AC and BC
As Thomas Friedman has said in the New York Times, from now on the world faces a new historical divide. The world ‘Before Coronavirus’ (BC) and ‘After Coronavirus’ (AC). We all know that things have changed permanently, globally. But how does that impact the world of technology and IT Services and what opportunities does it present?
Let us focus on BC first. What did IT Services look like in BC? For companies that provide IT Services the time from the mid 90s right upto now has been a uniform upward growth path primarily driven by demand. The company spend was however a mandated spend. So in the early 90s it was the move from the mainframe to client server, then came spending to overcome Y2K, then ERP implementations, followed by the virtual land grab of the dot com bubble and bust.
Then from 2001 to 2008/9 there was only one agenda, which was cost optimization primarily driven by a move to offshore in India. From 2008/9 the Indian companies became central to the IT operations of global enterprises as opposed to being in the periphery as they were from mid 90s to 2008. Global enterprises now ‘depended’ on their offshore partners including global offshores like IBM and Accenture.
Post 2008, the companies came back to stability in 2011/12 and from that time onwards, for the first time in maybe 20 years, Industries were growing well, were profitable and the CIOs were now free to spend money on what they thought they needed to do to improve the business as opposed to having a ‘mandated’ spend. This move coincided with the massive movement to the Cloud, Big Data, Artificial Intelligence (AI), Automation and Machine Learning (ML) among others. For the last several years companies have been in the pink of health and while before IT used to ‘Support the Business’, now IT ‘Is the Business’ led by the movement to ‘Digital Technologies’.
Now how will things change in AC?
What we are experiencing is not a slowdown. It is a ‘pause’. When the ‘play’ button is hit, the robust industry should come back to full order pretty quickly, as opposed to what happened in 2001 with the dot com bust or in 2008/9 in the financial crisis where demand evaporated. As Kawaljeet Saluja of Kotak Securities says in his analyst report: the IT Industry is “Corona Rattled — but not for long”. The estimate is that the industry will probably see a lower revenue of between 7% and 9% this year due to the Coronavirus related industry ‘pause’. That will probably translate to a marginal Year over Year decline which is much better than what some industries like hospitality and travel will see.
Swathes of industries, however, will never look the same again. The Global Conference industry, the Travel Industry, Retail, are among a few that come to mind. Working from Home, Virtual meetings and supply chain realignment will have become permanent in some of these cases. But all these changes will have to be ‘Technology Enabled’. So for the services industry, as long as it focuses on the right domains, Digital, Automation, AI, ML etc. they will continue to be front and center of enabling this transformation.
Also some absolutely new industries will come to be. Healthcare transformation comes to mind. Telemedicine, enabled by Big Data which will allow for Artificial Intelligence and Machine Learning combined by centralized Pharmacies and integrated services will start making an inroad. Retail, physical Retail, will transform to be experience centers with ‘Digital Immersion’. Supply Chains will become self optimizing based on rules. Virtual leisure will leap out of the ‘online gaming’ boundary and come mainstream. The New York Metropolitan Opera is free streaming full length Operas during this crisis and Movie theaters are providing access to new movies online. Will these end after the crisis? Transform the experience in multiple ways is probably more like it.
In some cases this will mean new competencies to be slapped on to existing structures, and in some cases completely new business models that will be enabled either by enterprise and finance.
This will unleash a completely new entrepreneurial generation. People who succeed in AC will need different skills. Virtual working and collaboration will become key. So not only do people need to be digital, team-oriented and multiskilled. They need to be able to do this in a massively virtual environment of collaborators and customers. A big social shift in the office environment. How will this affect organizational structures and hierarchies? Time will tell. But new innovators will rule.
Just as around the dot com bust many people became aware of dot com and bought something on the internet for the first time using a credit card, around this crisis is when many people used a Video conference for the first time to conduct business or do something serious beyond talking to family on Facetime. This will have profound impact long term in the way we work, buy, collaborate, entertain and innovate.
With any disruption, the financial industry will have a role to play. There will be many good companies with otherwise viable businesses that will just run out of money given the crisis. So they should be available at better valuations. Multiplatform play and innovation will become financially possible and technically acceptable. Combining multiple different companies to create a new player in a new space based on ‘Virtual interaction’ is something that will happen. Combining a ‘Telemedicine’ company with an ‘Online Pharmacy’ and ‘Concierge Medicine’ may become more possible than it was in BC.
Things will never be the same again but the same capabilities that brought IT Services to the prime in the last 15 years will be even more sought after now. Just that every company and every person working in it has to use their past skills and reinvent for the tomorrow. Despite this gloom, AC will come soon. Be ready for it.
Article by Anjan Lahiri