So, it’s official. We are in a recession. But some experts say investment in digital transformation during a recession should remain steady.
The National Bureau of Economic Research declared on June 8 that the recession began in February. It’s an unusual recession, by all standards — one not caused by macroeconomic financial mechanisms as in 2008 with the housing market collapse or in 1981 on the heels of tight monetary policy and an energy crisis. No, this recession has less to do with financial triggers and can be attributed largely to an unprecedented global pandemic.
It’s left the business community to make some tough decisions. Where can we cut costs? How should we shift resources?
From an IT perspective, while remote work efforts may in some cases increase the adoption of digital technology, investments in tough economic times are often approached with a more cautious mindset.
The Impact of a Recession on the Digital Transformation of Organizations Globally
In October and November 2019, executives worldwide seemed to state that should a recession occur in 2020, investments in digital transformation would either increase or remain the same – with very few saying that would decrease — this according to research from Business Insider Intelligence (BII).
If there was an economic recession in the next 12 months, how do you think your company would change spending in each of the following areas?
It would definitely be interesting to see whether their answers held true in today’s climate. In any case, many experts suggest that defunding digital transformation during a recession might not be a wise idea. At a 2019 Gartner IT Symposium keynote, Gartner Senior Vice President Val Sribar posed the question, “Globally, many economists and CFOs believe we are heading towards another set of economic downturns. If they’re right, how would you respond?”
According to Gartner and IT executives that were interviewed, the answer is for CIOs to prime their organizations for uncertainty, driving forward with digital initiatives while remaining agile and flexible enough to adapt to major changes — either in the direction of the economy or the marketplace.
Sribar continued by drawing an analogy to race car drivers that must learn to accelerate and brake around the same time — meaning that CIOs must figure out how to cut costs and invest simultaneously in the midst of an economic downturn. He added, “You have to analyze and execute, cut and grow.”
The crisis could even serve as an “accelerant” for IT initiatives. Firms that are on their own digital journey — whether that’s investments in robotic process automation or cloud-based information management technology — are persisting in those efforts, according to Bhushan Sethi, Global People & Organization Leader at PwC. Sethi said, “The focus remains on productivity and tying investments back to a business case, but new spend is harder to get approval for.”
But not all organizations are heeding the call.
E-Consultancy and Marketing Week conducted a survey of more than 2,200 marketers, which discovered that the majority believe that the COVID-19 pandemic has already heavily impacted business operations in areas like R&D and digital transformation.
Despite most agreeing that there is a sharp increase in demand for online and digital services, many are pulling digital transformation investments, when they should perhaps be investing in digital transformation, which serves to future-proof businesses. Transformation allows companies to focus on improving the customer experience, bolster digital offerings and develop brand equity.
Information Management as a Key Facet of Digital Transformation Built to Withstand an Economic Downturn
We can attest anecdotally to the fact that our customers — those that had intelligent information management as a core piece of their tech stack — fared well when it came time to send knowledge workers home to work. They had the same access to business-critical information remotely as they had at the office and thus continuity, productivity and efficiency did not suffer. Greg Fulk of Valeo Financial Advisors explains:
Ultimately, the key to minimizing the risk that disruption inherently poses is in future-proofing the organization. And one way to guard against disruption risk is with information management technology that, even in a recession, allows businesses to:
Streamline projects, engagements and client interactions
When all is said and done, the earth will continue to spin, the pandemic will pass, and the economy will recover. The question is: Will you be ready, better equipped, and wiser? Will you use this time to plan and prepare, priming your business to face the future?
In July, the Organization for Economic Co-Operation and Development (OECD) published a policy brief with some tremendous evidence-based information on potential productivity gains from teleworking in the post-COVID-19 era.
TL;DR Worker efficiency improves with low levels of telework but decreases with ‘excessive telework’, implying a ‘sweet spot’ where worker efficiency – and thus productivity – is maximized at intermediate levels of telework.
First, four key themes from the piece — supported by data and evidence — are:
Remote work may be a permanent fixture after COVID-19.
Remote work varies substantially across countries, sectors, occupations and firms.
In the long run, remote work has the potential to improve productivity and worker well-being but carries some ambiguity and risk in its overall impact.
