’ve been catching up with senior leaders and investors in the New Year and I’m struck by the optimism. Most expect growth in headcount fuelled by lower inflation, more certainty around costs and some stabilising of the cost of living crisis, but I’d also say their optimism is cautious. Money is still expensive, so don’t expect to see growth of the kind we saw post-COVID this year.?

Last year, investors advised firms to conserve cash and retain profit, and now they need to generate some returns. That means VC- and PE-backed firms should give leadership teams the backing they need to project growth.?

Budgets are higher, projects that had to be shelved are coming back online and that should support better engagement with engineering teams, better retention and a refocus on the role of culture.?

With the worst of the economic turbulence behind us, most CTOs I speak to are finally looking at a year of stability and the likelihood of more interesting work.?

Not everyone, though. Paul Cooper is Director of Technology Operations at River Island, and he reckons,

“2024 will be turbulent across the economy and global politics, this will have an impact on your business and you will need to consider the wider challenges on your current or to-be strategy.”

Nevertheless, tech moves quicker than most sectors and we won’t have to wait long to see the impact of the cautious optimism that’s emerging, I look forward to seeing visible and quantifiable shifts in the tech landscape by the end of this quarter.?

That means firms need to be ready for that shift. But most budgets for this year were signed off at the end of 2023, and they’ll already be looking quite conservative. Many will be revisited within a few months, meaning more work for CTOs but also more firepower.?

My advice and that of our consultants at Majar Group is to avoid the trap of simply doubling budgets without first reviewing your current capacity, projects, priorities, and ability to deliver them.??

Higher budgets bring higher expectations and pressure, and we’re helping ensure companies are set for growth from an internal perspective first, and that expectations are well managed.

Nainesh Mehta is the Director of Engineering at BPP Education Group, and he also sees the evaluation of current projects as critical to success in 2024:?

“My one piece of advice is to continually evaluate if you are prioritising the right initiatives to deliver.? Be confident that you are not working on initiatives that deliver little to no value to the business.”?

That’s the optimistic case for 2024 - what about the challenges?

A report released by Arrows Group this week has found that over half of companies are concerned about training and development, and their ability to attract and retain talent this year.?

Cost savings in 2023 meant a lack of investment in personal development and that gap will be exposed this year. Many staff feel they have not been invested in, they've not had salary increases for 12 months or the level of reward and recognition for hard work during a difficult period. So it’s no surprise that salary comparisons and the anticipated requests for increases are worrying managers. That said, I’ve felt for a while that tech salaries have been at relatively high levels historically and a period of stability or even a slight decrease would not be bad for the market.?

I don’t think we will see a great resignation, but I do expect to see quite a bit of movement of people. As the market stabilises, staff have a bit more security and they may feel more confident in looking for a new role.?

There’s a belief that growth is great, and even if you lose a few people, you can hire and expand. But that’s a myth because there’s a cost to losing people that goes deeper. It takes time to retrain, scale and develop new people,?

In a candidate-led market, it’s still far better to focus on retaining good people. The best companies will be able to both retain and grow, so we’re advising companies to first focus on looking after their own, even if bigger budgets are approved and there’s an air of confidence around.?

Use some of that bigger budget to review and invest in L&D needs, retention measures, and culture. Otherwise you may end up wasting valuable time replacing instead of adding.?

And there’s no time to lose. Of the execs I’ve spoken to since the turn of the year, most told me they have already had a resignation, often at quite senior levels. Although it probably came as a surprise to managers, I don’t see it as the classic January wobble, as for these staff it’s not a snap decision, and they would have considered a move for some time.?

A company’s culture is easily written off, and one of the first when budgets are cut, but I always think the impact of small decisions can be unusually big. I heard from a lot of people that Christmas party budgets were slashed by as much as half, and while people understood the difficult environment, downsizing things that play into culture is a symbolic act that sends a message, or just strengthens a sense of decline and lack of?

One company that hired the NEC in 2022 to host 5,000 staff at an end-of-year event chose to host smaller events for regional teams in 2023. I picked up a real sense of sadness around that decision from their staff, and it wasn’t an isolated example - there are hundreds of teams in similar situations across the sector.?

Culture isn’t the only area that teams will be looking to for a boost. They’ll be looking for clarity on business strategy and better communication after a tough 2023 when companies put long-term strategies on hold and stopped communicating their vision and purpose as effectively.?

Companies that revisit their strategy and come out of the blocks with a bold vision will create their momentum quickly. Those who let things happen organically over 6-12 months will miss an opportunity.

Let’s not forget AI!?

I asked Sarah Greasley , Director, Solutions Architecture EMEA, AWS what she saw as the big questions this year.

“My view is that 2024 is the year when AI becomes real; we know we can drive huge business value from AI, but it will take effort to build systems which manage the balance between accuracy, cost and performance

I am focussing on what this means for businesses and industry. How do we think differently about the way we work in the age of AI? I am also particularly focussed on skills, capabilities and expertise. What does it mean? How do we grow the next generation of expertise?

My advice to CTOs and tech firms is to Think Big, the potential impact is huge”

What does a Director of Engineering see as the strategy for the coming months? Nainesh Mehta told me he’d be focused on, “how we simplify our technology estate, decommission legacy platforms and improve efficiencies across the business.”

On the tech side, AI has been talked to death (I’m as guilty as anyone) but of course, it’s not going anywhere this year.?

Nainesh Mehta’s view was that “2024 will continue the theme of innovating in the generative AI domain.? The technology continues to rapidly evolve and businesses will look to see how they can leverage generative AI to grow existing and open new revenue channels.”

AI made huge strides in 2023 but I’d say a lot of the potential is still just that - potential. At River Island, Paul Cooper is all about provable impact:?

“Proof of Value will be all the rage in H1 as this grows in maturity, but how much of this is measurable will be the outcome that business leaders will be looking for.? My challenge is to deliver more value with less investment in an overly competitive market where the cost of living is having a real impact on customers. So more focus will be on fact-based decisions where value is proven versus faith-based decisions where speed and learning are the ultimate priority.”

Inevitably a lot of the hype surrounding AI has related to productivity and profitability, and another CTO in my network was more interested in the big questions around AI and the way we work:?

“How can we leverage AI to allow us to amplify our people and democratise the toil? Can we have people focus more on their high-value inputs like collaboration, discussion and decisions and leave the toil to the machines?”

AI could touch all these different areas, yet our survey revealed that 25% of businesses still feel underprepared for adoption and for ethical and security issues. CTOs will shoulder a lot of the responsibility and expectation for how AI can drive productivity, but I’ve lost count of the number who have expressed frustration at boards asking “Why aren’t we using this product?” or whatever that week’s hot new app may be. It’s important not to be distracted by the latest trend or shiny new thing, and CTOs I speak to are focused on defining an AI strategy they can commit to, influencing those around them and communicating it to their teams. That’s how they’ll avoid bouncing from one innovation to the next.?

Steady as she goes and stable growth - that may not sound sexy but it’s what I’ll be looking out for this year, and what many in my network are expecting from 2024. If you want to know what others in your sector are thinking, take a look at the Majar Group white paper, which came out yesterday: Link

Thanks to Paul, Nainesh and Sarah for contributing to this newsletter. If you’d like to have your say on a tech topic that’s high up your agenda this year, please get in touch with me on LinkedIn.?