As C-suite executives look ahead to another year of budgets, investing in emerging technologies may be frowned upon in favor of playing it safe during times of uncertainty.
Companies embracing emerging technologies are earning more than those that don't, said Matthew Guarini, VP and research director at Forrester, during a panel at Forrester's Technology & Innovation Global conference on Thursday. However, tech leaders still shouldn't invest just for the sake of having the shiny new thing.
In a survey of more than 500 innovation decision-makers, Forrester analysts discovered companies leading with technology were earning 3.5 times more than their counterparts, according to Guarini. To the researchers, the trend seems backwards because in the past, tech philosophy discouraged investing in emerging tech as the primary way to lead transformation.
Upon closer study, "we found that those companies that were leaders were getting so good with the technology that they were able to use that technology to solve problems that they never solved before," Guarini said.
Leaning into the uncertainties of emerging technology seemingly paid off for decision-makers surveyed by Forrester.
But making the argument for these investments that require capital up front with unknown payoff can be a hard sell. Data analytics, AI, cloud and edge computing can be productive places to start, analysts said.
Applying analytics to existing customer data helps companies anticipate the "next-best experience" for consumers, said Brandon Purcell, principal analyst at Forrester. This concept considers what the company is hoping to get out of the customer and what the customer hopes to achieve when they interact with the company to find the profitable middle ground.
The next-best experience framework pushes business leaders to "look at past customers who've been at a similar crossroads in their journey and see what the impact of each of these interventions has been on average on their customer lifetime value," Purcell said.
This is a part of creating "anticipatory experiences" for the customer base. By understanding past wants and needs, companies can act on what customers want now and choose the best way to serve them, according to Julie Ask, VP and principal analyst at Forrester, speaking on the panel.
"[Enterprises are] going to need a lot of intelligence to anticipate and assemble these engagements to anticipate needs and act proactively," Ask said. "They're going to need speed to execute at every step and in every layer of the network and of the stack, and then finally they need a north star to protect consumer privacy and act ethically."
Taking a leap of faith on emerging technology helps enable this tactic most effectively.
Data analytics at a scale where this can be considered for each customer interaction usually requires AI and machine learning techniques, according to Purcell. Companies that have a strong foundation in these technologies have a smoother time implementing the method to enable it for customer retention and, ultimately, profit.
Public clouds and edge computing have become "innovation engines" for companies pursuing these tactics, too, said Dave Bartoletti, VP and principal analyst at Forrester. Those technologies open up new opportunities for CIOs to accelerate software development at the heart of transformation efforts and take advantage of data analytics and other efforts.
To start, CIOs should be building up container development and operations, reengaging with key software suppliers, and implementing a container platform strategy to take advantage of these trends, Bartoletti said.
Managing the risk of these investments still haunts IT leadership teams. The benefits are valuable, but only if embraced in a careful way that properly manages the possibility of a negative outcome.
Companies only have so much bandwidth for risk, said Renee Murphy, principal analyst at Forrester. Reducing that risk as much as possible at every step of the emerging tech investments helps enable continued innovation.