COVID-19: Sparking a new era for digital maturity | Orange Paper

COVID-19: Sparking a new era for digital maturity From crisis to thriving

A Sullivan & Stanley Report

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Prelude The arrival of the Covid-19 pandemic, despite early warning signs from Asia, took business leaders by surprise. When the UK government announced the lockdown, new guidelines and in some cases temporary rules and laws were imposed. Those with predominantly office-based roles were advised to work from home and eventually only key workers were allowed to travel. Across Europe, all non-essential workers were furloughed with non-essential retail, hospitality and travel seeing drops in sales of over 50% for 10 weeks.

This huge change in working patterns immediately put a strain on IT teams to support the sudden movement to home working. Additional demands were also placed on the teams to support new business ways of working including curbside pickup; automated customer contact, as well as the demand for better data through reforecasting and eCommerce demand changes.

Wanting to understand how successful IT teams reacted and what their plans were post-Covid, Founder and CEO Pat Lynes and CxO Advisory, Ken Towning from Sullivan & Stanley, held a virtual event with leaders from across their CIO network.

They collectively shared their experiences and discussed what they were planning to do in the coming months.

This feedback has been consolidated and authored by attendees Nigel Lemmon, Suzie Willians and Ken Towning to create an ‘orange-paper’ from S&S on how Covid-19 has step changed the move to Digital.

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The Change Curve Timeline Unlike the majority of events, the Covid-19 crisis hit across the UK at the same time - with all businesses being impacted, positively or negatively, collectively. All non-essential gatherings and services were closed from 23 March 2020, with all companies being advised that their workforce should work from home.

Coronavirus in the UK 29 January 2020 The first two cases of COVID-19 are recorded in the UK.

5 March 2020

28 February 2020 The first British coronavirus death is recorded in Japan.

First confirmed coronavirus death in the UK.

11 March 2020

14 March 2020

Chancellor announces ÂŁ12bn of emergency support to cope with the coronavirus.

Confirmed number of UK cases passes 1,000.

16 March 2020

17 March 2020

PM urges people to avoid pubs and restaurants and to work from home.

Chancellor announces ÂŁ330 billion of support for businesses to cope with the coronavirus.

23 March 2020 PM places the UK in lockdown, with people only allowed to leave their homes for limited reasons.

20 March 2020 UK schools, pubs, restaurants, gyms and other social venues close. Job rentention scheme is announced.

Credit: https://www.ibisworld.com/industry-insider/analyst-insights/uk-industries-benefiting-from-social-distancing-part-one/

This impacted all businesses simultaneously, with some businesses continuing to trade as per normal and others being severely impacted.   Each company went through or is still going through 3 key phases, as demonstrated in Figure 1. We asked our team of CIO leaders what success would look like in each of those phases - Response, Restart and Re-invention.

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Performance

The Covid Change Curve

Pre Lockdown - business as was usual BAWU.

Response - manual processes and PPE increased costs for those still trading, others stopped completely due to regulation.

Restart - new processes, new ways of working; regulation eases - establish new ways of working with new cost and sales profiles.

Time

Figure 1

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Response The responses from businesses and government institutions varied enormously in the first few days and weeks.

Businesses that were deemed ‘successful’ were able to respond quickly to the changing situation. This meant they were able to deploy all office-based colleagues to work from home seamlessly; close down swiftly if regulations meant they were unable to trade; adapt to changing customer demands and fulfil, if applicable, new customer requirements; provide a safe working environment for colleagues and customers.

Not all businesses were equally affected, but it was apparent that those performing ahead of others in their industry sector, demonstrated these key attributes. The most prominent of which, have been reviewed in more detail below.

RESPO NSE

DIGITAL MATURITY The speed of response in digital-only and more resilient businesses lay in the fact they were either already equipped or were quicker in achieving the move. Here are some of the key actions they took: •

Prioritising the activities which supported stabilising the business through the early stages of lockdown, ensuring staff, partners and processes could continue through remote access technology. This technology was extended to roles not previously taking advantage of it and also to partners and suppliers.

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For digital-only businesses and the more digitally-mature businesses, scaling for new demand was served through scalable technology such as cloud and software-as-a-service. This enabled quick and continued response to changing demand for a business’ services and included providing digital channel capabilities enabling customers to buy and access propositions, products and services.

