Technology will have a vital role to play in our recovery from the pandemic. Businesses worried about the impact of Covid-19 on the economy may prefer to delay ambitious digital transformation projects, but that would be a mistake.
The end of a painful 2020 offers companies the chance to reset their thinking. Next year, they will need to make tough decisions on technology investment.
Covid-19 has transformed our lives forever. The way we work, shop, eat, seek medical advice, socialize, and entertain ourselves has fundamentally changed, and, as the New Year approaches, there is no going back.
Spend on technology to survive
Companies that tech-enable their businesses during a recession tend to become more resilient to future shocks.
The latest report from GlobalData’s Thematic Research team, Tech, Media, & Telecom Themes 2021, explains that enterprises have taken a conservative approach towards IT spending in 2020 due to Covid-19. The world of ‘remote everything’ should prompt organizations to accelerate digital transformations. However, many are likely to shun larger transformational projects in 2021.
Successful tech companies have long recognized that spending rather than saving is the way to survive recessions.
In 2008, Intel’s decision to continue investment into research and development (R&D) despite the global economic downturn put it several years ahead of its competitors. The company was adamant that you cannot save your way out of a recession.
Beyond Intel, examples of companies that invested in technology to survive a recession include Microsoft and Apple in 1975, Netflix in 1997, and Airbnb in 2008. These companies’ investments put them in a position to capitalize on the increased consumer demand that followed the return to economic growth.
Targeted, tactical digital transformation will be vital for companies to survive in the new post-Covid world. This is good news for IT services, infrastructure and application software companies, which have struggled in 2020 as many enterprise IT projects have been delayed, scaled back, or cancelled.
Digital transformation projects will help with the Covid-19 recovery
GlobalData predicts that companies will rely on multiple technologies ranging from cybersecurity to cloud computing, automation, the internet of things (IoT), and artificial intelligence (AI) to recover from the Covid-19-induced economic downturn that is likely to be deep and prolonged.
For example, robots will increasingly be used to perform a broad range of functions, from cleaning supermarkets and offices to delivering packages and even offering comfort and support to the sick.
Meanwhile, AI is already being used to automate routine business processes, saving time, reducing operating costs, cutting out errors, and increasing productivity. Automating mundane day-to-day activities contributes to more efficient use of labor, with workers able to focus their time on higher-value tasks.
The Tech, Media, & Telecom Themes 2021 report explains how Covid-19 has had both positive and negative impacts on the TMT sector. Cloud services providers and cybersecurity experts benefited from the global shift to remote working, while demand for entertainment, from gaming to video streaming, surged as people confined to their homes tried to keep themselves entertained. Ecommerce platforms found themselves overwhelmed as store closures and restrictions on movement forced customers online.
At the same time, companies across the TMT industry experienced significant supply chain disruption, forcing them to delay product launches and leaving many struggling to meet customer demand.
No-one could possibly have predicted the seismic shock Covid-19 has caused to the world. However, what is certain is that the world relies on technology, and it will be the beating heart of its recovery.