​2024 Planning: Don’t Let Modest Budgets Create Complacency

One year ago, leaders were facing global unrest, supply chain instability, soaring inflation, the long shadow of the pandemic, and a projected economic slowdown. Yet most had overly optimistic expectations heading into budget season, with every function expecting to lock in modest budget increases for 2023.

Many of last year’s concerns didn’t materialize, and the outlook for the global economy in 2024 is a bit brighter as supply chain disruptions ease and inflation edges back toward targets. The IMF projects growth will bottom out at 3% this year and global inflation will fall to 5.2% in 2024. To gauge expectations for 2024 spending, Forrester’s Budget Planning Survey, 2023, surveyed 470 US business and technology decision-makers across functions, representing nearly 1,000 decisions related to budgets in the next 12 months. Interestingly, 2024 budget expectations are much more realistic. Most leaders in every function anticipate at least some increase in overall spending in the next 12 months but fewer than last year (see Figure 1). Expectations vary across functions.

• Tech leaders are the most bullish on spending opportunities. Eighty-four percent of tech leaders expect their technology budget for 2024 to increase, up from a mere 66% last year. The greatest proportion expect spending growth in data, data science, and analytics, followed closely by information and IT security. Unsurprisingly, AI is the tech category expected to snag the biggest budget increase (see Figure 2).

  Learn more in Planning Guide 2024: Technology Executive

• B2C marketers are more optimistic than their B2B peers. Overall, 80% of marketing leaders expect some level of increase in their 2024 budget, with a large chunk expecting increased investment in headcount; 12% expect budgets to remain flat; and 8% expect a decrease. But there’s a stark difference across business models, with 86% of B2C marketers expecting an increase versus only 74% of B2B marketers.

  Learn more in our ​Planning Guide 2024: B2B Marketing Executives​

• CX and sales leaders have the lowest expectations. Only 64% of CX leaders expect a boost in their budgets for CX initiatives in 2024 — down from 82% last year; 16% expect to spend less overall than this year. Only 54% expect to spend more on headcount. B2B sales leaders’ expectations have grown since last year but are still quite modest, with only 75% of sales leaders expecting a boost in spending.

  Learn more in our ​Planning Guide 2024: Customer Experience​

More realistic budget expectations will serve leaders well as they enter 2024, but don’t let those translate into timid plans and undue complacency. Stakeholder, shareholder, customer, and employee expectations for growth remain steadfast. Outdated, short-term growth strategies will fail in a market driven by empowered digital customers who are hungry for new things. And as generative AI threatens to change every business at an unprecedented pace, now is not the time to hunker down. Now is the time to prioritize what creates customer value, cut inefficient complexity, and experiment aggressively to create differentiation.

Invest in capabilities to bring emotion and engagement to customer experiences, and consistently deliver on your brand promise and vision. When it comes to tech, it’s all about AI. But approach and details matter here — and AI isn’t the only game in town. To get ahead:

• Build a versatile AI strategy that can deliver customer value fast. AI is the story in tech now. But don’t let the hype divert your focus from developing a versatile AI approach that can address multiple needs simultaneously while putting in place the guardrails necessary to yield returns responsibly. In Forrester’s Budget Planning Survey, 2023, 86% of US technology decision-makers in data-related functions anticipate their organization’s investment in AI capabilities will increase over the next 12 months. Work to deliver a broad range of solutions across operations and provide sustainable momentum as your company’s AI experience matures. This momentum will be the result of greater company productivity, clearer knowledge sharing and transfer, and faster deployment and adoption over time. Focus on leveraging AI for both efficiency and effectiveness in the pursuit of delivering more customer value.
• Invest in AI-generated synthetic data to unleash the potential of your data science teams. With AI-generated synthetic data, you take a sample of real customer data, ensure its quality, and use it to generate high volumes of new data that is as good as real data but doesn’t belong to any of your customers. Data science and marketing teams can then access and work with data they weren’t allowed to touch before, while security and privacy teams can relax most of their privacy and other safeguards on the synthetic samples. While companies have only experimented with niche cases so far, the time to invest on a larger scale has come. Plan to use synthetic data sets widely not only for traditional analytics but also to train and refine AI models. As you consider vendors, evaluate your comfort with their level of anonymization, ensure the right processes and legal bases are in place to start using a small sample of real data, and define very clear boundaries for how the vendor can use your real and synthetic data.
• Embrace TuringBots to build software faster, better, and cheaper. TuringBots — AI that helps development teams be more productive across the end-to-end software development lifecycle — are maturing fast. Adoption in areas like coding, testing, and deployment is happening in real time. TuringBots collaborate with all development team members and other business and IT stakeholders to reduce friction, connect different stages of the lifecycle (and shortcut some of them), and thus build applications and products faster. They will automate many use cases, such as optimizing product plans and work overall, generating code from prompts and comments, and creating tests from requirements. Technology leaders should invest in TuringBots to rapidly build and deliver higher-quality custom software that differentiates the business and propels it forward.
• Hire a leader of revenue operations to drive alignment and growth. Driving customer value through increased alignment requires B2B organizations to invest in a senior-level leader responsible for shepherding a revenue operations discipline. Forrester views the need for revenue operations as an expansion of operational focus. This is the most direct way to enhance operational capabilities and close the persistent alignment gaps facing B2B organizations. For organizations with established sales and marketing operations disciplines, revenue operations is neither a reshuffling of existing capabilities nor the insertion of a new level of hierarchy into a leadership structure — it’s an additive effort that harnesses operational resources, improves the buyer experience, and drives predictable growth.
• Create self-serve routes to market and hone digital B2B buyer interactions. Many B2B organizations have experimented with digital, self-service buyer engagement models and product-led growth; it’s now time to make these experiments a permanent capability. Digital natives are an influential B2B buying cohort that engages electronically and transacts online. Forrester’s 2022 data reveals that global senior-level Gen Z and Millennial B2B buyers make up more than two-thirds of digital purchasers. And Millennial leaders who are B2B buyers make up an audience two and a half times larger than that of Gen X leaders, a clear indication that the composition and practices of B2B buyers has changed. As a result, go-to-market strategies must change, too. For 2024, enable buyers to make website, marketplace, app store, and in-product purchases. And remember that purchasing is more than just a transaction; it is a journey — so create a seamless experience for buyers across the full buyer lifecycle.

