James McElhone, a Partner in Consulting at EY in Cambridge, talks about how technological innovation and the adoption of new ways of working is something that owner managers need to invest in, to ensure their business survives and thrives.
Investing in digital transformation has the potential to accelerate new and better ways of working. This was the case well before COVID came about. However, the impact of the global pandemic meant that some businesses were left exposed by their lack of action to implement new systems, tools and processes, and at risk due to the impact on cashflow of needing to undertake investment that was unforeseen and unplanned.
Whilst some businesses struggled to adapt initially, others found technology to be the new lifeblood of their business, with resulting new revenue streams far beyond what they would have expected.
This is particularly true of some retailers, who faced with prolonged store closures invested in their websites and online user experiences to make it quicker, easier and more consumer-friendly to purchase goods online.
Additionally, data from Companies House revealed that 2020 recorded a phenomenal number of business start-ups, triggered in part by entrepreneurial individuals who were made redundant due to COVID looking to create new opportunities.
Nearly 85,000 new businesses were set up last year, a 12.3 per cent increase on 2019 and the highest number since 2011.
Not surprisingly, the sectors which saw the highest set-up growth in 2020 were retailers of medical goods (up 176 per cent), e-commerce, an increase of 88 per cent from 2019 and clothing (up 55 per cent).
Late last year, EY published its Digital Investment Index, providing a snapshot into organisations as they recalibrate their response to the COVID-19 pandemic.
The index was published partnership with Oxford Economic and surveyed over 1,000 executives with technology decision making responsibilities across industries worldwide about their digital strategies and results.
It found that some technologies such as cloud computing and artificial intelligence have become table stakes, accounting for the minimum offering it takes to be considered a player in the market.
However, scaling these digital initiatives remains a challenge for many businesses, as too often investment is piecemeal and not across the entire business – making it harder to fully incorporate and appreciate.
The index further revealed that those responsible for technology-based decision making are not yet aligned on investment strategies and struggle to measure the returns on their investments.
Yet, the best practices of a select group of leading companies provide a possible way forward for all businesses to achieve higher returns from their digital investments. The survey highlighted five areas:-
- Lessons from the digital performance leaders
- How to improve digital investment benefits
- Aligning on investment vehicles
- Overcoming barriers to scale
- Establishing robust metrics
Nearly two-thirds of the executives surveyed agreed that organisation must radically transform their operations over the next two years, to incorporate more emerging technologies in their operations including the Internet of Things (IoT), AI and cloud computing. For businesses investment in automation and digital collaboration tools are a must if they are to survive and thrive.
Undoubtedly, a post-COVID economy is one where businesses are more tech-enabled, have greater adaptability, based on investment in new processes and tools, and have a focus on developing its people with the necessary skills for skills to future proof.
Businesses who have pressed the reset button during COVID, now need to concentrate on a future where investment in digital transformation is absolutely critical.