To minimize risk of harming long-term innovation and worker well-being, remote work should be a choice and not “overdone”.
We wanted to take a moment to give you an abbreviated synopsis of some of the more interesting, actionable findings.
Remote Work Affects Productivity in These 2 Main Channels
Perhaps one of the most compelling sections of the report, it lays out the two main factors that shape the impact of telework on firms and staff.
Telework can improve or hamper firm performance, with its overall effect depending importantly on two main channels:
A direct channel affects firm performance through changing the efficiency, motivation, and knowledge creation of the workforce.
An indirect channel is for telework to facilitate cost reductions that free up resources for productivity enhancing innovation and reorganization.
The path to productivity gains is laid out in this model:
Will Remote Work Improve or Harm Your Firm? These are the 4 Determining Factors
According to the model above, there are four main factors that will determine whether remote work will help or hurt your firm’s productivity:
1 | Worker Satisfaction
This one can break two different ways. “Telework can improve firm performance by raising worker satisfaction and thus worker efficiency, e.g. through better work-life balance, less commuting or fewer distractions leading to more focused work or less absenteeism. It is, however, also possible that worker satisfaction decreases with telework, e.g. due to solitude, hidden overtime and a fusing of private and work life, or an inappropriate working environment at home.”
Thus, it is important to give workers the choice to work remotely and offer a flexible work environment where employees can choose what’s best for themselves.
2 | Cost Reductions
Telework can also improve firm performance through facilitating cost reductions. A few ways this happens:
Lower capital costs by reducing office space and equipment required by the company
Labor costs can be reduced as telework enlarges the pool of workers firms can choose from
Hiring costs may decrease if higher worker satisfaction reduces voluntary quits and turnover
Potentially attract workers at lower wages than would otherwise be the case – in particular if combined with other measures that improve work-life-balance such as flexible hours – to the extent workers are willing to give up a higher salary in return for these amenities
3 | Communication
The report points out that the reduction in in-person interactions — and communication quality, in general — can hamper productivity. “A wide range of evidence supports the notion that personal meetings allow for more effective communication than more remote forms such as emails, chat, or phone calls. For instance, personal communication has been shown to be more convincing, to attract more attention, or to better allow observing social clues. Disruptive forms of communication may surge to compensate for the lack of personal communication, e.g. increased email traffic or virtual meetings.”
4 | Knowledge Flows
This factor is near and dear to us here at M-Files. The lack of personal interaction can decrease knowledge flows among employees. At M-Files, a few cornerstones of our information management solution are:
The ability to share information easily with colleagues
Improving the discoverability of critical, helpful information
The flow of information between individuals, departments, business units and external parties
Workers learn from in-person encounters with colleagues — water cooler chats, dropping by a teammate’s office — and that interaction cannot be understated. The report says: “Innovation depends importantly on the sharing of knowledge: ‘What each individual knows is less important. What counts is collective knowledge.’”
To compensate in a remote work environment, firms should realign their digitization efforts to promote knowledge sharing in the absence of interpersonal engagement. And to that end, information management tools like M-Files are absolutely critical to ensure a healthy knowledge flow.
In Remote Work Environments, there is a Point of Diminishing Returns
The report goes on to explain that there is indeed a point of diminishing returns with teleworking. In summary, worker satisfaction increases in a remote work environment — enough to offset potentially negative effects on communication, knowledge flows and managerial oversight.
“The relative strength of these channels in turn is likely to depend on the intensity of telework: the negative effect due to the lack of personal interactions likely becomes stronger with telework intensity, as opportunities for in-person communication diminish, while worker satisfaction improves with low levels of telework but may suffer from ‘excessive’ teleworking, e.g. due to solitude or a fusing of private and professional life.”
Thus, there is a sweet spot for maximizing productivity. Not offering remote work is bad. Too much remote work is bad, also.
Ultimately, firms must ascertain for themselves where that point of diminishing returns is and aim to create a more flexible workplace where employees have the option to choose whichever volume of remote work suits them best.
And to maintain productivity, they need to be equipped with digital solutions like communication, collaboration and information management — at the very minimum.
What Exactly is Information Lifecycle Management (ILM)?
“Information lifecycle management (ILM) is the effort to oversee data, from creation through retirement, in order to optimize its utility, lower costs, as well as minimize the legal and compliance risks that may be introduced through that data.
