Technology has been at the centre of business continuity plans during the COVID-19 crisis and will play a key role in navigating the path to recovery, but amid a prolonged period of uncertainty, the challenge for technology leaders is choosing which playbook to follow.
According to research from Gartner, survival, not growth will be the priority for executives in 2020. And that survival will depend on maintaining cash flows and income while continuing to be innovative with technology.
While digital transformation has accelerated as the pandemic has forced entire populations into digital channels, the question facing businesses now is how long will those behaviours last and which ones are permanent?
“We have probably had a 10-year digital shock. In the space of a couple of weeks, COVID-19 has changed the economy more than the next 10 years of digitisation would have managed. But how much of that is going to stick and how much of that is going to go away?” asks Andy Rowsell-Jones, a Vice President and Distinguished Analyst in Gartner’s CIO & executive leadership research team.
The Gartner analyst told Which-50 the current crisis can be understood in three distinct phases: respond, recover and renew. Each has its own behaviours and technology choices.
For most Australian businesses the response phase began abruptly in mid-March and has now largely passed. The period was characterised by the shift to working from home, as the national government restricted any non-essential travel, and required IT step in to provide adequate access to equipment, tools, and internet infrastructure.
“We are still talking to a lot of people who are at the tail end of respond and the very early phase of recovery,” Rowsell-Jones said.
Cloud technologies allowed businesses to quickly move entire white-collar workforces offsite and new research suggests the transition was a success for many Australian businesses.
According to a survey of more than 200 c-level business and technology leaders conducted by Adapt Research, 61 per cent of IT and business leaders agreed existing business continuity plans were fit for purpose in tackling the COVID-19 challenges.
Jason Blackman, CIO of Carsales.com.au, told Which-50 the business was well prepared or staff working from home if the office was closed.
“We went from a number of staff working from home on an irregular basis to complete lock-down of all our offices across Australia and Latin America,” Blackman said.
Carsales is a solely cloud-based business, having completed its transformation to the cloud a few years ago. “Even our back-office enterprise applications are all cloud-based (SaaS), and this was the key factor in our workforce one day being in the office, and the next day working remotely,” Blackman said.
“Our biggest challenge and this will highlight the lack of impact to us, was how to get equipment and have a great onboarding experience for those new team members who have started right in the middle of the lock-down.
“One of the positives that has come out of this crisis is that we have just performed the biggest business continuity test ever. Getting a test of 100 per cent staff working remotely during normal times would have been considered extremely disruptive.”
“This shift to remote working has really opened up new possibilities in the future with regards to how we consider growth within our teams and new ways of working. Something that only comes about when there is an event that causes such disruption.”
A big priority for the business now is the welfare of employees and partners, as well as supporting the health of the wider automotive industry which the classifieds company depends on.
“This pandemic has most certainly shifted the priorities, though probably not to where you think,” Blackman said.
“Our priorities have shifted to looking after our staff and customers’ wellbeing, and ensuring that our industry as a whole is supported through this pandemic and has the strength to recover quickly once the worst of it is over.”
Carsales has focused on product improvements to help customers and is offering its employee assistance program to its customers and their staff if they need it in this crisis. The program includes access to the confidential counselling services normally offered to Carsales employees.
“It is times like these where the human element is most important.”
Recover (and cut costs)
With the fires now put out, or at least burning under controlled conditions, business leaders are looking to the next phase which is much more uncertain. The executive with the clearest mandate is the chief financial officer who must conserve cash at all costs.
According to Adapt’s research, which was conducted in the first two weeks of April, reducing costs is the new number one priority for organisations.
Seventy-one per cent of respondents ranked reducing costs as a high priority at number one. This compares to Adapt’s CIO Edge survey conducted in February which ranked reducing costs 7th.
“Cost has really come up the ladder in terms of importance,” explained Matt Boon, director of Adapt Research Advisory.
