How can your business respond in a downturn?
Even though global economists were predicting a possible downturn as early as last October no one could have envisioned the sharp shock to our survival and way of life that Covid-19 has brought over the last few months. According to the IMF as a result of the pandemic, the global economy is projected to contract sharply by –3 percent in 2020, which is much worse than during the 2008–09 financial crisis. The recommended response in a downturn is to cut and innovate. Well in normal times its easier for your average CIO to cut spending and ride the ‘down-turn’ storm rather than take the risk of innovating but these are not normal times.
Established enterprises are being challenged as never before by new players with access to the latest technologies and can give customers what they want, a personal responsive service. Just look at the Fintech arena. Established bank and insurance companies are holding their own for the moment but for how long. In fairness many have commenced their long journeys of digital transformation but what happens when you throw a seemingly protracted business lockdown into the mix and funds begin to dry up?
Well the ‘cut costs and innovate’ mantra still holds true, its just how they are applied is slightly different. In these current challenging times it is necessary to embrace change at a greater pace, while placing a greater trust in the newer emerging technologies and in your own in-house teams to deliver. The latest technological innovations, driven by AI, ML and Cognitive Automation require less expert consultants to operate. They are also open systems which means less vendor lock-in and more choice. Api-driven connectivity is opening up a whole new world of business opportunity in the cloud.
The one trump card that established enterprises has to play is their data. Through many years of customer loyalty, personal information has been willingly shared. But in an ever changing enterprise landscape that is customer driven, loyalty comes with one caveat, it is time limited. Faster more accessible challenger brands who don’t have to deal with legacy systems can quickly overtake incumbent enterprises by providing customers with a more personalised service now.
Many enterprises were already experiencing disruption due to technology innovations from the Cloud to AI but the current crisis has accelerated the process. Whatever our new normal turns out to be, business will have to transform quickly in order to survive. Much has been made of the requirement to become more agile as seen in the huge push to get those who could work from home setup and running. Those who had never engaged in a conference call before have quickly adapted to Zoom etc. However by not investing in more agile backend infrastructure, many have had to wait for engineers to be on-site to get requirements, code and test before releasing much-needed changes into production. (eg. banks suspending loan repayments, and service providers keeping their customers up to date).
So where does that leave the many businesses that have been left scrambling.