“ILM involves storage optimization as well as strategies to improve data quality and security. Finally, a strong information lifecycle management practice will proactively control data retention and disposal in accordance with business policy.”
Why is Information Lifecycle Management Important?
Most organizations don’t leverage their information effectively. There are varied statistics out there but one assessment says that 60-73% of company data goes unused. It lies dormant in some repository, forgotten about, taking up space that costs money and may even violate compliance requirements.
Ultimately, the information your organization creates is one of its most important assets. A good strategy must carefully manage and protect that information, particularly when customers have entrusted it to you. The past decade has seen the advent of evolving regulatory compliance and privacy requirements — like GDPR and CCPA — which now sit at a crossroads with an upsurge in digital data volume.
Companies must sustain good governance policies over rapidly increasing quantities of information. This is not an effort that can be delayed. The most prosperous businesses of the next decade will be those that can locate, categorize, and enforce control over their information.
The consequences of doing nothing (or very little) can have vast and amplified effects on the organization at-large over time. When it comes to enterprise information, they need to secure it, deduplicate it, and dispose of it at the proper time. Serious consequences include:
Legal and regulatory exposure. Many regulations specify how long data must be kept. There’s no benefit to keeping it longer and, in fact, could present risk if sensitive information is still discoverable past its useful lifetime.
Cost. A Veritas study estimated that poor information governance will create 1 billion of avoidable storage and management costs worldwide by 2020. Unnecessary data storage costs money.
Access. Obsolete or irrelevant information mixed in with critical information slows down access and creates the potential for confusion and errors.
Information Lifecycle Management Visualized
Our friends at Iron Mountain published an infographic which succinctly lays out a 5-step information lifecycle management path. Businesses are creating a massive volume of information, but what happens to those documents? Are they handled appropriately? Are the disposed of or taking up costly space on a server somewhere?
Take a look at the infographic and follow the path:
The concept that Iron Mountain visualized is that documents and information should have a defined lifecycle with five steps — encompassed by awareness of compliance measures.
Create. Create information and classify it with metadata according to organizational standards.
Use. Make information available to certain individuals and applications in support of organizational goals and obligations.
Retain. Protect information by storing it in secure repositories according to retention policy.
Preserve. Safeguard information to meet legal, regulatory, operational and archival requirements.
Dispose. Destroy or archive information at the end of its useful life according to formal procedure.
Simplifying Information Lifecycle Management
Regrettably, many organizations — even large ones — depend on manual processes for information lifecycle management and that makes the process slow and inaccurate. M-Files can automate much of the process to free up staff time to work on more strategic projects. It can also save time and headaches in the event of a discovery demand or regulatory request.
The M-Files intelligent information management platform has a role in all five phases of the information lifecycle, simplifying every process, and here’s how:
At the inception point of a document, it can be classified with metadata — even with the help of built-in AI — and governance rules can be applied with workflow rules to flag that information for proper archival after its useful lifetime.
With customizable, dynamic permissions, access rights are controlled tightly, and usage policy is inherently well-defined.
M-Files offers a cloud, on-premise or hybrid deployment allowing for flexibility and security in data storage — aligned with any compliance or governance policies.
If information needs to be retained in accordance with regulatory requirements, M-Files can safeguard that information for any specified length of time.
A simple governance workflow can automatically destroy or archive information at the end of its useful life — or notify an information manager to act on that data.
If you’re a student of sales and/or marketing, then you know that you must provide value to your customers. And you must do it in terms of how your customers think about value and not how your company thinks about value. What you think are the greatest features and best use cases are nearly irrelevant. So, when we think about our bread and butter sectors here at M-Files, where our document managementsolution has significant impact, professional services and specifically, business consulting rises to the top. We sought to answer the question: Why do business consulting companies love information management technology?
And so, to frame the answer in terms of value, it’s important to consider value from the business consultancy’s point of view and not ours. A cool prompt for that angle comes from Bob Apollo at Inflexion Point. He presented at an M-Files Sales Kickoff and I always remember the slide he put up on the screen about how customers think about value.
Solutions like information management technology must answer a few of the following questions for buyers:
How will this help me to increase revenues?