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For those businesses that had a non-office working scenario as part of their BAU or business continuity plans, the move to working-from-home was straightforward.

Less prepared businesses, but still winners, focussed on getting the basics right first such as relaxing Bring Your Own Device (BYOD) policies when they could not provide items like laptops, reviewing and revising security guidelines in line with this and quickly enabling collaboration tools such as personal video conferencing or team planning.

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Businesses had to adopt new technologies quickly and perhaps with less stringent selection processes than was normal. This led to the CIO becoming the digital visionary for the company, demonstrating their credibility in the technical space. These fast purchases were followed by more agile implementations with test and learn and fast deployments featuring. The winning companies delivered digital at pace on an as-needs basis, setting the potential scene for fast future technical delivery.

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R ES P ONS E

BRILLIANT COMMUNICATION - A PEOPLE FIRST STRATEGY Winning companies also demonstrated clear people-first strategy and communicated often and reassuringly to their customers and colleagues. These companies were quick to: •

Assess the impact of lockdown and the absence and illness of staff on sales and operations, suppliers and partners. They communicated their approach to colleagues quickly and clearly.

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Set clear survival tactics with a community-first approach that included highly engaged two-way communication with employees and with supportive tones in the time of uncertainty. They understood the struggles faced by staff which included having to work from home and adjust with various working conditions, being ill-equipped IT wise and managing busy households with homeschooling or living alone in confined homes without much interaction. The ‘super communicators’ took the same approach to their customers, with weekly emails from the CEO to the customer base informing them of the approach they were taking as a business.

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Make the hard decision on which roles were crucial for the business to remain operable, and which roles needed to be furloughed, a status where a member of staff is not required or cannot work and whose pay is supported by government contributions during a pandemic. Winning companies used furlough - but took the time to explain it to colleagues; enable volunteering where possible and top-up payments to colleagues.

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Access changes in business demand, which led to changes in requests put to colleagues. These winning businesses determined the priorities and then presented clearly and concisely without dictating, a need for staff to help focus on the new priorities to help the business through.

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Regularly and frequently communicated updates on expectations, offers of help, both inside and outside of work and working hours and by sharing access to new tools and methods.

RESPO NSE

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Show appreciation for staff by sending personal messages, gifts, vouchers and ideas for maintaining spirits in addition to organising virtual coffee meetings, evening quizzes and other virtual events.

GREAT USE OF DATA AND TECH The winning companies pivoted quickly as they were already digitally mature, but they demonstrated throughout that they could utilise their tech and data to support new requirements from the business. The fastest reacting companies could flex their systems to implement new processes and new customer trends.

Key technology trends deployed were: •

Great use of data - they could utilise existing data alongside new inputs to determine the impact on their business e.g. using data to spot employee habits and trends as well as productivity; being able to reforecast quickly based on changes in customer habits; adapting supply chain requirements based on changes to eCommerce and store sales.

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Scalable infrastructure and base services - having the ability to flex solutions, mainly in Cloud and AAS technologies, to meet the changes in customer demand. Several companies with excessive initial demand were forced to implement queuing systems onto their websites. The winners found ways to prioritise and ensure that their regular customers and the vulnerable were able to access their sites as needed.

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Sales switched to eCommerce - without physical stores, the additional load put pressure onto the fulfilment arms of several companies and subsequently onto customer services. Winning companies moved quickly to ensure that the customer service provided was efficient, with automation keeping customers informed on the progress of their orders. Additionally, user experience changes to websites were introduced for easier use and to communicate clear messages on websites about the anticipated length of delivery.

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R ES P ONS E

GREAT LEADERSHIP INCLUDING FOCUS AND PRIORITISATION Strong leadership is crucial in a crisis. In the winning businesses, the C-suite worked together as one team, on a united front, with four key roles standing out:

Chief Financial Officer As uncertainty reigned, the active financial strategy and point-in-time financial position were examined to ensure there had been and continued to be, a healthy balance sheet, liquidity and solvency ratios and an understanding of where government support would be needed or called upon. Many CFOs turned attention to short-term tactics and measurements to ensure survival, putting longer-term strategies to one side.

