The tech industry shifted1 from high growth throughout the pandemic to cost control starting in late 2022 and continuing into 2023. As a result, companies and their CIOs are focused on building resilience1 into their operations. Technology is a critical component to weathering uncertainty, responding to labor shortages, and keeping employees satisfied. More specifically, CIOs will continue to prioritize security software and cloud migration this year.
100 CIOs from the US and Europe were surveyed by Morgan Stanley for their 1Q23 CIO Survey. The survey found that in 2023, security software remains the top CIO priority, followed by cloud computing, data warehousing/business intelligence/analytics (DW/BI/Analytics), AI/ML, and digital transformation. In this quarter’s survey, AI/ML surpassed digital transformation from last quarter’s survey.
It is not surprising that CIOs continue to prioritize cybersecurity after cyber attacks increased in 20221 and are expected to continue increasing this year. The CIOs surveyed indicate that security software will receive the greatest IT spend in 2023. Investing in cybersecurity is a great way for companies to build resilience amidst shortages in critical IT skills and labor in general.
In many ways, cloud computing and digital transformation go hand-in-hand. While only 19% of data is stored in the cloud today, CIOs expect 43% of data to be centralized in a cloud data-based warehouse or lake by the end of 2024. Even more encouraging for the sector, the percentage of CIOs expecting to or having already completed data centralization increased from 64% in 2021 to 77% this year.
DW/BI/Analytics and AI/ML add significant resilience for companies across industries. Both tech categories are essential for enabling companies to do more with less while still allowing growth as they continue making cost-conscious decisions this year. Experts recommend1 embracing the latest data mining and analysis tools as well as AI/ML for the sustainability of their businesses, better customer experience, and enhanced employee effectiveness and satisfaction.
The TrueShares Technology, AI & Deep Learning ETF (LRNZ) provides exposure to a concentrated portfolio of technology companies that are significantly involved in these CIO top priority categories like cybersecurity, cloud computing, data storage and analytics, and AI/ML, among others.
Snowflake, a cloud computing–based data company, is one LRNZ holding. Snowflake is the third-largest cloud data storing vendor (after Microsoft and Amazon) with its market share growing year-over-year. According to the CIO survey, Snowflake is one of the top five companies to watch in 2023 in the cloud computing and DW/BI/Analytics spaces. ServiceNow, another LRNZ holding, was also highlighted in the CIO Survey as a top company to watch in digital transformation and AI/ML. LRNZ holdings also include other top cybersecurity and cloud computing companies like Crowdstrike, SentinelOne, and ZScaler. By investing in the top CIO priorities, companies can understand that they can build resilience for these uncertain times while cutting costs without sacrificing the essentials. We anticipate that cybersecurity and cloud computing will be big winners in 2023.