How will this help me to reduce expenditure?
How will this help me to avoid risks?
How will this help me save time?
How will this help me achieve my goals?
For business consulting companies we’ve worked with — like advisory firm Horne — the answers are not difficult to ascertain.
How will information management technology help me to increase revenues?
Buyers want a collaborative relationship where information is readily available about their engagement. M-Files turns client engagements for business consulting firms into streamlined experiences.
How will information management technology help me to reduce expenditure?
M-Files reduces expenditure at just about every juncture — respond to audits 5x faster, secure cloud storage versus expensive on-premises storage, and reduction in resources needed for information governance, just to name a few.
How will information management technology help me save time?
According to research, 46% of workers say it’s challenging and time-consuming to find needed information. M-Files drastically reduces the time spent searching for documents by providing a 360-degree view of needed information across disparate repositories.
How will information management technology help me to avoid risks?
Consulting companies have data littered in multiple, disconnected systems — ERP, CRM, laptops, network folders. A multi-repository information ecosystem increases risk, as it compounds the challenge of ensuring that information doesn’t leak out or fall into the wrong hands. Information management technology solves this problem.
How will information management technology help me achieve my goals?
Information management helps business consulting companies reach their goals by allowing them to do more with less by reallocating resources to high-value work, like serving customers or developing new products.
There is way more story to tell on just how information management technology impacts business consulting companies and addresses these five questions.
The pandemic has unsettled the world, leaving us all to navigate the uncertainty. I don’t need to elaborate. We all know and feel the effects the COVID-19 pandemic has had on our economy, workplaces, and personal well-being.
However, at the time of writing this, restrictions around the world are starting to lift, little by little. And as the initial hurdle comes to a close, we are gradually shifting our attention from the panic of What now? and instead, shifting our focus to What’s next?
As a Product Marketing Manager for M-Files, I am in the game of figuring out what moves and shakes people to change, or more specifically what drives companies to invest in new technology. This pandemic has certainly offered a new driver to the mix.
COVID-19 has Forced Companies to Transform (and Transform Quickly)
Before this crisis, some common drivers across many industries included items like increasing efficiency in a competitive landscape, winning and retaining new business, and minimizing risk.
These drivers are still relevant. The pandemic, however, has presented a new driver — resilience. Namely, how can companies ensure and maintain operations in times of crisis? How can companies continue with business as usual in times when business is not usual?
While the initial hurdle of this pandemic seems to be coming to an end, there is no guarantee that the pandemic will not grow worse or that further restrictions will be enforced in the future (some news media portends the possibility of a second wave of cases globally). And as experts warned us of a possible pandemic before COVID-19, they are also insisting that we realize that other pandemics are just as possible in the future. We simply do not know. We used to operate with a false sense of certainty about the future, but this crisis has exposed just how uncertain things really are. Despite this, we are certain that the COVID-19 crisis has taught us that businesses need to transform. We can feel confident about that lesson. And when there’s need for great transformation, there’s need for great guidance.
Bring in the Consultants!
The reason I boldly claim that we need consultants now more than ever is because we’re in uncharted territory. Emotions are strong and it’s difficult, for both employees and business leaders, to wrap their minds over what to do next. Consultants, by and large, are transformation experts. We call on consultants to get us from one state to the next, because they have the expertise, experience, resources and know-how to pave a path to our objectives.
When it comes to the topic of resilience, businesses are plagued with questions around policy, leadership, technology, security, and change management while also grappling with the struggles of maintaining business today. This presents an interesting opportunity for people in the thinking industry.
The Driver: What’s driving or forcing companies to change?
The COVID-19 crisis has tested the resilience of the business world.
The Objective: What do companies need to do in response to this driver?
Companies have been forced to establish and maintain organizational resilience — to handle future crises.
Business Changes: What transformations must take place for companies to meet these objectives?
To establish and maintain organizational resilience, companies must:
Institute a flexible and secure work environment
Reduce costs to buffer current and potential decreases in revenue
Enable a remote, yet effective workforce that can work either from the office or at home
Establish policies and procedures for times of crisis and train staff on policies
Train leadership on managing and leading in times of crisis
Uphold excellent customer experiences in times of crisis
Business Value: What is the potential business value of these transformations?
