The COVID-19 pandemic and its repercussions in the business world have once again highlighted that without technology, life as we know it – both from a consumer and business perspective – would come to a complete halt. While technology solutions, technology services and technology consultancies had been on the ascendancy before the arrival of the virus, demand for their offering has, in many areas, exceeded even the most ambitious growth forecasts.
As working and living environments are necessarily shifting to meet government instruction and safety guidance, tech solutions are facilitating a new way of life, especially at home, connecting family and friends, providing online workouts and games.
Many predict that the effects of COVID-19 will change consumer habits for good, with a higher proportion of life conducted online. If that’s the case, this can only be an opportunity for the technology sector for further growth, development and innovation.
However, for many end users and businesses, these tech solutions are far from new or untested. Remote working, unified communications, including video conferencing, have been available and used for the best part of 15 years. The real difference is that these solutions have never been used on such a global mass scale and many insiders predicted that networks, cloud computing or video conferencing platforms would crash as they are all built with a specific contention ratio in mind. Thus, it is assumed that only a certain amount of traffic or users will access a network or a platform at any given point in time and a 50:1 contention ratio is not unusual. Yet, so far, the tech providers have managed to cope, although performance reductions are clearly noticeable, such as video call quality.
In business, it is likely that the critical importance of tech – whether internal or externally facing – will have moved to the top of the agenda in preparation for a future that will be directed by it.
- In financial services and retail, that can mean an increased digitisation of the customer journey.
- In manufacturing and logistics, that can mean the long-expected arrival of Industry 4.0 incl. streamlining and tracking of the supply chain.
- In other sectors, tech will increasingly facilitate data mining and analysis, business intelligence, or the move to cloud.
- In the upcoming economic downturn, companies will make moves to become as lean and efficient as possible, as well as agile.
- In virtually all cases they will look to technology to drive that change.
“New needs born in our current crisis will likely drive lasting innovation in other areas, such as mass disease-testing technologies, digital collaboration tools, or affordable home office setups.”
However, success depends on the type of tech business and the stage in its lifecycle, and not all technology firms will flourish. Early stage startups will struggle with issues such as cashflow until they can access new capital or coping with sharp increases in demand. On the one hand there are several highly publicised campaigns such as ‘Save our Startups‘ to ensure they survive in the medium to long-term. On the other, HealthTech start-ups or AI and data analytics innovators are at the forefront of successful and outcome-driven collaboration during the COVID-19 crisis. While the large pharmaceuticals will deliver the goods it is fair to say that it is the new innovators that are dramatically fast forwarding the analysis and understanding that precedes any eventual solution to fight the virus.
In addition, tech companies that support communication (video conferencing and online meetings), productivity (online learning platforms) and entertainment (social channels and platforms) have already seen serious upturns. Looking forward to the medium and long term, the markets for HealthTech, EdTech and advanced manufacturing, logistics and clean growth BioTech are expected to grow, with real opportunity to elevate service delivery for public services; the UK government is talking with tech sector industry leaders to examine the role of technology during this crisis. Having already partnered with the UK’s NHS to provide medical information through its Alexa device, Amazon is expected to deliver testing kits for the health service. BioTech in particular is expected to be in higher demand with increasing for investment.
Whitecap works with the technology sector across three key groups, each of whom will be affected in different ways and now is the optimum time to develop growth strategies for the future. So how can tech service providers, tech consultancies and tech solution providers respond to the change in demand from the tech sector? What should their considerations be looking forward? Well informed decisions will determine the outcome of this ‘make or break’ opportunity.
Technology Solutions: What to consider?
Tech solution providers (these are off-the shelf software and hardware providers with no service wrapper) need to make sure they remain closely aligned to changing client needs and they should be considering:
- As private and business consumer needs change, how can the product evolve with these needs? How should product iterations change?
- Should the product target new sectors? Which should those be?
- How can they continually monitor changing customer demand/sentiment?
- How do they make sure their technology solution can respond to increase in users?
- How will advanced tech shape the product directly or indirectly (via API / integration)- AI, ML, automation, IoT, 5G, smart cities, blockchain, data analytic etc? How long will this take? Where will it be most prominent?
- What level of integration and API need to be facilitated to succeed in individual environment, multi-cloud set-ups and / or marketplaces?
Tech Service Providers and Tech Consultancies: What to consider?
Following the initial increase in demand, tech service providers (e.g. software as a service providers such as Microsoft 365, Xero or Zoom) and tech consultancies (e.g. Accenture, Infinity Works or BJSS) can expect strong growth in the medium and long term. Technology consultancies in particular should continue their fast growth with focus on public sector and healthcare projects while trying to accelerate commercial projects that have been postponed or slowed down.
Tech service providers may see a temporary slow-down in new business opportunities though demand from existing clients and reduced churn will easily make up for any new business revenue impacts. Also, their SaaS business models, combined with close alignment to with client needs – particularly fast growth technologies like AI, ML, automation, IoT, 5G, smart cities, blockchain, data analytics will ensure long-term growth can be maintained:
- How is market sentiment amongst customers now and how is it likely to change?
- How will each sector’s needs for services change in the medium and long term?
- How can your product service be tweaked to cater? Within each sector, which areas will need those tech solutions first – how should it be phased?
- Which sectors / services should the business prioritise? Where should the focus be?
- How can BD, sales and marketing efforts be phrased and staged in to respond to changing market sentiment?
- How can messaging reinforce the service as indispensable?
- Where is the industry heading? What changes are competitors likely to make? How can the business respond/stay ahead of competitor moves?
For technology consultancies, technology service providers, and technology solutions, the ability to move and flex with type and amount of demand will be key. PwC commented “the crisis underscores the need for flexible, resilient business models, including increased focus on cash-flow forecasting and impacts on supply-chain and commercial-channel partners.”
COVID-19 presents an opportunity for the tech industry to maximise on what it does best: innovate and create for a better future. There will be companies and investors looking to acquire or distribute their dry powder. It could be, then, that the upcoming economic downturn will in fact turn into a ripe opportunity for the tech sector to pursue aggressive growth.
In April 2019, an article in the Harvard Business Review stated:
“Counterintuitively, 14% of companies grew both their top and bottom lines during recent economic downturns, and our analysis shows they create value mainly through differential growth. This is true across all industries. The evidence is clear: the best time to grow differentially is when aggregate growth is low. “Flourishers” in a downturn do reduce costs to maintain viability, but they also innovate around new opportunities, and they reinvest in growth pillars in order to capture opportunity in adversity and shape the post crisis future.”
Some tech companies have an opportunity to drive innovation at this time and use it to solve new problems and fill new gaps in society presented by the COVID-19 crisis. For these tech firms, the current social conditions and economic downturn could be a potential platform and golden opportunity for growth not likely to be seen again in our lifetime.
Established in 2012, Whitecap Consulting is a regional strategy consultancy headquartered in Leeds, with offices in Manchester, Milton Keynes, Birmingham, Bristol and Newcastle. We typically work with boards, executives and investors of predominantly mid-sized organisations with a turnover of c£10m-£300m, helping clients analyse, develop and implement growth strategies. Also, we work with clients across a range of sectors including Financial Services, Technology, FinTech, Outsourcing, Consumer and Retail, Property, Healthcare, Higher Education, Manufacturing and Professional Services, including Corporate Finance and PE.