2023 Planning Isn’t

Business As Usual
Embrace Discipline And Precision To Navigate Volatility
The Balancing Act Ahead
Economic headwinds coupled with unexpected trends in
employment will make planning and budgeting for 2023
trickier than normal. Leaders must temper their overly
optimistic predictions for budget increases with discipline
and precision. Those who come out on top in 2023 will
prioritize investments that maximize revenue growth,
profitability, and resilience while cutting spending in areas
prone to waste. They also will maintain experiments with
emerging technologies that show growing value. Read this
guide to explore current budgeting trends across functions
and understand where to increase investment, cut spending,
and experiment for the largest impact.

© 2022 Forrester Research, Inc. All Rights Reserved. 2

Leaders Are Overly Optimistic Heading
Into The 2023 Planning Season

Global unrest, supply chain instability, soaring inflation, and the long shadow of
the pandemic dominate today’s headlines — and point to an economic slowdown.
The IMF projects that world economic growth will slow to 3.2% this year, down from
6.1% in 2021. Hiring freezes and layoffs have hit the tech sector in earnest over the
past few months, despite a surprising recent uptick in job growth overall.

Slower overall spending mixed with turbulent and lumpy employment trends will make
it difficult to navigate 2023 planning and budgeting. To gauge current expectations for
2023 spending, Forrester’s Budget Pulse Survey, 2022, surveyed 382 US business and
technology decision-makers across functions, representing nearly 1,000 decisions related
to budgets in the next 12 months. We uncovered overly optimistic hopes for:
• Modest budget increases across all functions. Most unlikely to drop spending on talent — both internal hires
leaders in every function expect at least some increase and external services. In fact, on average, 60% expect
in overall spending in the next 12 months; less than 10% to increase spending on personnel and 62% expect to
expect a decrease, with the exception of B2B sales (see increase spending on external services (see Figure 2).
Figure 1). Marketers and product management leaders
• More spending on key technologies. Leaders across
are the most bullish; B2B sales and tech/IT leaders are
functions don’t want to slow down tech investments
much more cautious.
either, with 67% reporting expected budget increases
• Continued spending on people and skills. Despite in technology. Category standouts for the biggest
some high-profile hiring freezes and layoffs at firms like expected increases are digital experience software,
Alibaba, Klarna, Meta, and Microsoft, leaders say they’re privacy tools, and cloud security (see Figure 3).

Figure 1 Planned Or Anticipated Total Budget Changes Across Surveyed Functions

Respondents who planned or anticipated a change in their organization’s investment

in the next 12 months by functional area

Increase Stay about the same Decrease Don’t know

Product management 88% 10% 2%

Marketing 85% 6% 9%

Customer experience 82% 11% 6% 1%

Technology/IT 66% 24% 9% 1%

B2B sales 60% 16% 24%

Base: 50 to 187 business and technology decision-makers; sample size varies by function.
Source: Forrester’s Budget Pulse Survey, 2022

© 2022 Forrester Research, Inc. All Rights Reserved. 3

Figure 2 Planned Changes In Organizations’ Budget In The Next 12 Months Related To Personnel

Respondents who planned or anticipated a change in their organization’s investment

in personnel in the next 12 months by functional area

Increase Stay about the same Decrease Don’t know

Product management 74% 20% 6%

Marketing 72% 18% 10%

Customer experience 70% 24% 6% 1%

Technology/IT 54% 32% 13% 1%

B2B sales 54% 38% 8%

Base: 50 to 187 business and technology decision-makers; sample size varies by function.
Source: Forrester’s Budget Pulse Survey, 2022

Figure 3 Tech Categories For Which Respondents Are Planning A Budget Increase

“Which of the following describes any planned/anticipated change in your

organization’s budget for the following technologies in the next 12 months?”
(Percentage of respondents who selected “Increase”)

