What are the top software buying trends of 2023 for UK firms?

The UK is facing rising energy costs, inflation, and a tight labour market. How are these challenges affecting businesses when it comes to choosing software to improve their operations and competitiveness? This Capterra study looks to find the answers. 

With inflation at its highest rate in 41 years, energy prices rising, and one of the tightest labour markets in recent years, 2022 has been a difficult time for UK firms. What challenges will businesses face in 2023, and what software buying trends will play a role in this year’s business strategies? 

Perspectives may vary between doomsayers and optimists. With increasing talk of recession, it should be little surprise that confidence levels among UK SMEs have fallen to their lowest since the pandemic. However, a recent report has revealed that half of UK SMEs currently operating internationally plan to enter new global markets in 2023. This approach to diversifying markets and catering to new customers may support growth and create resilience to changing domestic market conditions. 

The current economic climate can present challenges and uncertainties. Businesses must find solutions to ensure continuity and support their activities. These can range from adopting CRM software to manage customer relationships, deploying recruitment software to help find the best talent, or optimising customer service to cater to new markets and customer demands.

What types of tools are companies planning to invest in during 2023? Can software help organisations address the challenges they will find this year? We sought to answer these questions with our study, conducted from August 2022 to October 2022. The participants were 1,526 decision-makers in companies with under 1,000 employees in Australia, Canada, France, the United Kingdom, and the United States. The UK panel consisted of 253 respondents. 

A complete methodology is available at the end of this article. 

Despite the recession, software spending will increase in 2023

Difficult days may lie ahead for businesses in 2023. According to the Bank of England, the UK may be facing the longest recession since records began. Current energy-intensive industries like steel, chemicals, and glass manufacturers are expected to need government support in 2023 to cushion the shock of rising energy bills. Additionally, the Confederation of British Industry (CBI), the UK’s biggest business group, warned that the UK is at risk of facing a decade of lost economic growth.

Businesses can prepare themselves for this scenario with different spending plans. Some have reduced costs in areas such as corporate travel or staff recruitment. Others will look for new ways to invest in streamlining operations.

Software buying trends, for example, are not expected to wane. 2022 began on the back of a record-breaking year for the UK tech sector. Record investments of over £29.4bn have seen the sector thrive, creating more unicorns and opportunities than ever.

62% of UK firms plan to spend more on software in 2023

When asked about their company’s projected budget for spending on technology and software in 2023, 45% of UK respondents said they plan to spend between 10% and 20% more in 2023 than in 2022. 17% planned to spend even more than that threshold. Only 7% of respondents said they planned to spend less on software in 2023 than in the previous year.

The UK also had the highest percentage of survey-takers who planned to spend the same budget as last year. While the average for all international respondents was 26%, the figure for UK respondents was 30%.

Using the right technologies can help companies overcome upcoming challenges. This can be done through varied approaches. These include implementing remote working tools, deploying automation processes to reduce repetitive tasks and enhance productivity, or using sustainability software to comply with government regulations on emissions and save energy.

What software investments will UK firms prioritise in 2023?

Many UK companies are looking to increase their spending on software in 2023. But what do they want to invest in? By reviewing the trending software technologies among our respondents, we saw that security was a growing concern for businesses. 41% of UK respondents listed cybersecurity as one of their top priorities for investments. 

Cybersecurity is a growing concern

The latest UK Cybersecurity Breaches Survey reported that 39% of UK businesses had identified a cyberattack in the past year. However, the same report suggested a risk of less cyber-mature organisations —with less advanced levels of protection to detect, respond to, and recover from threats— might be underreporting and that this number may be even higher. 

With this risk in mind, businesses must be prepared for cyberattacks. Our survey results highlight the concerns many UK companies have regarding security:

• 70% of respondents say they either had already started using cybersecurity software before the pandemic (39%) or have adopted it since for permanent use (31%)
• 38% of survey-takers cited security concerns as one of the top challenges when investing in technology
• Nearly three in ten decision-makers identified managing and preventing cybersecurity threats as one of the biggest challenges heading into 2023
• 58% of respondents consider advanced cybersecurity as a valuable or potentially valuable emerging technology for their organisation, the highest percentage of all surveyed countries

Marketing, supply chain, and IT management are also priorities

Among the other technology investment priorities highlighted by respondents, marketing (41%), IT management (40%), and supply chain management or enterprise resource planning (39%) are in the top four. 

Marketing activities are equally as important to our respondents as cybersecurity. In combination with sales management or CRMs, which received 36% of votes in our survey, investment priorities centre on providing services that focus on managing customers, generating leads, and increasing brand loyalty. 

