Post COVID-19, technology’s stature within companies will continue to rise. Companies will make strategic portfolio shifts and redesign its global supply chain. Working remotely will likely to stay. More investment will be made to business continuity. All these changes will add to the major digital and technology investment companies are already making to make technology an essential part of their businesses. However, companies will also likely seek more shift in IT portfolio itself to invest scarce resources in most strategic areas. Here are some predictions on how IT will likely shift post COVID-19.
As Yogi Berra famously said, “’It’s tough to make predictions, especially about the future‘”. Even though the world is still in the midst of a fierce war against COVID-19, companies have started to think about post COVID-19 world and prepare for the recovery. How would IT change after COVID-19? What could be the actions that CIOs would take in the second half of 2020 and 2021?
Here are my predictions:
- IT’s stature within companies will no doubt become even more critical.
Before COVID-19 hit the whole world, companies had already been pushing relentlessly on digital and technology transformation to stay ahead of customers and competition and make technology a core part of their businesses. COVID-19 had accentuated this even more. Without IT’s ability to launch remote work, foster virtual collaboration, and most importantly, shift products and channels to online to generate revenue and continue to service customers, most companies wouldn’t have had the ability to survive through the crisis. IT’s stature within most companies has no doubted already risen more during the crisis and the rise will only continue in the near future.
- Investment in business continuity will increase.
Companies have often confused disaster recovery and business continuity. Disaster recovery is about the IT infrastructure changes to allow systems to recover when unexpected problems happen, such as tornadoes and hurricanes. Business continuity is about how business can continue to function overall in an unexpected situation. It goes beyond IT’s disaster recovery coverage and should cover everything else a company needs to do to stay afloat. COVID-19 is probably the biggest unexpected business continuity test ever. After COVID-19, more companies are going to realize that they are not ready for such dire situations and more investment in business continuity is essential.
- There will be significant new technology demand to support shifting business portfolios.
In addition to business continuity, many companies realized that their current strategy wouldn’t survive in another COVID-19 like hit. On the demand side, retailers had to shut down their stores. Sport teams had to shut down their matches. Airlines had empty seats on the planes. Show performers had to cancel all the shows and let go all the performers. On the supply side, many companies realized that they can’t survive with their current global supply chain footprint dominated by one or two countries alone. They must have more options and backups to continue to function.
All these factors would push companies to re-evaluate their overall strategy and make significant shifts in their channel strategy, their geographical footprint, their product strategy, and their supply chain strategy. This in turn would imply major uptick in the IT systems support for those areas.
- New scrutiny on the IT budget will likely happen.
This will likely happen for 3 reasons. First, companies are going to attempt to continue to optimize non-essential spend to reduce capital expenditure and be lean during the recovery time. Second, during COVID-19, many projects have been stopped and companies will continue to question the criticality of those projects, since if the projects can be stopped temporarily, why not just stop them permanently? Lastly, during the COVID-19 crisis, many companies shifted to a more bare-minimum operations stage with many business activities and applications shut down. This provided additional visibility into what applications are truly essential and which ones are not. COVID-19 might just be the catalyst to allow companies to radically rationalize their application and infrastructure landscape. I used to tell my clients that there are opportunities to free up at least 30% of their spend onto new strategic priorities. Unfortunately, most would argue with me at the time saying that it’s impossible and everything is a must do. With US economy running only at 70% as of April 2020, it’s clear that not everything is a must do.
I foresee many companies conduct IT budget reviews post COVID-19 to assess the spend and free up investment for more critical areas.
- There will be a “Re-”Rise of Game Theory and scenario planning applications
It would be fair to say that COVID-19 caught 99% of people off guard. As a native Chinese who worked in China for 8 years, I was closely monitoring the outbreak of COVID-19 in China, starting as early as late December of 2019. In January 2020, I was even planning to take a trip to China for a client meeting. I have to say that none of my friends and colleagues ever thought that the virus would spread this far and this deep.
The virus would reignite the interest in Game Theory to allow strategists to strategize about the future. With the advance of technology, many companies would go even one step beyond to conduct computer simulation based scenario planning. Custom applications that take in vast amounts of internal and external data and plan out different disaster scenarios would likely become a key component of IT application portfolios.
- Cloud migration will likely accelerate.
During COVID-19, companies have been relying heavily on public cloud infrastructure such as Zoom and Microsoft Teams to continue to function collaboratively. To ramp up production for COVID-19 related items and to shift operations support activities to areas that are less hit by COVID-19, many companies have shifted their servers and storage to cloud to allow for quick ramp up. Those activities have further demonstrated Cloud’s advantage over on-premise infrastructure: the speed to ramp up, the flexibility to ramp up and down, and the functionalities that current applications don’t always provide. Hence, it’s likely that cloud migration will accelerate.
In addition, one of the key challenges many companies faced with cloud migration prior to COVID-19 was the shift from capital expenditure to expense. When servers/storage were purchased, they were capital expenditure. With cloud migration as expense line items, many companies were hesitant to do the shift to avoid the immediate hit on profit margin. Post-COVID-19, given that the capital and credit could be in short supply near term, cloud’s expense might actually be more attractive.
- Agile and physical collaboration will be questioned.
With the social distancing, most companies have moved towards a virtual work environment. It’s likely that a lot of companies will stay this way, having realized that the remote work seems to work fine for many functions. The blowback from work from home years ago would likely disappear. Gartner CFO survey done in April 2020 revealed that 74% will move at least 5% of their previously on-site workforce to permanently remote positions post-COVID 19.
However, a lot of companies have also been told that to do agile, they must get everyone together physically to foster the cross collaboration. COVID-19 and social distancing will force companies to re-evaluate such desire and re-design how they do agile in the future.
Furthermore, while agile was fast, many companies are now forced to move even faster. There will be additional scrutiny post COVID-19 on why the current agile implementation wouldn’t be able to achieve the speed COVID-19 was demanding.
- IT will become much more complex
Last but not the least, IT will become even more complex. The portfolio strategy of balancing online and offline channels, the diversification of product portfolios, the expansion of global footprints, and the requirement to ramp up and down production quickly would make IT twice or third times more complex. There will be more applications across more geographies with the hard demand of instant shut down or ramp up. In addition, many companies have experienced remote support problems from the offshore locations when such countries were in lock down too and there wasn’t sufficient infrastructure to support remote work. IT supply chain’s complexity will definitely increase post COVID-19.
Post COVID-19, IT and CIOs will have an incredible amount of challenges and opportunities ahead of them. In addition to continuing to support digital transformation, IT must be able to enable the business strategic shifts AND work on IT’s own changes. All these might have to occur while the IT budget is also being reduced. But companies who do this right will have a great opportunity to transform IT. As Rahm Emanuel said, “You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.” COVID-19 will become a catalyst for many IT organizations to become stronger and better!