“In a crisis, there’s always the risk that long-planned business processes and strategies will be abandoned and quite often panic-driven reactions to cut costs.”
“What we are encouraging is that organisations need to obviously keep an eye on what are the big plans and strategies that they did have before this, and make sure that they’re picking the key components from that and not letting investment and strategies go by the wayside completely.”
Blackman agreed that there’s a greater imperative to forensically examine technology costs.
“It is likely that we will re-evaluate more vendors, and more rigorously, to ensure we are receiving value for money. We normally do this anyway, but given the crisis and the economic impact this will now be essential, rather than just good practice,” Blackman said.
Gartner’s Rowsell-Jones noted there will be budget cuts and much more centralised control of company finance.
“There’s very strong control and centralisation because otherwise businesses are going to be trading while insolvent and will not pull through,” Rowsell-Jones said.
“We’ve seen huge dents in the business models and the business drivers in the economy.”
For IT leaders, after the initial consideration of how to reduce the operating costs of the business, the actions they take next will require an understanding of what the future will look like and how much of the behaviour changes during COVID-19 are permanent, Rowsell-Jones said.
For example, will a portion of the workforce continue to work from home to save on commercial office space? Or can online sales be increased to close certain retail locations?
“This is a very, very uncertain period. So we are beginning to see organisations beginning to do things like scenario planning which is a great way of dealing with uncertainty,” Rowsell-Jones said.
“The challenge with where we sit at the moment is we are definitely in the recover planning piece, but we don’t really know how many people who are working from home will continue to work from home, how many people are buying stuff online that will continue to buy stuff online.”
Renew & making the right technology bets
Out on the horizon the renew phase will be more familiar for CIOs who have been used to making longer-term bets as technology has evolved. However, it’s still too early to place those bets.
“The reality is we don’t know what renew will look like. We are trying pretty hard to try and predict it but it’s still too early to say how much of this change brought about by COVID-19 will persist,” Rowsell-Jones said.
The analyst expects more use of cloud, AI, digital channels “are almost certain to be pretty high on the list of priorities for the renew stage.”
“But right now you would be a very brave individual to be punting on a particular solution.”
Technology investments will likely be in line with making the necessary cost reductions, boosting productivity or building a more resilient business.
That means the bleeding edge technologies like self-driving vehicles, drones, VR, and AR are likely to take a backset unless they deliver productivity gains or reduce costs.
“Emerging technology is useful when you can make a case for it. You need to have a view of the future and work backward,” Rowsell-Jones said.
Adapt’s research found previously hot-emerging technologies are no-longer seen as critical. As organisations double down on proven technologies that will help them manage the current crisis and maintain business as usual.
“A lot of organisations are going to put some of those planned pilots and deployments on the back burner to some degree,” Boon said.
“Think about AR, VR and mixed reality, the interest around these technologies has literally fallen off a cliff. Only about 10 per cent of respondents see these as critical in the next three to six months.”
“Adapt expects emerging technology focus remain low until many organisations have determined what are their new business priorities, what are their new goals and get a much clearer understanding of how emerging technologies can help them with that.”
The strategic role of the CIO
With technology playing a fundamental role in the post-COVID-19 world, CIOs may find themselves taking on a more strategic role in the business. However there’s also a chance history may repeat itself and the digital agenda will once again be returned to a different function in the c-suite like the chief marketing officer, chief digital officer, or chief customer experience office.
Rowsell-Jones says it’s not assured that the CIO will seize the opportunity to take on a more strategic role in the business beyond the pandemic.
“At the beginning of the response part of the crisis, the CEO’s best friend was the CIO because they had to send all their workforce home and connect them. Now the reality of recovery and renew is going to change business models – what do we sell, how do we sell it, and how do we distribute it?”
“The renew world will certainly be more digital but it doesn’t necessarily mean the CIO role will be more strategic in that because it depends on which of the executives is politically astute enough to grab the agenda.”
“There is an opportunity, but it is not a lay down misere.”