However, with recent supply chain problems arising from Brexit, COVID-19, and staff shortages, businesses haven’t forgotten the importance of strengthening their operational flows with supply chain management software. These tools can, for example, help organise production chains or detect disruptions in workflows to improve efficiency.

IT management also figures as a high priority to ensure that all computer systems and networks run smoothly as companies strengthen their digital presence. 

Which emerging technologies do UK companies see as the most valuable?

Our survey shows that advanced cybersecurity was the most valuable or potentially valuable emerging technology for UK organisations. What other technologies were valued by our respondents? 

Half of UK respondents valued technologies that can help them integrate software with other applications. Omnichannel capabilities are becoming increasingly important for industries looking to combine several applications in one or to deliver customer services or share information over numerous channels. Similarly, the interconnection of devices and the cloud can also raise interest in the Internet of Things. 

A third of UK decision-makers considered artificial intelligence and machine learning to be among the most valuable emerging technologies. These can provide businesses with the tools to deliver more personalised experiences to customers. This can be done by leveraging data and using predictive analytics to anticipate consumer behaviour based on past interactions. Automation, also selected by a third of UK respondents, can help reduce costs by, for example, answering routine requests automatically, thus saving time for both employees and customers. 

UK firms are more cautious in their approach to emerging technologies

Digital transformation strategies may incorporate technology disruptions that can change your business. Businesses often have to decide whether to be early adopters of emerging technology. Doing so has its benefits. Companies can, for example, gain early access to solutions to industry problems, participate in product development, become thought leaders, and gain a competitive advantage. However, they also risk facing bugs and defects, encountering compatibility issues, or becoming the victims of marketing hype.

Among our international respondents, UK companies were the most cautious when approaching new and emerging technologies. 54% of UK decision-makers said they approached new and emerging technologies ‘somewhat’ or ‘very’ cautiously, compared with an average of 48% across the surveyed countries. 

According to the World Intellectual Property Organization, the UK stands as the fourth most innovative economy in the world. This, however, is not reflected in our survey when it comes to taking risks with new and emerging technologies. Although 50% of UK respondents agreed that emerging technologies played an integral part in their organisation’s IT strategy, this figure is lower than the average of 57% across all the surveyed countries. 

The UK also relayed the lowest percentage in agreeing that their company managed to keep pace with emerging technologies. Only 48% of respondents felt this way, while the average among all surveyed countries was 56%. 

Additionally, only 40% of UK respondents agreed that their company was an early explorer of emerging technology, against an average of 53% among all surveyed countries. When finding a cause for this, only 45% of British respondents thought their company had sufficient resources to monitor emerging technologies compared to an average of 55% across all countries. UK C-suite executives should ensure that proper funding is given to research, monitor, and invest in digital technologies.

What are the main investment challenges?

Even if businesses invest more in software in 2023, they may face challenges on the way. UK decision-makers most frequently cited compatibility, identifying the right technology, and security as the top three challenges their organisation faces when planning investment in new technologies.

Compatibility

42% of UK respondents signalled that investing in software that was compatible with existing systems was an obstacle. With so many technologies available, the need to integrate them with existing systems is crucial. Solutions such as system integration tools and performance testing tools can help identify if apps run as expected. 

Security

Security is also a major concern. Any security breach can be problematic for organisations, and UK SMEs have been particularly vulnerable to cyberattacks. Businesses should deploy varied solutions to ensure data backups and network security while using multi-factor authentication to help secure systems against potential attacks. Training staff on how to detect security breaches and use new technologies is of equal importance. 

Identifying the right technology

The third biggest challenge for respondents was identifying the right technology. This task is easier said than done, even more so if we see that UK companies steer on the more cautious side when deploying new, unproven technology solutions. 

UK businesses are still committed to digital transformation

Our survey shows that despite the difficulties 2023 may bring, UK companies are still set on developing their digital transformation strategies. Some challenges have been identified. For example, there are some reservations when it comes to implementing emerging technologies as opposed to proven ones. There are also concerns regarding security. However, companies have responded by increasing investments rather than shying away from technology. 

Consequently, UK businesses are looking to apply part of their budget to strengthen their cybersecurity capabilities. This is in addition to focusing on other strategic elements that can improve their revenues and operations, such as marketing, IT management, and supply chain management. However, to successfully adopt digital technologies, these companies need to do their research to choose the right software and ensure their solutions can integrate into their existing systems.

Choosing the best software may not always be easy. In the second part of our survey analysis, we will look deeper into buyer behaviour and provide tips on how businesses can ensure they make the right decisions when choosing and buying software.