The coronavirus pandemic has radically changed the world of business. Many organizations have been forced to scale back their workforces, whilst others are struggling to simply stay afloat. With the UK facing new sets of lockdown restrictions, the country being in recession, and with Europe facing a deeper-than expected downturn, tough times and further uncertainty lie ahead. This is all while businesses have had to deal with lower levels of staff due to the ongoing ramifications of furlough and redundancies. As a result, the pressure is therefore on the c-suite to not only perform and build resilience to survive the ‘now’, but also to fuel future business growth. Decision making is hard in the best of circumstances, but over the coming weeks and months, success will be entirely dependent on making the right ones.
It’s important to consider that whilst many businesses are starting to emerge through to the other side of the global crisis, ongoing turbulence – as a result of Brexit fallout – is set to send further shockwaves through the economy. According to recent analysis, businesses that have escaped the worst effects of the economic fallout from the pandemic are typically in sectors which are more likely to feel the impacts of EU withdrawal.
In order to overcome this, and navigate the murky waters ahead, businesses must be able to minimize costs, guarantee a stable cash flow and free up money for investment in future growth. After all, the future of the organization and its employees’ livelihoods depend on it. But how can the c-suite truly manage business costs when, all too often, a lack of visibility and departmental silos stand in the way of understanding the cost base?
What’s next for businesses?
Donald Rumsfeld gave his famous explanation of US intelligence reports back in 2002, but his comments on ‘unknown unknowns’ have much to teach the c-suites of today. It is hard to remember a time when so much has been uncertain – what, precisely, will be the legacy of the Covid-19 pandemic? How will business operations change and when? How will markets change? And given all of this, how can we even start to quantify and plan for the impacts of that even bigger unknown – Brexit? It is an interesting time to be running an organization, particularly for those in IT or finance – as these are the crucial elements of any enterprise when it comes to managing challenge and change.
But this recession is much more complex than those that preceded it: there are the unknowns of Covid-19 and Brexit (both of which extend beyond the UK), but also confounding factors such as the suggestion that the sectors less damaged by the pandemic may be at greater risk from Brexit. So, even though some organizations see green shoots of recovery already, 60 percent of business still expect their output to fall in the next three months.
Everyone is worried and looking to the c-suite for guidance, but particularly at times of extensive and complex change, there are no quick answers. Events are unclear, constantly unfolding and hard to predict, which means that responses and behaviors currently relied upon are likely to go out of date – and fast. Of course, firms must still minimize certain costs and guarantee cash flow. But innovation and flexibility are now mandatory, too. Just ask any firm that had to scrabble around for, and implement, a reliable and secure video conferencing arrangement as the UK went into lockdown.
Navigating business spend during market uncertainty
The focus must now be on agility and flexible response, rather than just saving money and waiting for the storm to pass. This may mean minimizing costs in one area but investing it elsewhere, to position the organization for future challenges and opportunities. Because, although times are tough, there will ultimately be plenty of opportunities in many sectors.
Any organization that is committed to success in the new normal – whatever that may turn out to be – must uncover and face the truths of its current financial and operational position situations, and adjust both spend and strategy in light of that knowledge. That means that:
- Every organization needs complete visibility of all financial, IT and other business assets, along with operational performance data, and the costs attached to each
- The information should be available in a real-time, easily understood form, avoiding the pitfalls of multiple error prone spreadsheets.
- Analysis of that information must lead to a clear understanding of costs vs value, to inform effective investment planning.
- Responses (be they to financial challenges, operational or market change, customer demand or any business case) should be data-led and automated where possible, as this drives up efficiency while driving down error and cost.
Cutting costs and fostering transparency is more complicated than just picking and using one of the many software tools in the market. However, financial management tools for enterprise services are vital in enabling businesses and leaders to gather vital real-time operational, project and vendor cost data – in essence, to uncover the truth around IT and other costs and make smart financial decisions. These tools enable fact-based scenario planning and in turn help ensure that innovation and digital strategies take center-stage in optimizing services and refining processes – whilst adding value.
In addition, financial management tools are commonly provided as a cloud/hybrid SAAS offering, and ensure greater resilience to cyber-crime, as well as easier adherence to compliance/regulation. This in turn gives businesses the ability to flex and respond swiftly to whatever this ‘new normal’ will bring.
The value of data and analytics to business success is already well established: recent events and the resulting change have intensified that. Nobody should fall into the trap of thinking only customer data matters, and that it only matters to marketing and sales. In our current – extraordinary – times, it is hard to overstate the benefits of data acquisition and management across the enterprise, and the application of that insight to all business decisions.
Whilst some people may believe that investment of this type is counterintuitive, fact-based decisions need to be made during a time of uncertainty – especially when it helps to reduce business spend. Yes, there will be casualties in the stormy seas ahead – but comprehensive, current and, above all, transparent data, along with decisions and actions taken in light of that understanding, can be instrumental in not only limiting those casualties but also in paving the way for business growth. Businesses must quickly take note and act – otherwise they risk being left behind.
Ronnie Wilson, Group Executive Vice President, Serviceware