  Learn more in our Planning Guide 2024: Portfolio Marketing

Creating customer value is the place for investments, but that doesn’t mean that all customer-focused teams or technologies should be on the investment list. For example, nearly every CX program we study has accumulated unnecessary baggage that reduces resources for more urgent and effective initiatives. To trim your budget:

• Avoid adding more cloud environments. Cloud sprawl is real. Focus on the interconnectedness among existing environments to generate greater operational portability in the cloud. In Forrester’s Budget Planning Survey, 2023, 78% of US technology decision-makers anticipate their organization’s investment in cloud infrastructure and development services will increase over the next 12 months. Ensure cloud investments expand capacity, shift workloads seamlessly, and remove barriers to scale delivery across environments. When you do need to add a new environment, such as a new software-as-a-service vendor, consider whether it complements your broader IT design; for example, Workday has an option for running on AWS purchased out of the AWS Marketplace, which can result in better interoperability and cost savings for AWS customers.
• Stop automatically relying on digital service providers. Per Forrester’s Digital Business Strategy Survey, 2023, global digital business strategy leaders whose organization has a dedicated budget for digital initiatives expect their firm to spend a whopping average of 29% of their organization’s digital budget on services in the next 12 months. Outsourcing can meet your immediate needs, but your firm’s survival and competitiveness hinge on developing in-house expertise. Hit “reset” now: Stop automatically turning to and relying on your digital service providers. Instead, rigorously review each provider you work with. Beyond offering stopgap solutions, can that provider become a more valuable co-innovation partner? Can it cocreate transformative solutions, provide ready-made partnerships that advance your business strategy, and augment your ecosystem of co-innovation partners? If not, plan to wean yourself off that provider and evaluate alternatives, including internal talent. For your truly strategic services providers, evolve to outcomes-based contract terms.
• Eliminate redundant tools across functions. Many leaders pay for similar capabilities several times over because they don’t realize they have multiple vendors with overlapping capabilities that the organization is unable or unwilling to act on; for example, many organizations have multiple vendors that provide surveys. Even if your budget grows next year, now’s not the time to pay for tools you don’t currently need, especially when solutions providers make it so easy for clients to turn on new capabilities when they need them. Conduct a tech audit across every function — including customer service/contact center, digital, and experience research, regardless of where they sit in the organization — to understand where capabilities overlap. Then, plan which programs to consolidate and which to sunset entirely.
• Let go of ITIL training. The ITIL (formerly IT Infrastructure Library) standard has been a training mainstay for decades, standardizing terminology and basic process models for IT and digital organizations. However, since 2013, it has slowly declined under pressure from agile and DevOps practices. ITIL as a framework still made some sense for immature organizations. However, PeopleCert (the current owner of ITIL) is changing its business model, and vendors intimately associated with ITIL for many years, such as Pink Elephant and ITSM Academy, have either discontinued their relationships or had them terminated. As a framework, ITIL is clearly in its endgame, and we don’t expect any further updates or significant thought leadership. Forward-looking digital organizations should look elsewhere for training.

AI has moved well past the experimental stage and requires real commitment and investment. But more advanced capabilities should dominate your list of ongoing experiments, including:

• Autonomous workplace assistants (AWAs). AWAs are cognitive or physical automations that can make decisions, act without approval, and perform a service based on environment, context, user input, and learning in support of workplace goals. They can be scheduled, triggered by an event, or directed by a human. These employee assistants or copilots can meet many needs due to the narrow conversation and resolution paths typical of many jobs. A health agent AWA, for example, can transcribe doctor’s notes, populate patient medical records, and orchestrate sign-off; a loan originator AWA can gather client data, prepare documents, compute credit scores, fund accounts, and manage client communication. The rapid progression of generative AI will encourage enterprises to experiment with creative AWA use cases.
• AI and machine learning security. Most of the AI implementations that security leaders will encounter will come from buying tools that include AI. But security leaders should anticipate “BYOAI” initiatives and a proliferation of finely tuned generative AI models customized to department-specific tasks. That will necessitate introducing a new set of controls designed to protect these models. This emerging segment within cybersecurity includes not only pure security use cases but also model stress testing and audits. Explore new frameworks like Alphabet’s Secure AI Framework and new vendors like CalypsoAI, HiddenLayer, Protect AI, and Robust Intelligence as funding pours into this segment.

Explore our full list of planning guides reports and webinars to understand current budgeting trends across functions and gain insight on where to increase investment, cut spending, and experiment for the largest impact:

Forrester clients can access all of our 2024 planning guides here.