Software

Digital experience 66%

Privacy tools 65%

Customer relationship management (CRM) 62%

Commerce 62%

Marketing technology tools 61%

Software development and engineering 60%

Customer experience 57%

Return-to-work tools 57%

Business management 53%

Procurement and sourcing 53%

Employee experience/human capital management 52%

Manufacturing and supply chain 47%

Base: 89 software technology decision-makers

Source: Forrester’s Budget Pulse Survey, 2022

© 2022 Forrester Research, Inc. All Rights Reserved. 4

Tackle 2023 Planning With Discipline
And Precision

Kudos for heeding the lessons of the early days of the

pandemic when those who boldly invested in digital innovation
found success. Slashing budgets with a blunt instrument didn’t
work in 2020, and it won’t work in 2023, either. But don’t bury
your head in the sand: 2023 budget pressure will be intense,
and blindly planning for modest spending increases across
the board will backfire. To come out on top, you’ll need more
discipline and precision to prioritize investments, trim waste
intentionally, and place smart and bold investment bets.

Prioritize Investments That Boost Customer Value

It’s true that the best way out of a downturn is to continue investing — but only if you
pick the right areas. Prioritize investments that maximize revenue growth, profitability,
and resilience (see Figure 4). This includes targeted and coordinated investments
in technology, talent, and insights that help drive customer value and will accelerate
differentiation coming out of the downturn. The top items to defend and ideally increase
in 2023 are:

• Customer insights and engagement. 2023 is unlikely • Technologies that improve customer experience and
to look like the 2020 shutdown or any past recession, reduce costs. Unlike the pandemic-induced need for
rendering many assumptions about your customers tech for new digital experiences and anywhere work,
and their behavior useless. Invest in more relevant and the current economic headwinds will demand more
reliable customer data to help sharpen your audience focus on tech tuned for optimization and resilience. For
targeting strategy and shift budgets to higher-yielding example, a cloud cost management and optimization
tactics with proven financial value. Prioritize investments tool can help wrangle escalating cloud spend. But this
in normalizing and augmenting data from disparate doesn’t mean you should turn your back on digital
systems and sources as well as customer analytics experience innovation. Keep pushing forward, but
and tools like experience research platforms that prioritize investments that also reduce operational costs.
democratize and accelerate customer research. Finally, Document extractions, robotic process automation
recalibrate messaging to address new or evolving (RPA), and agent assist apps can bolster well-designed
customer needs, focusing on post-sale experiences that self-service experiences with smart escalations to live
drive loyalty, cross-sell, and upsell opportunities among agents that drive loyalty. And they save money, as self-
your existing customers. service channels are less expensive than staffed ones.

© 2022 Forrester Research, Inc. All Rights Reserved. 5

• Security. Cyberattacks and data breaches don’t • Talent and productivity. One possible upside of an
pause with an economic slowdown — especially economic slowdown is a cooldown of the white-hot
when geopolitical events and technology disruption talent market. But job-hopping — especially among
continue to fuel a highly sophisticated threat landscape. digital talent — is here to stay, with the best employees
Prioritize security solutions that protect customer-facing expecting a competitive salary and benefits plus the
and revenue-generating workloads as well as any tools and technology to allow them to work anywhere,
infrastructure critical to health and safety for industries anytime. Don’t pull back on the talent acquisition and
like utilities, energy, and transportation. Defend retention improvements you put in place this year, but
investments that support cloud modernization and your balance them with a renewed focus on productivity.
organization’s evolution to Zero Trust. And make sure Sales leaders, for example, should deemphasize
you’re able to respond when the inevitable attacks and reliance on a few heroic reps or dramatic headcount
breaches occur by investing in crisis simulation and increases; they should instead invest more liberally in
purple team exercises. scalable levers like integrated processes rooted in data-
driven and actionable insights.

