Technology Impact on Business Economics in a Crisis

Today’s crisis has every business looking at cost-cutting measures. Extreme pressures are forcing extreme responses. The challenge for business leaders is figuring out how to respond to these pressures and leave the organization in a better position when we come out of this.

As Charlie Feld recently said in his blog post, Thriving in Dynamic Times: Turning Headwinds into Tailwinds, “You owe it to the company to keep the bigger, more strategic, and longer-term initiatives and objectives in play – to do no harm for the future”.

In this article, I’m going to focus on ideas for maintaining an eye on the future while applying technology to create efficiencies and reduce operational costs. My belief is that IT should look first at its role in enabling business cost reductions. Identifying where economic leverage exists in the business model will help prioritize where IT can play a critical role in reducing business costs. These efforts are likely to have a bigger impact on overall cost reductions than looking solely at IT to give up its “pound of flesh” as a cost center.

Today, all companies are taking a hard look at their operations and trying to find places to be more efficient, do more with less and manage costs. The move toward customer self-service has been a trend for some time. Today, whatever isn’t already self-service enabled is being pulled forward so that support costs can be reduced. Artificial Intelligence and Machine Learning (AI/ML) initiatives are being fast-tracked to help identify where machine enabled controls can dramatically improve efficiency and drive productivity. The need for a flexible supply chain is paramount as global logistics are stressed.

In order for you to find the right opportunities in your organization, start with a company or business unit P&L or executive scorecard and work your way through the key drivers of operations and costs. The results of that evaluation will likely translate into ideas like:

Example: Enabling Self-Service (Customer & Employee)

Eliminating process waste in the form of time, labor, complexity, etc. is an obvious place to find costs. Moving customer service processes online and enabling self-service is a key example. Not only is it required as we all work from home, but it also allows for reduced staff as we deal with strain placed on our workforce. Recently, airlines have had to cancel a large number of flights and enable their customers to change or cancel a ticket without fees. To facilitate this, specific capabilities on airline websites tailored to these demands were required. Without this kind of response, a taxed support center could clearly become overwhelmed. The same dynamic is true of internal employee support. As offices have closed, the need for employee self-service to enable remote work has been critical. These are just a few examples of things to look for when evaluating where processes can be streamlined.

Example: Automating Workflows

Automation of process is another lever to drive cost savings. Automation can take any number of forms, from workflow and rules automation through robotic process automation (RPA). The key is to focus on the primary transactions of the business and the unit cost of those transactions. Even in today’s climate, some industries are making new investments in automation in order to support a spike in demand. For example, you can imagine the speed to market now required of key manufacturers, healthcare and consumer packaged goods companies. Quickly adding automation into approval cycles could be a part of what’s required in these industries to shorten time-to-market. Obviously, many companies aren’t facing demand pressure, but automated processes can absolutely create time and cost efficiencies and have the benefit of leaving your organization in a better place after the crisis.

Example: Asset Optimization with AI/ML

We all recognize that industries and businesses will change as a result of this crisis. Those that more effectively learn and adjust to the changing business climate will differentiate themselves. The adoption of AI/ML is a part of this learning cycle and will continue to ramp. Examples of this can be found in any asset-heavy business. Asset utilization and optimization are critical. AI/ML models can create insights at a scale and speed that can’t be replicated by humans. These insights can be operationalized to drive up utilization. At a more sophisticated level of maturity, models across a network of assets can be built and integrated to optimize the system as a whole vs. individual parts. These types of capabilities can fundamentally change the operation of an organization.

Example: Efficiencies of Remote Work

We have all had to stand up, or augment the tools we had, to enable work-from-home in this crisis. The shift to work-from-home is a dynamic that will have long-lasting implications. As companies have adapted to this, it’s unlikely that working styles and teams will ever completely go back to the way they were. Work is becoming more efficient in many ways. The role and scope of the use of physical office space will change, and opportunities for reducing real estate costs will become increasingly attractive and available. Also, organizational barriers of teams separated by geography will fade and consolidation will take place. Consolidation can take a variety of forms, whether it’s organizational, geographical or other. Expect more to come.

Connecting with Your Business Colleagues

These are just some examples of what may result from this business-focused exercise. The important point is to stay close to the business and be creative in how technology can help achieve cost-saving goals. Your business colleagues are facing tremendous pressures to cut costs while potentially serving spikes in demand and, in all likelihood, trying to preserve jobs. That kind of pressure requires creativity. Reach out to them, work with them, and put your heads together on what can, or maybe must, be done with technology to make it happen.

As you work through these analyses, we would advocate that you map your company’s basic financial levers against the key technology enablers of those levers (ex. Figure 1). The Feld Group Institute teaches the framework below in its Transformation Leadership Development and Enterprise Architecture classes. This can be a great way to collaborate with the business on how, collectively, a difference can be made. At a mature level, this type of mapping should manifest itself into a business capability model that becomes the basis for how the business and IT communicate technology demand.

 

Figure 1.

Translating these “ability to’s” into your capability model fills out the unique “needs” of your organization. In times of crisis, this model can be the lens through which you select which efforts you can kill, and what you must protect or double down on at all cost. In the second of his series, Shaping Demand, Charlie Feld discusses the idea of “Go Short” and “Go Long”; everything in between is a target. Applying these concepts against your capability model, and shaping the demand as a byproduct of the “needs” is the best way to position yourself for playing offense on the other side of this crisis. Free up resources that are not focused on critical capabilities to speed the delivery of what’s going to help you win.

Hopefully, this provides a few ideas on a structured approach to making smart moves in response to today’s crisis. We all understand that for most organizations, shared pain is required. However, starting with how technology can enable more efficient business operations will translate into greater returns than blanket cuts to cost centers. More importantly, this technology enablement builds the muscle to compete in the future. In fact, these difficult times can be viewed as an opportunity. Meeting these demands not only requires creativity but can translate into less bureaucracy and more willingness to adopt change. You will likely find business partners ready to adapt and take on changes that, in normal times, would be hard-pressed to gain buy-in. Leverage this spirit of cooperation to execute on the good ideas that are out there to transform your business. Not only will you see the benefits of improved processes, but you will also “bend the cost curve” so that, over time, more room can be made for incremental investment in the business.

 


 

Author: Mark Canada, Affiliate, The Feld Group Institute, and Principal, Dialexa – a Feld Group Institute partner.

Dialexa builds product experiences that drive true innovation in businesses around the world. We have been the arsenal behind more than 100 companies, turning “back of the napkin” concepts into real-world, powerful business solutions. What sets us apart is our relentless commitment to what we refer to as our Collaborative QualityTM process. Through this process, we develop a thorough understanding of our client’s customers and build software and hardware products that meet their individual needs. Our company was built to create lasting, global impact – with a level of perfection that is unsurpassed in the market – and that commitment is ingrained into our DNA.

Photo by JESHOOTS.COM on Unsplash

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