When companies are resilient to crises, they:
Retain more business
Maintain business continuity in times when business is not usual
Have better buffers for sudden revenue decreases
Mitigate risks to security and quality — in areas like information security, safety, and compliance
Increase workforce satisfaction and trust
So, if you’re in the service of helping businesses transform, take a moment to consider if this new driver offers your firm new opportunities. And in doing so, consider the following:
What sort of products or services can you provide to help potential or existing clients manage this crisis?
What sort of training do you need to better help your clients manage crises and build resilience?
What sort of content can you develop to help your clients manage our current global predicament?
In times of global uncertainty, we need people in our corner to help us put one foot in front of the other. That’s why we need consultants now more than ever.
At its core, digital transformation is exactly what it sounds like:
“The process of integrating newer and more sophisticated examples of digital technology across all areas of your business, thus fundamentally changing how things operate for the better along the way.”
But at the same time, it’s also so much more than that. It’s a unique opportunity to not only streamline engagements but eliminate manual processes in favor of automated alternatives as well. It also helps to create the most important benefit of all: empowering you to create a better customer experience with a free flow of information on demand to customers, typically for the first time in your history.
Of course, getting to that point requires you to move beyond digital transformation itself. Once your technological evolution is complete, the next step involves sharpening the tools you’ve acquired to fully unlock all of those benefits outlined above. Getting to that point isn’t necessarily difficult — but it does require you to keep a few important things in mind.
Empowering Engagements, One Step at a Time
As you move beyond your digital transformation, maybe the most important area for you to focus on has to do with how you and your people are actually engaging with your customers. The tools are officially available for you to do this in a better way than ever before. Now, it’s up to you to actually put them to good use.
Your business will have a new level of mobile capability coming out of digital transformation, for example, which absolutely should be utilized to your advantage. Not only will it be easier to share information and insight between departments, but all of that data can also be accessed from any location on Earth with an active Internet connection. This includes via not only desktops and laptops but smartphones, tablets, and other devices.
This means that your employees now have the tools needed to better engage with customers on-the-go or at THEIR location, not yours. This type of purpose-driven technological shift doesn’t just create better engagements with your clients on a day-to-day basis. It also makes your professional services firm far more valuable to your client base as well.
The Power of Automation in the Modern Business Enterprise
One of the major reasons why enterprises go through a digital transformation in the first place often comes down to the idea of automation. Rather than paying high-value employees to focus on routine tasks like data entry or document management, you can turn those jobs over to artificial intelligence (AI) and machine learning (ML) powered solutions to handle everything on their behalf.
Think about it like this: every minute that one of your employees is focused on these everyday jobs is a minute they’re not supporting and empowering your business’ relationship with your customers. AI, on the other hand, is perfect for examining large sets of data and extracting the most meaningful insights in a way that humans could never match in the first place.
From that perspective, automation doesn’t just once again create an opportunity for you to provide a better and more personal level of care to your customers. It’s also an incredible chance to eliminate manual, repetitive and error-prone processes in a way that allows you to become more efficient as a business with far less overhead at the same time.
A Bold New Customer Experience Begins Now
Finally, we arrive at what is perhaps the most important driver behind digital transformation for many professional services firms: enhancing the quality of the customer experience they’re able to offer.
A rock-solid information management system can absolutely act as the foundation between your professional services firm and your customers — but that doesn’t mean that it won’t require a little additional work on your part after the transformation is complete.
Here, you’ll need to focus on two core areas, including:
Removing any and all obstacles that prevent personnel from serving the customers in the best way possible. This means making sure that information about customers is available to anyone who needs it, whenever and wherever they need it, no exceptions. This enables them to not only make better decisions in the heat of the moment, but to avoid the duplication of documents and requests as well.
Reducing friction (and costs) to focus on delivering your critical services. As outlined above, you should absolutely be using your digital transformation as an opportunity to digitize and automate as many of those menial administrative processes as possible, all so that your actual human employees can devote the majority of their attention to those tasks that truly need them.
If you’d like to find out more information about the many ways in which professional services firms can reap digital dividends as we collectively move beyond the concept of digital business transformation, or if you’d just like to discuss your own needs with someone in a bit more detail, set some time aside with us.