Figure 4 Where To Increase Investment In 2023

Increase investments in: Examples

Customer insights and engagement • Customer analytics

• Experience research platforms
• Recalibrated post-sale experience messaging

Technologies that improve customer experience • Cloud cost management and optimization
and reduce costs • Robotic process automation
• Intelligent agents/agent assist apps

Security • Security solutions that protect customers

• Zero Trust
• Crisis simulation and purple team exercises

Talent and productivity • Talent acquisition

• Coaching programs
• Sales productivity tools

© 2022 Forrester Research, Inc. All Rights Reserved. 6

Cut Spending On Unproven Tactics And Waste

Today’s economic climate will put outsized pressure on budgets. Use this moment as an
opportunity to cut spending in areas prone to waste (see Figure 5). A shortlist of spending
reduction opportunities includes:

• Bloated software contracts. Economic uncertainty is • Low-quality data and innovation outsourcing. External
destabilizing some software markets as established partners will continue to play an important role in your
firms struggle to live up to their valuations and new growth, but two key areas are ripe for deep cuts. First,
entrants struggle to survive. Use this moment to the quality of third-party data continues to drop as
renegotiate prices (including pushing for consumption- regulators and tech companies like Apple aim to tamp
based pricing), optimize terms, and consolidate down on unchecked data sharing, so streamline your
contracts. Contracts with core enterprise apps likely get third-party data partnerships to only those that add
regular scrutiny, but don’t overlook agreements with value to customer relationships and offer a futureproof
point solutions, such as voice of the customer. These solution. Second, many firms have relied too heavily on
offer potential savings by consolidating department- partners for digital innovation — especially during the
specific contracts and taking advantage of recent M&A pandemic-induced digital sprint. Consider bringing more
activity — such as Qualtrics’ purchase of Clarabridge or innovation in-house to solve two problems at once:
InMoment’s acquisition of ReviewTrackers. Be pragmatic freeing up budget and providing a creative outlet that
about who needs a license, and scale back seat-based will help retain talent.
spending to employees who really use it.
• Underperforming markets and customers. While it
• Technical debt, including cloud. Many thought cloud seems obvious, leaders all too often continue their old
would be the antidote to technical debt. But yesterday’s habits and miss the opportunity to assess and document
lifted-and-shifted workloads are now debt themselves, the markets that they should exit, pause on, or passively
given how inefficient to operate and difficult to upgrade harvest — as well as activities that they should modify
they are — especially compared to cloud-native options. or drop. Use this moment to reallocate resources
Plus, even the smallest bit of inadequate governance, toward high-potential customers and market segments.
misdirected investments, poor coordination, and failure However, don’t completely ignore buyers in those
to manage change increase technical debt. Forrester’s segments negatively impacted by economic challenges;
2022 data shows that business and technology implement lower-cost nurture programs instead. These
professionals with future fit tech strategies are more than will reduce your current costs yet still position your
two times more likely than others to view upgrading, organization to be first in line when these organizations
refreshing, or consolidating business apps, hardware, recover and are ready to spend again.
and software infrastructure as critical. In 2023, minimize
legacy investments and duplicative or underutilized
tools across your entire tech stack as an intentional
part of your planning. And yes, consider early cloud
deployments as candidates for technical debt reduction.

© 2022 Forrester Research, Inc. All Rights Reserved. 7

Figure 5 Where To Cut Investment In 2023

Cut investments in: Examples

Bloated software contracts • Outdated pricing and terms

• Duplicative contracts
• Inactive seats

Technical debt, including cloud • Legacy investments

• Duplicative or underutilized tools
• Early cloud deployments

Low-quality data and outsourcing • Third-party data partners

• Digital innovation outsourcing

Underperforming markets and customers • Expensive programs for low-potential customers

Figure 6 Emerging Technology To Experiment With In 2023

Experiment with: Description

Edge intelligence Tools that help firms conduct advanced analytics

and algorithmic decision-making on localized data
that’s collected and processed away from data
centers and public cloud

Intelligent agents Software that can make decisions or perform a

service based on its environment, user input, and
experiences; often referred to as bots, chatbots, or
digital workers

Extended reality, the metaverse, and Web3 A set of interlinked technologies that hold the
promise of immersive experiences linked to
token-based ecosystems using cryptocurrencies
and public blockchains

