The damage is sharp, deep and truly global. The World Bank has said it will usher in the deepest recession since the Second World War. We think technology will play an essential part in building business resilience and enabling businesses to address changing market needs rapidly.
It will also help define the new normal. We’ve already seen how technology-enabled businesses continue to operate during the pandemic. We saw the mass adoption of remote working technologies, collaboration,\ and cloud-based services. Gallup reports this peaked in the U.S. in mid-April when 62% of adults said they had worked from home in response to the virus.
The vulnerabilities of complex global supply chains were exposed when COVID-19 badly hit production. “In China, domestic and international trade transactions saw a week-on-week drop of 56% beginning mid-February,” reported the World Economic Forum. Digitization will be critical to building more robust supply chains, potentially including diversification of manufacturing capability. We anticipate more localization for assembly and also more automation.
Some changes will be permanent. My colleague, Francois Bresson, Head of Finance Americas, cites research that shows 65% of businesses are now prepared to embrace remote working models. Of course, this challenges other industries, such as office rentals, retail and transportation. Analysts at IDC predict 60% of the U.S. workforce will be remote by 2024, as executives accept it as part of the new workplace.
What consumers want has changed. They are cutting back on non-essential spending in expectation of tough times ahead. Deloitte reports Q2 consumer spending saw the sharpest quarterly contraction on record, down 10.1%. Travel and tourism were deeply impacted, but sentiment across most industries is negative, particularly the services sector, which saw consumer spending decline by 13.3%. Many firms are fighting for survival. Some may be too damaged to find funds to ensure future business continuity.
Consumers are shopping online, the use of contactless payment systems has surged, and the use of digital services has grown. Analysts, including McKinsey & Co, believe that many of the changes may become permanent. Consumers will continue to shop online, and if brands aren’t available online, no matter how loyal they are to them, they will switch.
The pandemic also exposed the need for wholesale and rapid digitization of the paperwork required to trade. This is essential to support the data-driven supply chains we must develop to boost enterprise resilience. Meanwhile, humans are expected to generate over 463 Exabytes of data every day by 2025, information that can be turned into valuable business insights.
What approach should you take?
Faced with the need to control costs while investing in new technologies to enable future business success, I recommend that you:
- Become data-driven to ensure business resilience
- Reinvent business models
- Digitize supply chain operations for agility and efficiency
- Innovate not just internally but with partners
Think about becoming a data-driven business. Not only does such information empower an enterprise to develop new business models, but it also enables rapid response to changing business and market situations. When data is gathered and exploited across not just your enterprise but also from your partners, manufacturers and retail chains, then the agility – and early detection of trends – expands exponentially.
Supported by machine learning and AI, data analytics systems can collect and analyze data from multiple sources, internal, external and mobile data from customers. This information, traditionally held in uncommunicative silo-based business structures, provides early warning to business changes, demand and supply levels, when unleashed. Of course, it also empowers businesses with the tools they need to deliver personalized customer experiences and new digital products and services. This approach is already being explored across many industries: banking, healthcare, retail, construction and beyond.
A PwC survey of 1,000 business executives showed data-driven businesses to be three times more likely to report significant improvements in decision making compared to enterprises using less data.
The need for new business models
We support a large multinational that works in multiple business sectors. Aiming to lead in each one of those sectors, it invested in a digital portfolio designed to provide the agility and insight to respond rapidly to market shifts.
They understood that business models based on siloed, linear information flows do not deliver the robust business resilience we need. These lack visibility, have limited response to change and suffer from unrecognized inefficiencies.
Data-driven business models, however, are non-linear, flexible and integrated within the business ecosystem. They recognize challenges fast and can react swiftly with all parts of the business built around a digital core. The pandemic showed that many supply chains remained based on linear models. To develop more resilience, enterprises must drive digital transformation across their chains, developing integrated business ecosystems.
So, what technology investments are required?
To become more data-centric, digitize supply chains and innovate, we need to invest in technologies to transform us into software-defined enterprises. While many will be grappling with falling revenue and challenging market conditions, future survival and resilience depend on these investments.
Three critical investment sectors include:
- Native multicloud solutions
- Data analytics, AI and machine learning
Accelerating digital transformation often requires enterprises to resolve the challenge of implementing new digital solutions alongside existing legacy environments, at least for a while. We recommend our Multisourcing Service Integration (MSI) solution to help manage this.
This approach outsources the challenge of managing multiple IT services by presenting them through a single digital interface. It makes it much easier to deploy new technologies across your enterprise while managing the existing solutions. It also opens up a route for a conversation with your partners, enabling a trusted service provider to solve the challenge of integrating different solutions to maximize the use of business-critical data.
In the digital world, we are all connected
What’s critical to understand is that the pandemic exposed how every part of our business relies on every other part. It’s not enough to go it alone. For success, your digital transformation strategy requires you to work closely with partners, suppliers and customers. With help from technology, we become agile and can rapidly respond to change. In the digital world, we are all connected.
Sam joined Orange Business Americas in September 2017 as the Head of Solutions for the Americas. Sam oversees all solutions resources in the Americas and is responsible for managing and developing the entire Orange Business solution portfolio in the region. He is also a member of the Americas Leadership Team, steering and motivating the region in alignment with the Americas and international strategies.