From home working to cybersecurity to digital commerce, COVID-19 has shifted business IT priorities. But how sustainable are these changes in the long term and are firms facing squeezed budgets, getting their spending strategies right?
It is often said the way that a crisis forces meaningful change by sweeping away resistance and hesitation can often be a force for good in the long term. There is no doubt that COVID-19 has been a catalyst for change, and the world of business IT has been no exception. As lockdowns and social distancing protocols have forced business to embrace everything from home working to digital-only commerce in order to keep trading, it has been estimated that we’ve seen more than five years’ worth of digital transformation in just six months. But how much of this change is sustainable in the long term? Are we seeing a new digital normal ushered in, and if so, where do businesses need to focus their investments to ensure they are spending in a way that enables future success?
The disruptions that COVID-19 has caused no longer need any introduction. In our private lives, our social lives, in work and in business, what we took for granted as ‘normal’ has been shaken hard.
Businesses have had to adapt fast to keep operating in a very changed landscape. IT has been right on the frontline of business response. With the basic rationale of finding ways to continue moving businesses forward whilst keeping people safe, organizations have been encouraged to switch to digital and remote options for anything that can be.
As a result, the majority of firms have experienced a shuddering acceleration in digital transformation activity – according to some estimates, undergoing the equivalent of more than five years’ change in just six months. But when these changes have very clearly been triggered by the short-term needs of a crisis response, is it premature to start talking about a ‘new digital normal’ emerging from the pandemic?
A new wave of digital disruption
The initial need for companies to keep operating even when their premises were shut, and subsequently to help minimize person-to-person contact, has pushed certain technologies to the forefront of business IT. We are all familiar with the well-publicized role teleconferencing platforms like Zoom and Microsoft Teams have played in keeping stay-at-home workforces in touch, and how cloud-based collaboration platforms have allowed remote workers to stay productive.
At the same time, businesses have raced to bolster their customer-facing digital assets, investing in everything from scaled-up web commerce capacity to new mobile apps and AI-powered customer service tools.
Business transformation with remote working at core
The remote working trend has resulted in a significant uptick in investment in digital communications and cloud solutions. Given the need to enable remote collaboration between colleagues working from home, it is not surprising that 92% of respondents told a survey from Twilio that transforming digital communications is extremely or very critical to addressing their current business challenges.
Gartner, meanwhile, predicts that spending on remote working apps will reach double-digit growth this year, with cloud-based conferencing growing by just under 25% and cloud-based telephony and messaging by 9%.
Aside from government advice and regulations, businesses clearly see home and remote working as part of a post-COVID future. The Twilio survey found that an overwhelming 99% of respondents recognized that the investments they were making in digital technology would support remote working in the long term. Half of CFOs taking part in a PwC survey, meanwhile, said they planned to make home working provisions permanent.
The message seems loud and clear – seven months into the pandemic, businesses do not see themselves as making changes for a short-term digital fix, but developments and investments are a key part of their strategy to embrace the ever changing new normal.
How has this impacted investment strategy?
Aside from the public health emergency, the biggest impact of the pandemic has been the cataclysmic hit it has dealt to the economy. With overall budgets squeezed from heavy loss of earnings, Gartner predicts global spending on business IT will be down 8% this year.
This decline is even more challenging when considered against a backdrop of predicted expenditure increases of 19% on public cloud services as a result of the required changes in response to the pandemic and working for home (newly installed applications and infrastructure amendments etc). Both these competing factors placing even more pressure on IT budgets.
It’s no surprise therefore that in order to offset the spend on cloud infrastructure, investment in more traditional and physical, non-cloud based technology has declined, with IDC stating that spending on non-cloud infrastructure plummeted by 16.3% YoY in Q1 of this year.
Protecting investments: Managing the challenges and risks
Despite the challenge of ever shrinking IT budgets, businesses faced very little choice and the had to make these investments – the consequences of not being too dire. Having done so, its now imperative to make these investments work, simply investing is not the same as succeeding. So what key challenges and risks do businesses need to be ever alert to?
The switch from having the majority of staff on premises to a large number working from home presents a number of technological and logistical challenges. Chief among these is cybersecurity, with the sudden switch to home working on masse during lockdown quickly exposing new threats and vulnerabilities. This has included exploitation of weaknesses in domestic WiFi and own device security, especially around unsecured smartphones being used to access business systems. Zoom’s status as the teleconferencing solution of choice for thousands of businesses has been overshadowed by a long list of security failings.
And beyond the safe confines of the office firewall, employee awareness around cybersecure practices has been found wanting, with a marked increase in successful phishing attacks and exploitation of poor password management.
Responding to these threats has eaten up a significant amount of time and resources and, in many cases, required firms to abandon or make wholesale changes to existing cybersecurity practices. Again all at a time when budgets are already tight and being challenged, and McKinsey reported that many companies had to abandon projects in order to focus on business continuity and shore up defences in response to home working.
McKinsey’s own survey found that the biggest cybersecurity investment areas included additional perimeter security for a remote workforce, advanced identity and access controls (especially for teams managing business-critical systems from home), dedicated remote service help desks and cybersecurity awareness training. These kinds of measures are expected to remain the top cybersecurity spending priorities for the rest of 2020 at least.
Domestic technology impacting IT performance
One of the big obstacles businesses have faced with the huge increase in home working is the strain it has put on domestic broadband connections.
In addition, unlike business-class last mile solutions such as FTTP leased lines, asynchronous domestic broadband isn’t built to handle the high upload demands of teleconferencing or the more data-hungry examples of cloud-based business software. Overall, IT performance in the home just isn’t as efficient as in the office.
There isn’t too much that companies can do to solve this problem in the short term, save giving employees advice on things such as wireless router efficiency and device hygiene. In the medium term, increased home working may require businesses to look at options like making business network accounts available in the home (working on the same principle as business mobile accounts, for example). Looking even further ahead again, it is possible that issues like these will accelerate adoption of 5G and WiFi 6.