Digital Transformation as catalyst for accelerated crisis recovery

Mihai Cristea 02/10/2020 | 17:08

One of the most important lessons learned from the COVID-19 pandemic was that no business is immune to a crisis and no organisation is 100 percent resilient. The crisis also taught companies that digital businesses and those fortified with some digital capabilities have been able to pivot more rapidly and respond to their customers’ needs. Business Review talked to Daniel Rusen, Director of Marketing and Operations at Microsoft and Adrian Georgescu, Enterprise Commercial Lead at Microsoft, to find out how a big company managed to deal with the pandemic crisis and with the uncertainty of the global economic climate.  

By Aurel Constantin

“Organisations that have already embarked on their transformation journey are seeing the benefits. With cloud-enabled technologies, they have access to on-demand tools and capacity tailored to their needs. With scalability and speed of implementation, they’re seeing higher cost savings. And with efficient, agile, and self-sufficient tools, their employees are staying productive across the entire organisation. These companies have been able to quickly respond as this crisis has impacted their industries, they have a solid foundation for recovery, and they’re already starting to reimagine what the future may bring,” says Adrian Georgescu.During the pandemic, companies found that resilience, the ability to adapt quickly to changing conditions, has become the hallmark for success in today’s environment. For many companies, adapting to change makes the difference between staying in business or going bankrupt. Today, to adapt also means to digitally transform your business.

An example of a Microsoft client is a large bank from Romania, which is moving its auxiliary and core-banking systems to the cloud and continuously working to embed new technologies and innovations in their core systems. The bank managed to rapidly adapt to the new reality and support SMEs across Romania and Eastern Europe. “Technology is embedded in their strategy and as they continue to transform, they become more resilient and unlock new value for customers,”  Daniel Rusen explains.

For the private healthcare network Regina Maria, tech adoption allowed a rapid deployment of Telemedicine solutions in less than 10 days. Hit hard by the state of emergency that kept patients out of their clinics, with support from Microsoft and Softeh, the company put up an online medical consultation solution that covered 50,000 sessions in the first two months. Employees from more than 1,500 companies used the solution and over 5,500 patients used it for their annual check-up.

“There are many challenges that businesses face when going digital and fortifying themselves with digital capabilities to improve their resilience. Interestingly, the root cause of many of the challenges customers face most often is also the potential solution – data,” argues Daniel Rusen. Data is generated by virtually limitless sources, and the pace of data growth is only increasing. IDC estimates that by 2025 the world’s data will grow to 175 zettabytes – that’s 175 trillion gigabytes. “To put that in context, imagine putting that much data onto Blu-Ray discs. You’d have a stack of discs that could get you to the moon twenty-three times. That is also a 9 percent increase over the same prediction made a year ago. When it comes to generating data, we’re even outpacing our own expectations,” says Rusen.

With all this data, the challenge organisations are facing is not just how to deal with the volume; it’s also finding ways to generate new customer value by leveraging that data. That’s how organisations become industry leaders.

“For all these customers and more, the key question was, how can they transcend product and data siloes in order to achieve their purpose-driven digital transformation? To answer that, we have worked in the concept of a digital feedback loop, which allows companies to cover new layers of innovation as they implement technologies,” Rusen explains.

 

Transforming CAPEX to OPTEX and minimising upfront costs

Digital transformation can help companies achieve cost savings and business value. Using the cloud allows them to transform CAPEX (capital expenditure) to OPEX (operating expenditure) through solutions that enable them to leverage pay-per-use models and avoid upfront investments. Meaning that it is cost-effective to pay a monthly fee per user for a certain software or app than to invest in licensing the software from the beginning. “This allows you to shift investments from IT infrastructure to core-business and to create new value for your customers,” says Georgescu.

Consolidating solutions to a single vendor has always been a strategy to enable costs savings. Right now, technology makes this easier than ever. For example, migrating IT infrastructure to the cloud enables cost optimisation in server maintenance as you do not need to worry about keeping data centres and hardware up and running. Your cloud provider does that. In addition, companies can leverage technologies available only in cloud, like Artificial Intelligence, which gives new insights into businesses and helps you provide better services to your customers. Costs of risks from cybercrime increased to from USD 600 billion to USD 1 trillion in 2019 so it makes sense to reduce your cost of risk with built-in, defense in depth security available in cloud.

There are several examples of companies that have used cloud solutions. GSX built logistics and supply chain to optimise British American Tobacco’s spare parts process. The solution provides insight into its current acquisition needs and then delivers a more efficient way to fulfil the order internally. Building and running the algorithm on-premise would have required a huge investment in raw processing power. GSX then moved the process into Azure with the help of local Microsoft experts Zitec, which made a radical difference.

“With our new software and the help of Azure, searches can now be completed in 15 minutes,” Rusen notes. In less than one year, the solution delivered more than USD 12 million in savings.

 

This crisis is different

In 2008, the crisis began with the disruption of the US real estate and financial markets and only spread to the financial and real economy in the rest of the world after a certain period. The COVID-19 pandemic is exerting a more radical and abrupt effect, and it’s hitting many industries harder than the 2008 financial crisis.

But as societies reopen, it becomes apparent that the economy in July will not be what it was in January. Increasingly, one of the key steps needed to foster a safe and successful economic recovery, besides tech adoption, is expanded access to the digital skills needed to fill new jobs.

In just a few months, COVID-19 caused a massive demand shock, setting off job losses that far exceed the scale of the Recession from a decade ago. The world will need a broad economic recovery that will require the development of new skills among a substantial part of the global workforce.

According to Microsoft calculations, global unemployment in 2020 may reach a quarter of a billion people. It is a staggering number. The pandemic respects no borders. In the United States alone, the Congressional Budget Office estimates that the country may witness a 12.3 point increase (from 3.5 percent to 15.8 percent) in its unemployment rate, equating to more than 21 million newly out-of-work people. Many other countries and continents face similar challenges.

In the shorter-term, COVID-19 will continue to lead to unprecedented reliance on digital skills. In many situations, some workers may spend several months or longer in a “hybrid economy,” where some will be in the workplace while others continue to work from home. The shorter-term “hybrid economy” is a more digital economy.

The economic recovery will take place amid the longer-term and already-unfolding wave of automation based on the new technologies that underpin what some have called the Fourth Industrial Revolution. “Over the next five years, we estimate that the global workforce can absorb around 149 million new technology-oriented jobs,” says Rusen. Software development accounts for the largest single share of this forecast, but roles in related fields like data analysis, cyber security, and privacy protection are also poised to grow substantially.

Romania is estimated to have a capacity of 645,000 new technology jobs in the next 5 years (by 2025) with more than 400,000 in software development and 100,000 in Cloud and Data roles.

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