HR Director The HR director reacted at pace with supportive messaging but also by ensuring all staff were easily locatable so that IT could provide staff with the right tools.

Additionally, the HRD provided support and advice on anxiety, new or changing performance measurements and ways of guiding and managing remote staff. Some businesses even offered free external online training to furloughed staff.

Chief Information Officer The IT director had the largest expectations on their shoulders. For many who had struggled to justify technology changes found themselves with a far easier route to quickly implement cloud and other remote working technologies (which will be covered in more detail below). The acceleration of the CIO delivering technology change has never been more pressing.

With the help of clear priorities, permission to spend and less aversiveness to risk, IT met the challenges and delivered an unprecedented set of changes at pace. This enabled customers, workforces, partners and management to not only continue to carry out tasks but communicate easily and enable staff to support one another. IT touched every aspect of the business and for those willing to risk making changes quickly, fared better than those who were slower or chose not to. Companies

RESPO NSE

adopting a test and learn strategy with minimum viable product deliveries adapted quickly and put the most change through.

Chief Executive Officer The successful businesses had an early and clear direction and messaging. If that direction was changed it was communicated why and how just as clearly. Steering a business through uncertainty is the biggest challenge for a CEO and the businesses that responded best had a CEO that, even in part, had prepared for unusual events or could tactically adjust while providing clarity on priorities and outcomes.

Other roles such as digital officers, communication directors and others also had key parts to play to keep customers and staff engaged.

SUMMARY Whilst we all hope that Covid-19 will be a rare peak like Y2K, it has driven the digital transformation forward in a way that was not anticipated. Time will tell whether the companies that appear to have won in the ‘Response’ phase manage to keep the momentum through into restart and reinvention. However, they are starting those phases ahead of other companies in their industries.

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R ESTART I NG

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Restarting Restarting will occur at different times for all businesses. It will be dependent on the industry sector, the countries of operation and the government regulations in place in those countries. Figure 2 demonstrates how Covid-19 has impacted businesses across various sectors.

Figure 2

During the lockdown, the winners and losers at a business level varied enormously. However, some common themes emerged. Much surrounded the industry companies operated in but also their level of digital interactions and maturity. We grouped the different performances against sales performance on one axis and change in the comparative costs on the other. From this, four identifiable groups were apparent.

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R ESTART I NG

THRIVING The thriving businesses will see an uptick in revenues with only a small or negligible impact on costs. Examples include motor insurers who because of the lockdown restrictions have seen a significant fall in motor claims but the need to insure a vehicle remains statutory. Or businesses whose digital services see increased demand and those companies involved with HMG in the pandemic response.

These organisations will have some relatively minor adaptations to operations to manage, however, they should be looking at the market to assess potential M&A opportunities, whilst taking the opportunity to Reinvent themselves ahead of the curve.

OPTIMISING Companies finding themselves with increased sales and also increased costs such as many supermarkets, need to focus quickly on optimising their activities to maintain or restore operating margins. Success will be determined by how well adaptations in restarting their activities under pandemic restrictions can be made whilst maximising customer throughput.

RESTARTING

SURVIVAL Those businesses that find themselves with falling revenues and also falling costs must quickly adopt a survival approach. Maximum utilisation of any government support in the form of employee furlough schemes and preferential lending must be used to ensure operationally and overhead costs are paired back. Then they must assess every opportunity to restore or develop new sources of revenue. One example being previously eat-in only restaurants that have pivoted to takeaway and delivery service on minimum staffing.

IN-CRISIS The worst of all places for a business is to suffer from falling revenues and increased costs. Here the approach is to take a crisis management response to every part of the organisation quickly. Maximum utilisation of any government support in the form of employee furlough schemes and preferential lending must be used to ensure operationally and overhead costs are paired back fully, whilst a cost reduction programme is actioned. Many Fashion retail brands are in this quadrant particularly if they have a poor eCommerce digital offering. Even with high-street retailers starting to return, they will be challenged to get enough customers with money to spend through the doors. Airports with high fixed costs and a high dependence on passenger travel for profitable revenues will have a difficult period for months ahead.

In general, only the industries supporting consumers at home have seen sales increase. These include the supermarkets, digital product providers and household suppliers. Of these, not all will have seen that increase transition directly to profit, as costs have increased in industries where Covid precautions (supermarkets) or increased delivery costs (supermarkets, physical products) have kicked in.

