It’s time to act so you can hit the road running as the world re-opens for business.
In a recent partner call, we were reviewing the business status of both our clients and prospects in the US and Europe—and it’s not as bad as advertised. If you listen to what you hear in the media, especially in the US, the business climate is abysmal. Although the pandemic has put a number of small companies out of business, especially restaurants and small mom and pop shops, the status of tech companies is surprisingly healthy. This is primarily due to the fact that tech businesses, for the most part, were quick to react as the pandemic hit and they cleaned up their businesses knowing that tough times were ahead.
Companies got rid of dead weight and trimmed their workforces. Consequently, they’ve been able to hold the line, if not show modest growth through the end of 2020—and forecasts for 2021 are looking very positive. Companies like Oracle, IBM and Kofax made substantial cuts to their workforces as the pandemic progressed, but in the long run, those cuts needed to be made. The pandemic prompted needed changes that probably would have lingered without the pandemic acting as a catalyst.
The sky is not falling
A survey of our customers shows that while many took a step backwards early in the pandemic, they have quickly recovered what was lost and they are operating at 2019 levels—if not showing some modest growth. In fact, in 2020, tech stocks, represented by the Technology Select Sector (SPDR ETF XLK), have outperformed the broader market. They have provided investors with a total return of 32.9%, above the Russell 1000’s total return of 18.1% over the past 12 months (as of January 2021). On a relative basis,
many tech companies are actually above their pre-COVID-19 valuations.
While the pandemic and lockdowns lasted far longer than any of us anticipated, it looks like there is finally light at the end of the tunnel. Companies are making strategic moves and investors are fueling the anticipated growth—as evidenced by UI Path, an RPA company, raising $750 million in venture capital to fund future growth.
Digital Transformation is at the Forefront of a New Industrial Revolution
The acceleration in the use of digital technology due to the pandemic is launching a new industrial revolution. During this past year, as we moved to working remotely, one area that has seen tremendous growth is the digitalization of everything from online customer service to supply-chain management.
Brendan Gaffey, a senior partner at McKinsey states that “One of the things that has always inspired me about the technology sector is it’s nimble and it’s fast. I think this is not just an opportunity for tech to recover faster than other industries. This is an expansion opportunity for tech in terms of growth and bringing its ability to disrupt and drive efficiencies to sectors that have yet to really feel that disruption”.
Prior to the pandemic, it took years for “game-changing” technologies to evolve from the conceptual stage to mainstream productivity tools. The COVID-19 crisis has sped up that transition, especially in the areas of digitalization using Intelligent Capture, Robotic Process Automation (RPA), and Artificial intelligence (AI). A McKinsey survey published in October 2020 found that companies are three times likelier than they were before the crisis to conduct at least 80 percent of their customer interactions digitally.
As tech companies think about the future as we come out of the pandemic, we need to ask, “Where should I focus product development and how do I adjust my sales and marketing efforts to a changing business environment”? To be successful, companies need to take advantage of their relative strengths and marry those strengths with the changes we’ve seen in the marketplace. More and more people are working remotely and automation is playing a larger role in changing processes and improving productivity.
Preparing to adapt to the “New Normal” in today’s business
According to Lareina Yee, a senior partner at McKinsey, “In the last century, we often thought about technology as enablement, as the back office, as something that we use to support our businesses. In this century—and certainly, post COVID-19—technology’s going to be very much in the front. It will be the competitive differentiator for how all businesses and ecosystems work.”
While Robotic Process Automation (RPA) and Artificial Intelligence (AI) drive digital transformation and continue to dominate the conversation in the technology industry, Intelligent Process Automation (IPA), an area of focus for the UNDRSTND Group, is making headlines and helping companies meet the new normal in today’s business. Within IPA there’s an ecosystem of technologies such as capture, content intelligence, Robotic Process Automation (RPA), image recognition, chat bots, machine learning and automated customer communications that can be pieced together to form a solution specifically tailored to solve a company’s processing needs. By fitting together different technologies it’s possible to tailor solutions for any Industry or application.
At its core, IPA utilizes RPA to automate repetitive knowledge work though software robots that have been given smart capabilities to satisfy specific process requirements. AI and machine learning help train the robots to make decisions and chat bots, and automated customer communications tie it all together to improve customer interactions. From a business perspective, IPA delivers all of the required technology for automating a process in a form that is scalable and easy to access.
Managing knowledge work effectively through IPA should be front and center on every organization’s agenda. It is the most important integration of technologies designed to meet today’s demand for automation—regardless of application or industry. By integrating business processes, meaningful gains in productivity can be achieved while meeting the demands of the new normal in a post pandemic environment.
However, Intelligent Process Automation involves more than just linking together technologies—it encompasses a wide range of issues beyond the technology used to support it. IPA requires new business models and potential organizational changes required to effectively go to market.
We are encouraged by the activities we are seeing with our clients surrounding IPA, as well as other technologies. We think that the actions they are taking now to improve their operations in 2021, be it strategy-wise, acquisitions, product positioning, sales enablement or marketing, will serve them well into the future. Please feel free to contact us to discuss your options and to help you strategize your actions as we exit the pandemic and enter the light as the world re-opens for business.