As we wrote in Digital Transformation: Digitally Resilient Organizations, digitally resilient enterprises have built themselves business-technology platforms that are elastic, agile and can correctly position themselves to securely meet current business demands. These enterprises are also constantly learning from their data and adjusting as markets, workforce and customers demand.
These enterprises have also eliminated the bulk of their technical debt and continue to innovate so they aren’t disrupted by competitors with a better idea, execution or understanding customer needs.
Consider the grocery delivery wars, and how the coronavirus pandemic may have shifted the balance. Today, $78 billion retailer Target has a chance to prove, to a delivery-eager customer base, its prior investments in its online services designed to compete with Amazon Prime. Will its new Drive Up pick-up service and Shipt delivery service meet customer demand during this period of social distancing— and keep those customers over the long run—while Amazon tries to manage its way through supply shortages and shipping delays?
Walmart and Instacart have also seen significant usage surges, due to social distancing mandates. According to app store intelligence provider Apptopia, comparing average daily downloads in February to Sunday, March 15, Instacart, Walmart Grocery and Shipt have seen surges of 218%, 160% and 124% respectively.
“We’ve also noticed people in the United States have been turning to Target to stock up on groceries, entertainment and everyday essentials. March 15’s downloads saw an increase of 98% over the average number of daily downloads in February,” Apptopia wrote in its analysis.
While certain industries, such as online food and grocery delivery, may have seen years of adoption growth condensed into weeks, many enterprises are seeing downturns in demand.
Research firm IDC previously estimated that real GDP in the U.S. would reach 2.4%, but downshifted that to a worst case 1.4%. While IT spending dropped from an expected 5.1% year over year growth to worst case 1.3%. IDC pegs the base scenario for GDP growth now at 2.0% and for IT spending at 4.3%.
This has thrown CIO priorities into the air. According to a recent poll conducted by McKinsey & Company, CIOs are pressed to solve immediate challenges. For example, 32% cited increased demands for collaboration services and operating norms for working from home at scale, and facing increased strain on budgets (22%), a medium- and longer-term consideration.
McKinsey & Company advised CIOs to keep their focus on stabilizing emergency measures by strengthening remote working capabilities, improve cybersecurity, adjust ways of working with agile teams and prepare for a breakdown of parts of the vendor ecosystem (supply chain). In the interim, CIOs need to address immediate IT cost pressures to reduce costs, and creatively redeploy the IT workforce, while also pivoting to new areas of focus in the future.
According to McKinsey & Company, many organizations are successfully digitally engaging with customers, and cited a government in Western Europe who embarked on an “express digitization” of quarantine-compensation claims to deal with a more than 100-fold increase in volume.
“Sometimes this effort is about taking loads from call centers, but more often it addresses real new business opportunities. To engage with consumers, for example, retailers in China increasingly gave products at-home themes in WeChat,” McKinsey & Company wrote.
“Technology departments must anticipate and prepare to offer more of these kinds of digital services, products, and channels,” McKinsey & Company advised. “The key to reaching customers will be creating suitable access interfaces between internal IT systems and external social platforms and accelerating the integration of new vendors and distributors.”
In the months ahead, the organizations to move beyond the economic downturn will be those that built the platforms that enabled them to efficiently endure the recession and position themselves to adapt to whatever the new business as usual turns out to be.