It is the industries requiring customers to be present on site which have been worst hit, with significantly reduced sales due to lockdown. Those with high fixed costs (travel, retail stores) have been hit the hardest, over those with higher variable costs (hospitality). The only winners appear to be the digital pure plays (Netflix, Disney) and personal insurance companies where although sales are potentially lower, claims are also significantly down.

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R ESTART I NG

Common across the majority of these businesses will be the desire to get back to normal (or better) levels of profitability as soon as possible. However, for the majority, operating practices will be very different from pre-Covid days.

The restart phase needs to be delivered very quickly, with the same level of engagement across the organisation as during the crisis days of lockdown. The focus of the restart phase will be the generation of the plan and targets for the remainder of the financial year.

Additionally, the restart phase needs to take into account the way that the customer wants and needs were delivered during the lockdown. The majority of businesses will have seen some additional transition to online during the lockdown - restart is the time to review that transition and understand what it means to the business model if that transition is permanent.

FOUR RESTART IMPERATIVES REGENERATE YOUR PLAN AND KPIS It’s not yet clear what the restart will look like, but it’s obvious that restart does not mean that businesses will carry on from where they left off. It will be key for each business to set their new success criteria for the year ahead. At a minimum, one trading quarter will have been significantly impacted, so the business targets need to be restated to ensure that they are achievable for the remainder of the year.

The refocused plan could have changed the business drivers for the year with the requirement for cost savings; sales increases; improvements to eCommerce to support customer requirements etc. The plan needs to be communicated to all teams and data that is used for forecasting, reporting must be realigned to the new plans. Additionally, the “lockdown” period will need to be normalised for any companies that use data on a like for like basis or future forecasts.

RESTARTING

The existing IT plan needs to be quickly reviewed and aligned to the new focus. In particular, review what changed during the lockdown and what that will drive from an IT perspective. Key questions to ask include: •

You may have introduced new tools quickly such as collaboration, cloud, RPA, so are these fully operational?

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●Is there any technical debt to be paid?

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Services may have been stopped during lockdown - do they need to be restarted?

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There may be the opportunity to reduce applications/kit across the estate, for example, are there opportunities to remove the requirement for desk phones?

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Could the mobile phone contract be reviewed? Is there legacy telephone conferencing bills?

During the lockdown, it’s likely corners were cut to ensure that service continued and patches may not have been deployed. IT teams need to review their estates to ensure that they are up to date, as well as review all changes that were implemented during the period, to ensure that information remains secure and that the handover to operations and services has been successfully completed.

Once IT plans for the year have been reviewed, they need to be communicated to the IT team and objectives must be updated to take into account the lockdown period, as well as what the new plans for the year are. The whole team must be on the same page with clear KPIs for the remainder of the year to ensure the new plans are delivered.

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MAKE SURE YOUR PEOPLE CAN WORK EFFECTIVELY Resilient companies moved to remote working swiftly as lockdown started enabling colleagues to work from home. Since then, many companies have come out in support with Twitter announcing it will advocate home working permanently, Google allowing employees to work from home until 2021, while Facebook has publicly stated that it believes 50% of its workforce will work from home over the next 5-10 years. As digital companies, this is perhaps not unexpected but indicates a trend that is likely to be seen across all industries.

The change to working from home will influence IT policies and the IT kit provided for colleagues. Both will need to be reviewed to establish what will be provided for colleagues moving forwards e.g. do they need support with the cost of broadband?

Does the business need to take responsibility for ensuring that its people have a suitable working environment at home?

Assuming that offices are reopening to some degree, meetings must work across a combined office and home working environment. Companies may have VC enabled in meeting rooms, but will the network hold up if colleagues separately connect to meetings from their desks? Will it work at 20% office capacity? What about 40%? If the office has a shared desks environment is IT kit being shared and how will this be cleaned between users?

Enterprises who implemented new collaboration tools during lockdown should now review whether the tools are being used effectively. The rollout may have been completed without significant training, so users could be using the system differently or in a basic way. There are likely to be opportunities to drive efficiencies across the system by training and potentially through removing legacy applications.

