In today’s unparalleled circumstances, some organisations may consider ways to slow transformation investment to preserve capital. However, history has shown that companies that take a strategic future-focused investment approach during times of unrest were better placed when the global economy rebounded.
With 80 percent1 of revenue growth predicted to come from digital offerings and operations over the next three years, IT leaders should continue transforming their operating models and investing in key enablers, like integrated cloud platforms, agile ways of working, intelligent automation, AI, blockchain, and advanced data and analytics.
When balancing short-term necessities with long-term investments, we believe there are six elements to consider:
Customer-centricity is emerging as the most important consideration when developing new experiences, products, and services during these unprecedented times. With customer behaviours changing rapidly and new demands emerging, understanding customer sentiment and expectations is more critical than ever. In addition to the digital natives, we now have large segments emerging of people engaging heavily through digital channels for the first time. KPMG’s research shows that customers are unlikely to return to their previous channel behaviour if they receive a great digital experience in this environment. Retaining this momentum, albeit delivered through serendipity, will deliver significant financial and operational benefits to organisations.
2. Business impact
As you re-prioritise your transformation portfolio in today’s COVID-19 environment, consider the longer term business impacts of not proceeding with a particular digital initiative. Consider how the initiative could directly impact revenue-generating activities, help you obtain a competitive edge in a climate of economic recovery, or give your staff a workforce enablement boost they may need to keep powering through extended remote working periods. There is merit in weighing up the one-off financial impact of making short term savings versus the medium- to longer-term impact of forfeiting the sustainable benefits you will achieve from digital transformation.
3. Risk and Compliance
In the post COVID-19 world, when the dust has settled and the retrospective is complete, many organisations will determine that they were lucky with certain aspects of their response. For the most part, organisations were able to switch to large-scale remote working without too many issues. But what lies beneath the surface? What corners were cut and what rules were broken to be able to achieve this? It will be essential to examine the architecture of the entire value chain to ensure your transformation initiatives address these risk issues.
Though a CIO has a fairly concise playbook of short-term financial levers to rely on during a critically challenging time, it is vital to not over-simplify certain levers. For example, there could be direct financial impacts, such as, potential write-offs, interest charges, tax credit implications, invoicing or payable issues. There could also be indirect financial considerations, such as, the slow down or re-start-up costs, contractual penalties and the future availability of capital timed to the market opportunity.
The prospect of far reaching change can be daunting. Too daunting for many organisations. Often it seems easier to do nothing, or in the case of a post COVID-19 panic world it may feel easier to revert back to the way things were before. Now is the time to commit to reinforcing all of the positive gains from this crisis and to cement them into the operating model. The reinforcement of newly established habits, many of which your teams will be enjoying, is the ideal time to be brave and commit to permanent change.
6. Technology Partners
The COVID-19 pandemic is having an enormous impact on many organisations’ technology ecosystems. Many technology service providers have themselves struggled to maintain client services during recent months. When reviewing your transformation programs, and understanding what, if any, consequences there will be for delaying or cancelling programs, be sure to consider your partner relationships. Now is an opportune time to carefully review existing contracts and contemplate the structure of future contracts. Settling disputes for example may provide you with the opportunity to renegotiate terms and plug any gaps that, however unforseen in the past, are now a very real prospect of everyday life for some time to come.
Organisations that continue to invest in the most important enablers during this challenging time will be the ones who emerge from this crisis not only ahead and more competitive, but thriving from within.
1 Source: IDC Press Release, IDC Launches New Framework to Accelerate Digital Transformation and Help Enterprises Become Digital Natives (IDC, Oct 2017)
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