COVID-19 and the Disruption of Technology Strategies
The effects of COVID-19 are disrupting technology strategies, the supply chain, demand, regional differences; data growth; and the emergence of new strategies. Last week, I hosted a round table discussion with company executives. The COVID -19 disruption has caused an acceleration of remote working and a significant change in corporate strategy regarding their investment in both technology and the people who support their on-premise resources. There is little question that there is a global economic disruption. The question? Will this economic disruption manifest itself as an economic recession or depression? The U.S. is facing unemployment approaching 25% and long-term unemployment hovering near 15%.
A. Supply chain disruption – The pandemic is requiring companies to reconfigure their supply chains as part of a broader remapping of global commerce initially set in motion by Trump’s trade war with China and exasperated by the COVID-19 pandemic. The U.S. chaotic economic global policy created uncertainty for the past six months. Today, there is a very real disruption in the supply chain.
B. Impact on demand – Demand is in crisis. Several sectors are facing their greatest challenges since the Great Depression of the 1930’s. The retail marketplace will change forever. Hospitality and travel face at least 12 months of continued disruption. There will be players who emerge stronger as their competitors face extinction. The demand in the healthcare segment faces new obstacles created by the pandemic and financial challenges that will dampen demand. Despite sharply curtailed demand from consumers and enterprises alike for products and services, the outlook for cloud-based computing and software-as-a-service (SaaS) offerings remains strong as work from home is now a reality for millions globally and, more than ever, people use video conferencing technology to stay connected.
C. Regional differences – It’s not simply that the countries of the world are managing the effects of COVID-19 differently, but the outbreak is impacting the IT supply chain unevenly dependent on the hardware in question: hard drives get manufactured and distributed through a separate supply chain to server components, for example.
D. Data growth – An oft-quoted study from IDC / Seagate, released at the end of 2018, predicted an explosion in annualized data generation to an eye-watering 175 zettabytes by 2025. Will the effect of the coronavirus dent these lofty projections and, if so, to what extent?
E. Emergence of a new strategy – Executives have learned several lessons over the past eight weeks.
Executives’ angst that remote workers are less productive has been put to rest. They have discovered that workers are more productive working from home. Remote workers logon more often including at night to catch up or get ahead on projects.
Executives discovered that their technical resources can manage their on-premise resources from home. Now, they have questions. Why employ these resources? Why deal with hiring, training, managing and evaluating these resources? Why not use managed services? The ‘premium’ of managed services is far outweighed by the savings of the total costs of employing these resources.
The pandemic will hasten moving additional resources and applications to the public cloud or using software as a service (SaaS) solutions.
The effects of COVID-19 are disrupting the technology sector, the supply chain, demand, regional differences, data growth; and the emergence of a new strategy. Those executives that embrace these changes will no doubt emerge stronger than their competitors.