As businesses’ IT plans may be changing, it’s critical to review the IT structure to ensure that the team can drive the new business plan forward. If organisations are more digital, there may be a need for more eCommerce resources. The increases in usage of collaboration tools and RPA could mean that there is a requirement for specialist skills in these areas. The IT team must create a clear team structure behind the IT plan - the marketplace is full and open for business. Some businesses may have furloughed IT colleagues, so it’s also important that the role that they are coming back to do is reviewed - is that what the IT team still needs from them, or is there an opportunity to retrain them into a role that is now required?

RESTARTING

REVIEW YOUR PROCESSES The lockdown provided an unexpected review of many processes as volumes radically changed. In particular, the volume in customer services increased leading to companies changing their wait times; removing phone contact and shifting to emails and automated responses before moving to preempted questions by more regular updates. A lot of this process work was completed by RPA, leading to a world where as volumes dropped the customer services roles will change.

As businesses restart, the IT team should take the opportunity to work with business leaders to be ruthless about whether or not processes need to restart, or whether they need to be redesigned. Senior leaders are likely to be much more open to making processes leaner as they will have cost challenges themselves. So, the IT team should look for opportunities to use automation and AI where possible to remove human error and to improve customer satisfaction.

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R ESTART I NG

RESTARTING

RESTART PROJECTS Once the strategy, people and processes have been reviewed, the next key stage will be restarting projects. At this point, it’s key that the core learnings from lockdown are taken into account - the executive must ruthlessly prioritise so that the team can focus on delivery and the IT team must ensure that deliverables continue to be delivered in a fast and frequent way. Projects mustn’t be restarted just because they were stopped for lockdown.

The outcome will be a new set of proposed projects as a result of the review undertaken. The core to delivering ongoing success for the IT team will be the removal of any technical debt introduced as part of the lockdown. This will include catching up on any information security patches that may not have been implemented.

Projects should be considered based on their benefit to the organisation both for the restart and additionally if a second wave of lockdown is required. The IT team must work with the executive team in the same collaborative way as during lockdown to establish the core priorities for delivery and the agreed benefit to the business of delivery. The successful IT team will keep the number of projects that are (re) started to a minimum - projects are delivered faster when they are the core focus.

During lockdown, each company established its “good enough” and its propensity to accept a trial or minimum viable product. This should become the baseline for future projects. The successful IT team will take this opportunity to break projects into fast deliverable products reducing “bells and whistles” requirements and remaining focused on a few projects rather than on a bloated portfolio.

Restarting brings its challenges to the organisation. The successful IT executive will treat it as a first 90-days in a new role and evaluate the plan, people and processes to determine what needs to be delivered to support the business as it comes out of lockdown.

This is the time to challenge whether the old ways of working are the right ones.

In response, businesses need to align its IT plan and KPIs to the way the business wants to work and to ensure that the IT portfolio is a tight series of short sharp initiatives to continue to deliver the benefits of that strategy.

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Reinvention (Re-Imagining and Recalibrating) The impact of the global Covid-19 pandemic will demand a revaluation of strategy for most companies. The Restart phase will, as described, have resulted in key operational changes and decisions to adapt to the realities of the pandemic response measures.

Strategies will have to be recalibrated against the new business environment, its restrictions, threats and opportunities. This recalibration will provide the opportunity for reinvention, it will differentiate the winners in the long-term. Following the financial crisis of 2008-2010, Bain Capital estimates that companies that took swift and decisive action had EBIT and TSR growth 2x industry/country average over the following decade.

The opportunity is now here for the reinvention of existing channels, operating models and ways of working. The new strategic imperatives will require the inclusion of organisational resilience and digital mitigation as priorities. Swift and determined executive leadership will be required to energise the organisation.

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R EI NVENT I O N

FOUR REINVENTION IMPERATIVES: RESOURCE ALLOCATION & PRIORITISATION The crisis provided a single, overarching imperative to align and galvanise the entire organisation in record time. In this phase, a new strategy needs to be reinvented and then operationalised to provide similar levels of organisational alignment.

It will require comparable levels of executive focus and leadership, as well as new processes and ways of making swift investment decisions. In some sectors, resources will be tighter than ever, which requires a balance between managing costs and building for a more digital future.

