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The Covid-19 crisis has ushered in a chaotic new normal, and enterprises are scrambling to determine how to adjust. In a recent survey of the economic impact of coronavirus on the enterprise, PWC reported that 60% of U.S. CFOs expect lower productivity due to lack of remote work capabilities. They also found that 44% of organizations expect a reduction in staffing, 64% expect to take cost-containment measures, and 64% anticipate deferring or canceling planned investments.
A dramatic scenario.
We’ve seen a very clear trend that the IT organization, and in particular the CIO, is orchestrating the response, reversing a trend from the last ten or so years where the CMO and other business leaders had been taking a larger share of the technology budget.
We recommend a comprehensive five-step approach the IT organization should take to help their organizations not only survive but thrive during the current crisis. These five steps address the following urgent problem areas: talent, business continuity, revenue, costs and preparing for the future.
We’ll discuss this five-step approach, and we attest that this response can help elevate the CIO to the essential position it ought to have within the organization. We’ll also share examples of how Softtek and some of our clients are adjusting.
The business world has rushed to move their office-based workers to home office scenarios. The move, however, is not as easy as it seems.
Softtek recommends a comprehensive approach to enable office workers, field service personnel, call center employees and executive staff to migrate work from home while minimizing office presence.
And because of the speed, security considerations and detailed technology focus required, this urgent business-survival action is something only the IT organization can execute.
Most firms have business continuity plans (BCPs) to deal with disasters like we’re experiencing right now. These are CIO-led prevention and recovery contingencies to deal with threats and enable ongoing operations before and during execution of disaster recovery.
Softtek was well positioned to create BCPs suited to the current crisis. First, Softtek developed work-at-home contingencies as a result of the H1N1 pandemic (which was first detected in the state of Veracruz, Mexico). Additionally, the backbone of our business model is remote work, as we provide technology services remotely from delivery centers in Mexico, India, China, Brazil and Argentina.
The current situation, however, is unique in that we’ve never had to activate all BCPs at once. Softtek has activated 800 BCPs to be exact, including 750 for Mexico and U.S.-based clients alone.
Out of our global workforce of 15,000 employees— 8,000 of which are based in Mexico— 98% of them are currently working remotely (as of April 2020). Arrangements for remote work vary depending on the type of work to be done. For example, employees supporting critical onsite activities are fortunately working by themselves in empty data centers.
During implementation of BCPs for remote work, organizations must enable virtual environments, including optimizing bandwidth and equipment for home-based workers. In fact, one of the most important challenges we’ve seen with the current crisis are bandwidth issues. Remote workers must now share bandwidth with family members who are streaming, gaming, working or attending classes.
Softtek CMO, Alex Camino, reprises the bandwidth issue during our recent webinar: “When our customers were in their offices with this huge bandwidth, they didn’t have to deal with…their coworkers watching Netflix. Now our [home office] ‘coworkers’ are watching Netflix and playing online video games.”
Dry runs were conducted in Spain and Mexico to test bandwidth and security considerations.
Another consideration is how to deal with hardware shortages. One of the lessons learned from the H1N1 outbreak was the need to overstock on much needed hardware; investments were made in laptops instead of desktops, and desktops were only acquired for special circumstances, granting computational mobility to the majority of collaborators.
Since the mass movement to remote work, Softtek has seen a 30%-50% increase in help desk calls, not just from Softtek’s own people but from clients who have also migrated to remote work.
One of the keys to success in dealing with the issues of remote work is flexibility and ingenuity. Camino said that Softtek help desk staff have had to improvise (something that is not seen as bad, given the unparalleled crisis were experiencing) as they work with employees’ at-home routers, printers and personal hardware.
The current crisis has caused huge disruptions for companies in their business and technology operations. As John Serral, former GE CIO and current advisor to global private equity management firm Clayton, Dubilier & Rice, LLC, said in the webinar: “Everybody is scared.”
The impact of the crisis is something the business community hasn’t felt since 9/11, therefore, “there’s no playbook for how to deal with something of this magnitude.”
CIOs are especially concerned. They’re not sure they’ve tested enough, if they have enough equipment or if employees will respond well to the technologies. And unlike 9/11, this is greater in magnitude and duration.
The key to working through this is to over-communicate. It worked for 9/11, it works during business as usual and it can work now, too.
In his capacity as an advisor to a private equity firm, Serral helps oversee 26 firms. He said the CIOs for the portfolio companies had previously established a monthly cadence of cross-organizational CIO-to-CIO calls, which have since been increased to weekly conversations to further synchronize best practices and ideas.
Serral said: “We’ve always had email groups which is great, CIOs to CIOs, that’s a phenomenal way to learn and to respond quickly, [where we ask] ‘…what do you do about this? Are you seeing this?’”
Serral also suggests frequent backups, software patching updates and a tenfold increase in log monitoring to detect unusual activities— a practice he’d learned after 9/11.
An important step here is to increase collaboration with outside vendors. “These are times when the hackers are taking advantage of you, when you’re not looking,” added Serral. “You can imagine everybody working remote and then having all your systems that they connect to shut down,” concluding that you need 20 eyes on security in times like these.
Additionally, it’s important to get vendor agreements in place for any surge needs. Whenever you’re light—only one or two people deep in many cases— a collaborator falling ill could be detrimental to operations.
Serral said they’re quickly scrambling with third parties to get the skills in place and make them redundant. If staffing does fall, you have additional people covering operations. It’s also important to double down on incident response and security to ensure everything is covered.
Finally, it’s important to broaden your networks, whether internally or with outside help. For example, smaller companies or those lacking in certain resources may benefit by bringing an consultant or adviser.
How are companies mobilizing to quickly handle the crisis? Jaime Palacios, Softtek’s SVP of Digital and Innovation, provides three compelling examples.