TuringBots AI-powered bots that can augment developers’

ability to design, build, change, test, and refactor
software in automatic and autonomous ways

Privacy preserving technologies (PPTs) Technologies like homomorphic encryption,

multiparty computation, and federated privacy that
protect customers’ and employees’ personal data
while processing it

© 2022 Forrester Research, Inc. All Rights Reserved. 8

Experiment Carefully With Emerging Technology

Despite the need for real cuts, don’t fall prey to the temptation to eliminate all experimentation,
especially when it comes to emerging technology. These experiments — and the creative
muscle they build — create and sustain competitive differentiation and justify further
investment. We recommend running small experiments in order to discover new opportunities
without sacrificing precious budget dollars (see Figure 6). Evaluate and invest wisely among
our list of top emerging technologies with growing and promising value:

• Edge intelligence that brings analytics directly to • TuringBots that write code on their own. These AI-
the customer. Edge intelligence is an evolution of IoT powered bots can augment developers’ ability to
advanced analytics in which much of the data analysis design, build, change, test, and refactor software in
and machine learning is done on compute resources automatic and autonomous ways. TuringBots leverage
that exist much closer to where the data is generated. various AI technologies, such as program synthesis;
It includes tools that help firms conduct advanced natural language processing; computer vision; machine
analytics and algorithmic decision-making on localized learning; deep learning; transfer learning; reinforcement
data that’s collected and processed away from data learning; generative adversarial networks; and, of
centers and public cloud. Customer digital experiences course, software development, testing, and release.
will benefit from edge intelligences as edge servers
• Privacy preserving technologies (PPTs) that
or smart devices process large local data sets and
protect data. PPTs like homomorphic encryption,
generate personalized interactions.
multiparty computation, and federated privacy enable
• Intelligent agents (IAs) that make experiences more organizations to protect customers’ and employees’
human. IAs are software that can make decisions or personal data while processing it, such as when
perform a service based on their environment, user input, exploring personal data to build data models for
and experiences. Often referred to as bots, chatbots, AI or sharing sensitive personal data across the
or digital workers, IAs use combinations of RPA, digital organization for analytics projects. PPTs promise
process automation, business rules, machine learning, to unleash the potential of high-performance AI
natural language processing, and conversational AI. Plan models while satisfying privacy, ethics, and other
for ongoing experimentation, as IAs won’t reach their regulatory requirements.
full potential for several more years due to the number
Intentional experimentation — combined with prudent
of dependencies and vast amounts of data required for
spending choices — will help businesses navigate volatility
them to make experiences more human.
and strengthen their position long term. Though planning
• Extended reality, the metaverse, and Web3 that offer for 2023 will come with unique pressures, it is also an
immersive experiences. These interlinked — and opportunity to sharpen focus, create differentiation, and
arguably overhyped — technologies hold the promise enhance customer value.
of immersive experiences linked to token-based
ecosystems that use cryptocurrencies and public
blockchains. Despite massive publicity and venture
funding, these technologies must overcome many
hurdles in order to deliver on the integrated future
they promise for consumers. Still, firms in consumer
industries should experiment with metaverse precursor Survey Methodology: Forrester’s Budget Pulse Survey,
platforms like Roblox and Decentraland to open doors to 2022, was fielded in July 2022. This online survey
included 382 respondents in the US from companies
new audiences now. And all industries should consider
with 500 or more employees, representing nearly 1,000
employee-facing experiments to drive collaboration,
budget-related decisions.
remote assistance, training, and onboarding.

© 2022 Forrester Research, Inc. All Rights Reserved. 9

Make The Right Investment Choices
In 2023
Planning for the coming year will be a balancing act. It will require discipline and
precision — as well as the courage and the vision to place bold investment bets.
Forrester Decisions — a portfolio of research services for leaders across technology,
customer experience, marketing, digital business, sales, and product management —
can give you the line of sight you need to stay ahead. It empowers you and your team
to shorten the distance between bold vision and superior impact.

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