Executives need to ask; was all that governance we had pre-Covid-19 actually needed when it came to the crisis response? Create a strategy and operationalise it in a way that negates the need for excessive governance, that will give the strategy greater velocity, remove unnecessary overhead, and release people to do what’s valuable.

Overly bureaucratic investment justification was not needed for the crisis response, so is it necessary to reinstate all of that legacy bureaucracy?

The crisis enabled rapid and clear prioritisation. The reduction in a vast portfolio of projects and initiatives was made swiftly and without endless debate and self-serving justifications. This velocity of action was a critical success factor in differentiating more successful responses to the crisis. How can this level of clear focus on the true priorities be maintained and embedded as you enter this next phase?

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RE INVE NTION

DIGITAL MITIGATION The pandemic has highlighted the differences in digital maturity across common sectors and between industries. Companies should look at their digital capability and ensure there is an enterprise-wide roadmap to a new digital maturity; eCommerce channels, frictionless customer journeys, relentless focus on data, event streaming, process automation and AI/MI enhancement, meaningful analytical insights and cloud-based architectures.

Most of this is an organisational challenge, not a technology task. The executive must set the goals and take ownership of the reinvention. The company will need new success measures to drive and embed digital performance. Paradigms will have to change, for example, retailers should be able to aggregate individual customer spend across all channels.

The value chain between physical products and digital capability must be seamless and fault-free. A customer ordering a basket of goods must be directly linked to specific inventory availability and the fulfilment capacity at the agreed service level must be assured.

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Were the eCommerce and digital channels scalable, was the organisation able to respond with certainty of secure, scalable and robust operations?

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Did the existing architecture facilitate remote and federalised operations in a seamless and frictionless way?

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Are there further options to move entire business systems and applications away from on-premise and into the flexibility of the cloud within an acceptable cost envelope?

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Did the company have all the information and insights at hand to respond or were there gaps in understanding its business model and value chain? A relentless focus on data, its capture, its quality and most of all its meaning must be a priority.

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Was the existing operating model fit for purpose when the crisis hit? What worked and what didn’t?

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Has the recovery phase given new insights into how more coordinated, crossfunctional teams solve problems faster and devise solutions that have balance and integrity?

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R EI NVENT I O N

RE INVE NTION

RESILIENT WORKFORCE No doubt the crisis tested your organisation, so what have been the key lessons to building a resilient team? Certain things will need to change to encourage this including: •

●Creating safer and effective working environments that ensure a workforce feels comfortable. This will be essential to ensure welfare both mentally and physically.

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●New policies will need to emerge to capture the ongoing benefits of remote, flexible working.

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●Existing work environments and practices will have to be assessed, adapted and equipped potentially even those in people’s homes.

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●Leaders will have to fully develop competencies to motivate and manage largely remote working teams.

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●Models of collaboration in the organisation will have to be developed as new norms with more fragmented f2f time and greater use of virtual interaction both individually and collectively.

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●Inducting new team members into both the organisation and their team will require careful thought and deliberate action to build relationships when working is largely remote.

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●Assess critical technology skills that may need to be augmented or recruited; software development, cyber-security, data science, change management, cloud and infrastructure.

When you reflect on the events were the right people around the leadership table when the crisis hit and a response was needed? Review the organisational response and the need for reinvention to determine what operating model and leadership team are fit for the future and to deliver your digital resilience.

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R EI NVENT I O N

NEW REVENUE SOURCES, CHANNELS, PRODUCTS AND/OR MARKETS The crisis is very likely to have caused varying degrees of impact in the markets and customers served. What opportunities does this create? If the balance sheet is strong enough there may be opportunities for acquisitions, providing new products and entry into new markets.

Were there new customers who turned to you in the crisis? In what ways can you retain those customer relationships and build new revenues? The economic recovery will take time, geography will be a differentiating factor. Some customers are likely to change their buying behaviour, and this will have a significant impact in some sectors and may mean some customers never return. Do you serve any high-risk segments, if so, how do you need to adapt your approach?

Did customers want to interact with you in a way you weren’t able to fulfil? What capabilities proved to be missing or unable to cope. What does this tell you about your understanding of customer needs and how well your business is designed to meet those needs?

Did the entire supply chain and ecosystem of your partners step up to the crisis challenge? There may well have been partners who failed to meet your business’ needs in your hour of need; identify them and question whether you find a more resilient partner or look to source in another way. Are your partners willing and able to walk in step with you on your journey to digital resilience?

