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Covid-19 and Digital Transformation or "just keeping the lights on"

Updated: Nov 2, 2020

It is undeniable that the Covid-19 pandemic has brought an abundance of economic hardship, business closures and a significant slowdown - in some cases: a standstill - to entire industries. With companies trying to stay afloat, teams reduced in size and virtualized (remote work), where is the perspective for Digital Transformation (DT)? Is DT really important right now or shouldn't you be more focused on keeping the lights on? We at SAPIT strongly believe you need to do both.

Obviously, it makes no sense to transform a business that's going out of business. And DT "does not come cheap" for a number of reasons: 1. a state-of-the-art infrastructure is needed along with 2. enterprise applications that deliver required business capabilities and 3. existing business models need to be adjusted and new ones developed, 4. products and services need be tailored to suit customers' needs in a rapidly changing environment - to name the most important drivers. Let's quickly address these drivers of cost and value:

  1. Virtualization of teams and working relationships as well as virtualization of buyer-supplier relationships requires an infrastructure that is fast, secure and scalable. Speed is not a luxury, but a necessity to have a functioning communications platform and to reduce latency (think of shopping carts abandoned because it took too long for the next page to load or of a slow video chat resulting in a poor meeting experience). More security is needed, because there is less in-person interaction. You need to be sure that the person on the other end is who they claim to be (authentication) and that they are properly authorized to do what they're about to, and you have to safeguard customer data and privacy - not to mention the company's proprietary information. The platform also needs to be up-sizable to deal with increased volume, traffic, utilization to be able to quickly seize on opportunities as well as down-sizable to afford an opportunity to save costs in a slowdown or setback.

  2. Required business capabilities have changed and will change further. This is mainly because of new business models and products that are needed, but also due to the slowdown itself. On the enterprise applications side, which is to deliver business capabilities and the "flipside of the coin" as such, there will be an ensuing shift. The proposition to support a specialized application becomes more difficult and a shift to standardized applications therefore prevalent. However, you have to be careful as to what and how much you standardize or outsource. It doesn't make sense to overdo it either. As Mike McNamara, the CIO of Target, famously said "Build what will provide a competitive advantage, buy the rest. You can't go anywhere and buy off the shelf." (For those who don't know, Target rose from a compromised position on the brink of failure in 2014 to become one of Amazon's few serious competitors today.) The key takeaway is to develop differentiators and not to squander funds to reinvent the wheel, e.g. build the best payroll system.

  3. The key term in this economy, and probably in the near future ("survival" aside), is "outcome based." Your business model needs to support this paradigm shift. It is not easy to come up with effective new business models when the future is uncertain. However, you cannot afford to lose the drive to continuously improve operations. The reason is simple: if you don't innovate, your competitors will. And that's a risk, because that's where your customers will go. A transformation can prevent this from happening. DT builds resilience. Even if the pandemic and short-term circumstances preclude an immediate implementation, you should build plans and "have them in the drawer to pull out and execute" when the time is right. Small adjustments to your business model can result in noticeable improvements that can be quickly recognized - and undone, if circumstances so necessitate. Some of these (smaller) adjustments help facilitate improvements in the next area.

  4. Today's customers prefer a "one-stop-shop," but their expectations go beyond a simple bundling of products and services. Even if you cannot revamp your business model, because that would be too risky and too costly right now - how can you deliver outcomes to your customers instead of just selling them products and/or services? Developing this capability is especially important during the pandemic, if not vital. With an outcome-based offering, you give your customers a higher level of assurance that they'll receive something of value for their money, but you cannot stop there. How you deal with your customers is also important. In many instances, the relationship will be "low touch" or "no touch." The term "customer experience" (CX) comes to mind. This still important, albeit with a changed focus: people suffer from hardship (economical and emotional), there is an accelerated shift to online buying (both consumers and professional buyers), putting profits over people is considered unacceptable and "little things" have become more important. DT, specifically real-time-analytics and robotics can improve CX and retention.

These were just a couple of key thoughts intended to illustrate the two-pronged strategy needed: one to keep the lights on and the other to digitally transform.


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