This week, we in the UK, marked one year from the first Coronavirus lockdown.
At the start of the pandemic, as per a McKinsey survey of CEOs, nearly 60% expected a return to growth.
Fast-forward a year later, a Gartner survey of CFOs while broadly supportive of the earlier view, has pushed back on their predictions to a return-to-normal with just over 50%% expecting that in the H2 of 2021 and a further 35% expecting a return-to-normal in 2022.
Just a week ago, Germany discussed the gradual opening up of the economy and is now entering into another lockdown due to the unexpected spread the new variants of the virus.
How do Business Leaders plan for times with such uncertainty?
A recent Forbes article1 suggests an approach. It recommends that Business Leaders create scenarios based on these inputs
- What has changed?
- What has not changed?
- And, what is still uncertain?
Within the context of IT Cost Management, when you look at each of these factors:
What has changed?
After the initial exuberance of working from home, and that this pattern would constitute ‘the new normal’, there’s been a resetting of expectations by a number of organisations that would not be so. A recent KPMG survey 2 of CEOs of major Global companies has revealed that just 17% of chief executives plan to cut back on offices, down from 69% in the last survey in August. Just under a quarter of firms said the pandemic would permanently change their operations.
So, while one can expect more employer flexibility in their work-life balance, the shift to a radical ‘fully remote’ workforce is not on the cards for most companies. Agility and Resilience is being built into the fabric of firms but not in ways that was imagined in the initial days of the pandemic.
What has not changed?
The imperative to reduce costs, digitise processes and sales channels, and transform to agile ways of working has not changed.
Many IT departments started their response to the pandemic with the swift and secure migration of desktops (virtual or otherwise) to enable remote working. With this mostly in place, the emphasis for many companies continue to focus on rationalising their portfolio and initiatives to lower their costbase.
And, what is still uncertain?
The exact timetable for reopening of most economies is still being dictated by the virus. This has clear implications for a return to ‘normal’ (whatever that means and will likely vary by sector and region) and also the readiness of companies to take advantage of opportunities as soon as the economy reopens.
The OECD expects 3 rapid growth in the world economy with growth expectations of 5.6% in 2021 – with some economies like the US even beating its earlier growth expectations.
Clearly, with such latent demand, companies need to be ready to rapidly deploy resources to capture market share as soon as regulations permit. Either way, companies need to be ready for expansion, but they cannot commit too strongly to one particular timetable.
It is tempting to throw one’s hands up and say forecasting is impossible. However, with the appropriate toolkit, forecasting can be a much easier process.
There are 2 essential components of this toolkit:
- Access to relevant and up-to-date data
- An IT Cost Modelling tool that can flexibly model and generate multiple scenarios and enable comparisons between these scenarios.
Our market-leading product, CostLens, is a leading IT Cost Management software with such capability. It enables business leaders to be better prepared no matter what the pandemic throws at them.
I’d like to close with this wonderful quote by William James
‘No decision is, in itself, a decision’.