Annual budget season is here again. A challenging task for all stakeholders, including CTOs. Analyzing and predicting the current and future needs of a business can be complex, especially when it comes to addressing the current challenges of the e-commerce industry.
According to Forrester’s Budget Planning Survey, 2024, 84% of technology decision-makers anticipate their organization’s tech investment increasing over the next 12 months.
It’s not news the industry is constantly evolving. The resources needed to adapt to new technologies and customer demand require a significant investment in both research and development.
E-commerce budget planning, why is it important for a CTO?
As e-commerce companies invest more and more in technology in order to keep up with the competition and meet the demands of their customers, the percentage of the budget allocated to the engineering department has increased. According to Gartner, IT spending is expected to grow by 8% in 2024, with software and data driving that growth. In 2023 it grew by just 3.5% in comparison.
E-commerce tech budget planning allows a CTO, and their team to:
- ensure that the team has the resources it needs to maintain and update existing systems, as well as invest in new technologies to improve the customer experience and operational efficiency,
- make informed decisions about technology investments, carefully considering the costs and benefits before making a decision, to avoid wasting time and money on unnecessary or ineffective technologies,
- track spending and identify areas for improvement. For example, vendors that are too expensive, or not cost-effective,
- communicate how the department is using its resources to achieve the company’s overall goals.
The challenges of budget planning in 2024
All businesses are increasingly aware of the importance of technology in driving business success and staying ahead of the competitor. But this does not come without challenges. In the face of economic uncertainty, software and technology costs are rising in line with inflation. And cybersecurity threats are becoming increasingly sophisticated, meaning more resources must be allocated to data & system protection. Each of these factors can put a strain on budgets.
Key areas of investment in eCommerce in 2024
Despite the challenges mentioned above, the opportunity to use technology to improve efficiency and reduce costs, develop new products and services to changing customer needs, and create a more sustainable business are to be considered.
Here are the top trends and priorities across e-commerce in 2024. We’ve been hearing about many of these trends for a few years now, so you may have already started implementing technical solutions to address them. And if not, you’re still right on time.
- Digital Experience
- Personalization
- Marketing and Sales Technology
- AI, AR/VR, blockchain
- Sustainable e-commerce
- Quick commerce
- Omnichannel commerce
Key areas of tech investment in 2024
1. Infrastructure and scalability
2. Cybersecurity is a top priority
3. Focus on innovation and future-proofing
4. Review legacy systems and outdated applications
5. Leverage cloud services
6. Integrate APIs across systems
7. Considering total cost of ownership
8. AI implementation & digital experience
Key areas of investment in eCommerce in 2024
So, with the current budget constraints and the evolving e-commerce landscape now in mind, CTOs are devising strategies to make the most of their resources. Here are the key areas CTOs are considering for investment in 2024:
- Infrastructure and scalability, including cloud computing, to ensure seamless growth and adaptability.
- Keep cybersecurity at the top of the agenda with heightened measures to protect sensitive data and customer information.
- Focus on innovation and future-proofing by investing in cutting-edge technologies will ensure that you maintain a competitive edge and meet the ever-changing demands of the market.
- Reviewing legacy systems will enhance efficiency and help developers integrate the cutting-edge technologies mentioned throughout this article. And, ultimately, introduce agility and flexibility into your platform.
- Leverage cloud services will streamline operations and reduce IT costs in the short and long term.
- Integrating APIs across systems will foster seamless data exchange between services, features and different backends, increasing cross-platform compatibility.
- Considering total cost of ownership (TCO) will ensure that tech investments align with overall business objectives, and align with longterm ROI goals.
- AI implementation & digital experience enhancements will contribute to delivering more personalized, immersive, and frictionless user experiences.
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Tips for effective budget planning in 2024
Now you have a clear understanding of where your investments lie in 2024, here are a few tips on how to manage expectations, and stay on top of your budget:
- Be flexible: adapting your investment strategies as circumstances change will ensure you stay ahead.
- Be realistic: it’s crucial to ground your expectations by considering the potential risks and rewards of each investment.
- Prioritize investments according to reachable goals and ROI.
- Analyze and present the impact of technology on budgetary needs.
- Harness cross-departmental collaboration in your budget planning. Involve all stakeholders so that your goals are aligned.
Budget Planning for e-Commerce CTOs in 2024
As the e-commerce industry continues to evolve, CTOs play a pivotal role in steering their brands towards technological innovation and operational excellence. By carefully considering the challenges and opportunities ahead, CTOs can make informed decisions about their tech investments, ensuring competitiveness and well-positioned future growth.
By embracing the strategies outlined and collaborating closely with stakeholders across the organization, CTOs can effectively manage their tech budgets, drive technological advancements, and propel their e-commerce businesses towards success in 2024 and beyond.