NECESSARY COST REDUCTION Where cost reduction is necessary it should be done through a strategic lens to avoid cutting into muscle and bone. Acknowledgement of the need must be made swiftly to avoid waiting until the company’s financial position weakens and a more blunt and excessive cut causes long-term damage to your competitive capability.

Reinventing your strategy and potentially your entire organisation will seem a daunting and overwhelming task given the events of the past few months.

However, there is a window of opportunity that is unique in our time and therefore an imperative to galvanise the leadership behind this task. The future will be clear on which organisations had the stamina and desire to seize this opportunity and those that did not.

RE INVE NTION

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Sector Impacts Aerospace, Defense & Security The world’s two major aircraft manufacturers, Boeing and Airbus have cut output by up to 50% in the first quarter and have lost US$641m and US$522m respectively.

Overall, airlines are reeling from the near-complete shutdown of the skies with IATA estimating that revenues are down 55%. Defence, on the other hand, has seen little impact which is better news for those companies with a missed civil and military portfolio.

Consumer The sector will have very varying severity of impacts depending on the product portfolio and the geographic mix, although a majority are reporting revenue loss in Q1. Consumer spending will fall as unemployment and lower incomes fall; premium and non-essential goods will be hardest hit. The reduced cost of oil will be positive for FMCG logistics and delivery couriers.

Insurance Insurance companies have mixed fortunes depending on their product portfolios.

There is likely to be a sharp rise in death benefit claims whilst motor claims will have dipped significantly. The health insurance impact of Covid-19 may be somewhat offset by the postponement of routine and elective procedures. Operationally the sector has had to find ways to run call centres remotely.

Energy, Oil, Gas & Power The impact of a near-global lockdown has brought about a dramatic drop in oil and gas demand with some estimates putting it at 26% in May. E&P projects have been put on hold to reduce expenditure. In the downstream, oversupply has caused storage capacity issues. Revenue and profit margins in both upstream and downstream will be hit. Utilities have had operational challenges with reductions in workforce capacity as safe working protocols have impacted operations; installations, meter reading and maintenance activity as well as the back-office customer services.

There have also been unusual patterns of network usage, caused by the move to mainly domestic consumption.

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S ECTOR I M PACT S

Pharmaceuticals The Pharmaceutical industry globally is racing to develop interventions for the pandemic with currently c1400 clinical Covid-19 product trials across nearly 400 pharma/biotech companies. Supply chains have been slowed and lab capacity has been diverted so there will be an impact on other R&D new product development.

Retail Retail is a major casualty with MarketLine forecasting a worldwide Apparel sector loss of US$279bn, a fall of 15.2%. The digitally native and mature players such as Amazon have seen very positive impacts despite having to manage major operational challenges. While Tesco has had to increase its weekly delivery slots from 590,000 to over a million. The pandemic is very likely to accelerate the demise of bricks and mortar retail and will provide equally significant needs for effective adaptations in the near terms to re-open profitably.

Technology & Telecom Generally, this sector has fared comparatively well. Collaboration and cloud services are growing exponentially, telecom infrastructure is only moderately impacted although projects and installations have been put on hold or slowed. IT service providers are contractually protected to a degree but projects and contract procurement have been stalled. While consumer product manufacturers such as Apple and Samsung have reported supply chain disruption.

Travel & Tourism A near-total shutdown in this sector will have lasting effects. Airlines from around the world have reported massive impacts, American Airlines posted a US$2.2bn net loss in Q1 and Delta reported it was burning US$100m per day. British Airways have announced 12,000 permanent job losses and will cease operations at one of London’s major airports, London Gatwick. GlobalData forecasts travel to the world’s most visited country, France will fall by 41% and to the US by 47%. The cruise industry has been severely impacted including by the damaging publicity at the outbreak of the pandemic. Europe is attempting to open up its borders for the summer season however, many travel restrictions remain.

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SECTO R IMPACTS

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Summary The pace, breadth and extent of the Covid-19 pandemic is unprecedented in human history. In the space of a few weeks, it was estimated that up to a third of the world’s population was under some form of “lockdown�. Millions of people are either now unemployed or benefitting from some form of temporary government-funded support. Governments are struggling to find the best combination of measures to minimise the death toll while keeping their economies functioning.

