COVID-19: Key implications for Digital Transformation projects

19.05.2020

In their joint ‘roadmap to recovery’ published last month, the European Commission and the European Council have identified digital transformation as a key strategy to enable economic recovery following COVID-19.

In particular, they say that “digital transformation will play a central and priority role in relaunching and modernising our economy. Investing in clean and digital technologies and capacities will help create jobs and growth and allow Europe to make the most of the first-mover advantage in the global race to recovery. It will also help make us more resilient and less dependent by diversifying our key supply chains.”

This makes sense. During the lockdown, organisations have relied heavily on key technology and communications services in order to stay operational and in touch with their people, customers and supply chains. Both large and small businesses have found their IT resilience tested to a significant degree. Having focused on managing the crisis and ensuring business continuity, it is now likely that they will seek to make their operations more resilient to ensure they are better placed to handle any repeat of the situation, whether through a second wave of COVID-19, a different pandemic or other event.

So, how might organisations apply learnings from the COVID-19 experience to their digital transformation programmes?

Resilience through investment

The pandemic has brought into full glare the need for enterprise technology to deliver operational resilience. Remote working tools have enabled people to continue working, in some sectors almost seamlessly. IT capacity and capability has come under scrutiny. Business continuity and disaster recovery plans and processes have been enacted, with technology at the core.

It is therefore likely that well-run organisations will put building increased resilience front and centre of their digital transformation programmes. Previously, the goals of digital transformation might have included the need to foster innovation, to enhance the customer experience, to develop new products or services, or to make better business decisions through data.  In light of recent experiences, it is likely that the need to ensure continuity – both in terms of underlying infrastructure and processes, and the business itself as a going concern – will feature higher up list of priorities for the digital transformation strategy.

COVID-19 has provided a test-bed for the value of new IT and digital transformation. Organisations that use this time to accelerate this transition will surely be better placed as the economic recover gets into swing. In practice, this might mean changing the roadmap to focus on adding more IT capacity, build in more redundancy, or procure technology and communication services to ensure the business can continue in the event of a second peak or future unforeseeable event.

Supply chain diversification

The pandemic has also shone a light on the high density of the IT supply chain. Trends in outsourcing and offshoring over recent decades has meant that large and small organisations alike are heavily reliant on a complex ecosystem of third party suppliers, technologies and processes in order to function. This has developed to the extent that some large companies are now reliant on more workers from outside than within their own organisations.

Of course, the virus has proved highly effective at making its way around the world, affecting regions and countries which have locked down to different degrees. Much of the tech supply chain exists in parts of the world in which local infrastructure is less dependable than the countries of the organisations they serve. While at the time of writing there do not seem to have been any major reported cases of offshore technology services being severely impacted, more than 90% of the Fortune 1000 (including many technology companies) have suffered some level of supply chain disruption. If the worst effects in those regions are still to come, further disruption can be expected.

Whether or not those effects play out, it is likely that any digital transformation programme will need to review the role of third parties, with a view to reducing supply chain risk to an acceptable level. While it seems unlikely that a large organisation would choose to fully in-source or localise the supply chain in full – indeed, this may weaken resilience by creating a single point of failure – it is likely that a sensible approach to risk management will consider diversification of the supply chain that underpins digital transformation, and the careful selection of individual suppliers and the role they will play.

Indeed, this could reshape the IT service ecosystem. A more diverse ecosystem may see increased adoption of new technologies such as edge computing (where data is processed at or near the source of the data) and automation (which can offset higher local labour costs), while it may give rise to new tech sector market entrants based in new offshore or near-shore locations.

Data-driven strategy

As well as reviewing the technology supply chain, organisations might use this opportunity to become more data-driven. The pandemic has caused organisations to take a closer look at the data in their possession, and to obtain more and different types of data on their customers, employees and other key stakeholders. For example, companies seeking to ensure the productivity and well-being of their staff are relying on data obtained through remote working technology to provide real-time assessments of how their people are doing and the impact on business performance. Consumer-focused organisations are using data analytics to identify changes in purchasing behaviours, and pivoting their products and services to make them as relevant and accessible as possible during the crisis.

While data will already be at the heart of many digital transformation programmes, it is likely that the COVID-19 experience will accelerate this trend. Of course, this gives rise to risks and issues surrounding data protection, data security and confidentiality, putting a greater emphasis on the legal and compliance structures that need to guide digital transformation.

As with much in life and work, it seems likely that COVID-19 will have lasting implications for digital transformation programmes. The Bristows team is working closely with clients on how they can implement key learnings and best practices into their digital projects, as well as helping them to manage risks caused by the pandemic in their supply chains and beyond.

Vik Khurana

Author