Tech has been a deflationary force for the past 20 or 30 years.
By Peter Burrows, technology journalist and author
Editor’s note: This story originally appeared in the winter issue of Workflow Quarterly.
Uncomfortably high inflation isn’t likely to go away anytime soon. That was Federal Reserve Chair Jerome Powell’s message in early February, when he said bringing surging prices to heel will be “a process that takes a significant amount of time.” For companies contending with an already uncertain macroeconomic outlook, this was unwelcome news. With war in Ukraine and the lingering effects of the pandemic also disrupting business as usual, who could blame leaders for feeling at the mercy of forces outside their control?
At times like these, businesses should remember they have a tool at their disposal to temper the impact of inflation: digital technology.
How so? There are two main forces at work: First, the costs to build technology—particularly software—usually rise more slowly than goods and services that require lots of repeated labor and physical parts. Second, investments in technologies like AI, robotic process automation, and natural language processing (NLP) can provide a powerful boost to productivity and help blunt the impact of inflation for businesses.
The 22% of companies that have completed digital transformations have a distinct advantage over those that have not, posting 17.3% higher revenue growth and 14% greater net margins, according to the MIT Center for Information Systems Research. Given software’s inflation-fighting qualities, companies still at an earlier stage of their digital evolution would do well to lean in now.
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