Entire business sectors have been brought to a near halt whilst others are thriving because their services or products are of the moment. As we have described, every sector has been impacted in some way but the consequences vary enormously.

Equally, within many sectors, individual businesses have fared very differently depending on their product/service portfolio, geographic presence and the degree of digital mitigation they have engineered.

There will be many lessons and insights from this pandemic. One is already emerging - the businesses that saw the strategic opportunity in digital technologies

SUMMARY

and invested before the pandemic have been in a better position to adapt. The Response to the initial phase required very rapid action, IT functions that had made the case and invested wisely were on the front foot. The inherent characteristics of cloud-based services gave flexibility and agility, collaboration tools quickly became the only way to work effectively and customers were only ‘on-line’.

For many, the ongoing Restart phase is requiring frequent adaptations not previously envisaged in business continuity plans. Here again, digital maturity is proving key for remote employees, new operating models and business responsiveness. Those organisations that have already embraced digital technologies, even if only to a partial degree, are finding it easier and faster to adapt internally and respond to customer expectations.

As the Restart phase ends and the opportunity comes to Reinvent strategies, every business will need to assess its organisational resilience and degree of digital mitigation. For those businesses that haven’t already understood that their digital maturity is a source of competitive differentiation, now is the time to make that change. Digital is not about what technology you buy, it is a mindset, a way of being, achieved by relentlessly looking through the eyes of your customers to remove friction, increase insights and enhance responsiveness.

Over the next decade, there will be winners and losers. The initial Response was made easier by those who had seen the possibilities of digital business.

During the Restarting phase, the flexibility and agility of digital ways of working are proving a critical success factor. When it is time to Reinvent the next few years the trajectory of a success curve will be very closely correlated with how effectively a business embraces digital thinking and leverages it to invent a different future for themselves.

Unsure where to begin or how successful your change programme could be? At Sullivan & Stanley, we provide the expert teams and assets required to help businesses cut through the uncertainty of change. De-risk your change and successfully improve your digital capability by getting in touch today.

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Our thanks go to the efforts of the authors: Suzie Williams Suzie was most recently the IT Director at Pets at Home and prior to that worked for Shop Direct (The Very Group) after a career as a consultant. Suzie is North West based and has recently landed her first interim role. Suzie gives up some of her spare time as a Scout leader.

Nigel Lemmon Nigel began his career in the Armed Forces, completed an MBA and then spent nine years with British American Tobacco in HQ, regional and executive board roles.

Since then, he has held national, international and global CIO roles. He is also a NED Trustee for one of the UK’s largest social care charities.

Ken Towning Ken started his career working with mainframes and moved through operations, support and project roles to hold a number of CxO roles. Ken is now an advisor and works closely with S&S on client sites on a fractional basis. Ken has coached children in football for eighteen years.

And a special thanks to our contributors from the S&S CIO 2.0 community: Abby Ewen, Adrian Wakefield, Aiden Barr, Barry Gould, Birendra Agarwal, Chris Lord, Colin Windsor, Craig Ambler, Duncan Stott, Enrico Tizzano, Fatuma Mahad, Heena Prajapat, Hemant Jivan, Ian Golding, Jon Tucker, Karan Jain, Kevin Holian, Mark Reid, Matt Potashnick, Neil Patel, Neil Hodson, Sarah Flannigan, Pat Lynes, Thomas Leng, Tom O’Connor, Tony Scott, Tony Sweeney, Trevor Hunt.

SUMMARY

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About Sullivan & Stanley Sullivan & Stanley is an award-winning specialist change consultancy that deploys expert teams to solve the challenges companies face when undertaking change.

Founded in 2016, Sullivan & Stanley was born in a digital era as a rebellion against ineffective change practices and to correct the alarming rate of failure The existing practices, methods and tools that once worked, are no longer helping businesses deliver successful change in this ever-changing world. Sullivan & Stanley provides the skills, capabilities, people and assets required to cut through the uncertainty of change and co-create unique solutions to help them embrace change as a constant Sullivan & Stanley’s ultimate mission is to revolutionise the future of work, become a model organisation and change business for good.