One of the largest national healthcare service providers in Latin America, serving 70 million patients in 32 states, provides an impactful example.
About ten days previously, IT executives from the healthcare provider reached out to Softtek CEO Blanca Treviño with a very specific ask: they wanted to minimize patient commutes as much as possible to reduce the need to travel great distances to visit a hospital or clinic. They also wanted to provide the entire population with real-time Covid 19 information, such as self-assessments, so patients could gauge the extent of symptoms they may be presenting, and what actions to take.
Palacios said Softtek was able to provide a fully functional minimal viable product (MVP) within 48 hours, an astounding turnaround time.
Leveraging low-code/no-code technologies from Outsystems, they developed a full UI/UX enabled application to support the institution’s varying needs.
The MVP included complex algorithms to balance patient intake, access to emergency medical appointments, issuance of digital certificates for medical leave to prevent travel to and from the clinics, and prescription delivery through third parties like Uber.
Additionally, implementation of geofencing functionality was planned, which will allow the facility to understand patient behavior and minimize clinic saturation.
A nationwide fitness chain had to close their facilities to the public. With 400 clubs in 15 states, this large enterprise normally serves 4 million members. They wanted to migrate their members to an online platform so they could deliver their wellness programs virtually.
Softtek helped them deploy a livestream application to broadcast live workout sessions, a system to drive online sales and a portal for members to manage their accounts.
The fitness chain was revamped with digital marketing with dynamic pricing and bundling, and tools to monitor two data sets:
The third and final case we wanted to introduced is Cinepolis, the third largest cineplex chain in the world with over 700 theaters and 5,000 screens in over 30 countries. As with the fitness chain, they’ve had to close their brick and mortar facilities.
Fortunately, the company already had an online streaming platform similar to Netflix, but it lacked the ability to stream new releases. Cinepolis wanted to incorporate that content into the online platforms, but there were two significant challenges: the content was not formatted for home video streaming, and the loyalty program for cinema goers only worked at the facilities.
Softtek helped them with a dynamic formatting solution to incorporate the new releases into the platform, and integrated the loyalty points system as well.
The current crisis has provided an urgent incentive to rationalize IT operations and reduce waste. Beni Lopez, Softtek CEO for the USA and Canada, shared his experience having lived through ‘The Tequila Crisis,’ the Latin American economic crisis of 1994 which started in Mexico and quickly spread to the rest of Latin America. He described how to get the funding for the digital future Palacios previously described through quickly rationalizing and reducing waste.
As soon as a CEO tells the CIO they need to reduce X percent of your current cost, the places CIOs must look are:
It’s logical to want to suspend some development projects, at least temporarily. But when you get to the bare bones, dont compromise SLAs.
“You’ll regret it very quickly in a few months if you ask for discounts from your existing partner vendors, and in exchange they will ask for some flexibility in SLAs,” said Lopez.
Once costs are optimized, organizations should then invest in solutions to further rationalize operations.
The first step companies can take is to maximize the digital labor force with cognitive RPA. Many newer companies already have RPA programs, but they are often leveraged in two different ways:
Another short-term cost optimization action you can take is digitizing and automating operations, which is said to to reduce costs by as much as 30% within a year.
As companies experience dramatic declines in sales, it’s important that IT sit down with sales, marketing and operations to plan how to handle the first phase and drive initial savings. Plan how to quickly integrate information and streamline processes to include demand forecasting, response times to market opportunities and challenges with the existing supply chain.
An example of this need is the current grocery delivery situation in New York City. Lopez’s daughter, who is home from college, spent four hours dealing with five or six different supermarkets to arrange home delivery. None of them were able to give her any clarity as to when they could deliver the groceries.
This is a situation that really doesn’t need to exist. Current low-code/no-code technologies and rapid appification methodologies can provide quick fixes so that companies in the retail supply chain can implement demand forecasting to address demand spikes.
Finally, it’s not too soon to get ready for the recovery. Whether we have a V-shaped recovery, a U-shaped recovery that will take longer, or an L type of recovery (the longest time frame possible), a recovery will happen.
New digital business models are driving different customer experience expectations.
In a recent meeting with an automotive firm— an industry segment that has taken a big sales hit— Lopez learned they’re looking at current projections, especially at the transition to mobility models. He said a third of their revenues for the next five to ten years will come from the aftermarket and other types of digitally-enabled services.
If they over-compromise in the short term, they won’t be ready to take advantage when that recovery happens.
Organizations, individuals and government entities have been thrust into a new normal by the Covid-19-induced economic crisis. The only constant for everybody is the lack there of: uncertainty. We recommend coming to terms with uncertainty, accepting that change is the new constant.
Vince Chapa, Softtek’s SVP of Sales for the USA and Canada, quoted theoretical physicist Max Planck, the originator of the quantum theory of physics:
“When you change the way you look at things, the things you look at change.” – Max Planck.
This is the first time those of us alive today are facing a truly global pandemic. We’re learning how to deal with the unknown, and adapting to change is critical. We must adjust as new information comes in. Right now, more than ever, it's okay to be unorthodox— working remotely, expanding digital channels, tweaking business models to adapt to market shifts, not visiting clients, working with peers over video-conferencing applications.
We can see very clearly that the monumental actions organizations must take to retool their companies and adjust to the new normal in record time is a task ideally suited to the CIO and the IT organization. In fact, we would assert that organizations crafting their response to the current crisis depend almost exclusively on the expertise of the CIO.
Let’s take a look at these five areas again and look at why the recommended response will re-elevate the CIO:
We’ll leave you with this quote:
“Good enough can be fine in the current environment. Companies have unprecedented permission from clients to experiment in perfecting their digital channels.” – Jaime Palacios