By Greg Braca
The pace of change in today’s technology world is increasing at unprecedented speed, and this is adding new complexity to what has always been one of a CEO’s top priorities: the ability to grow.
Technology investments have the potential to bolster productivity and create smart efficiencies. These process improvements become instrumental when achieving success.
However, the number of tools and programs in the digital world, from the cloud to the internet of things (IoT), can make a technology investment strategy complex and overwhelming.
This reality was underscored by the results of TD Bank’s recent survey data from the Bloomberg Breakaway Summit in New York. According to respondents—a group of high-level company executives that included CEOs, chief financial officers and company founders—technology was predicted to have the second most significant impact on their business next year.
The results of the survey also showed:
· 44 percent plan to increase capital spending somewhat in the next year;
· 25 percent want to use capital spending for cloud technology;
· 20 percent said they will use capital spending to invest in the IoT;
· nearly 25 percent cited outside financing options as the primary source of funding for their company’s capital spending plan.
Furthermore, while 56 percent of leaders surveyed said their credit needs will remain the same, 32 percent expect to have an increased credit need. This makes the company’s financial partner essential, since they are positioned to guide company leaders through this increasingly complicated matrix.
As businesses in nearly every industry move quickly to adapt new technologies under tight budget environments, the financial partner must work even harder to deliver a dedicated suite of products that addresses these concerns. Such partners can bring a wealth of knowledge to any business relationship and help develop the company’s capital spending plan. The decision to increase capital spending for technology purposes should not be underestimated.
Here are three tips when utilizing capital for technology investments.
· Before speaking with a lender, determine which investments are business-critical. The ability to outline what efficiencies can be created and what capabilities would be added can help streamline the financing process with the lender.
· Engage a lender early in the process to help determine the best financing options.
· Speak with a financial partner that will help you set priorities and establish a budget.
Investments in technology are important across all sectors, especially as pressures on earnings intensify. These investments allow companies to gain a competitive advantage by improving productivity through functions that create smart efficiencies, such as automation.
While navigating the ever-evolving technology world may seem difficult, it’s nonnegotiable for companies that want to remain competitive and grow market share.
Greg Braca is the head of corporate and specialty banking at TD Bank.