There is a theory in management that smaller and leaner companies have the ability to adapt and change with the market ahead of their competitors. Larger enterprises may have more resources to help them change, but the process of change tends to be slow. There are also those companies or management that will not change, they cannot break free from those old tried and trusted processes – not broken, why change.
And then we got the Covid19 Pandemic!
The Spanish Flu after the First World War lasted two years from 1918 – 1920. Really we have never seen anything like this, and certainly never had to handle something remotely like it.
Technology in all its forms brought over the last few decades, the Global Village. Like the Tower of Babel, has Covid19 broken it up for good, or are we experiencing just a temporary setback?
John Medved, founder of global equity crowdfunding platform OurCrowd, comments “The first thing to understand is the only thing that is constant is the change itself,” he says. “The lesson of the past seven months is that anyone who thinks that they can predict the future with any clarity is wrong.”
First, it should be very clear that there is no going back to the “old normal”. We now have to move forward with a “new normal” whatever that is. Second, digital transformation will give companies and their customers the tools to allow them to continue and succeed.
The most visible effect of Covid19 is probably best seen in the consumer retail sector. Stores and shops in High Streets, Malls and commercial centres are closed in lockdowns and on reopening have significantly lower trade, from limits placed on numbers of customers permitted in the store, to older customers self-isolating for whatever reason. Many shops did not reopen following the first lockdown. Now with the second lockdown, how many more will close?
So how do stores stay open for business? The internet and social media! This is something that should have been happening before, but hasn’t. If families can buy clothes and other goods over the internet from abroad, they can do the same from local stores. Stores that do not have an internet presence nor provide a home delivery service, even after the lockdown are going to struggle. This applies to both the local and the larger chain store.
Covid19 does not distinguish between different types of businesses and offices. It affects all, including government services, local and national. The advancement of technology over the last twenty years has prepared us better than we would have had otherwise. Laptops, video-conferencing applications and business systems operating over the internet, “the cloud”, have allowed many staff to continue working from home.
Large corporations, such as insurance, credit-card, cellular companies, and internet providers that have major call-centre operations have used their large IT operations to provide for staff to work from home. Mobile phone use, combined with high speed home internet connections, have revolutionised the modern call centre as calls to company offices are directed to the staff working from home. Back office staff working on a company’s systems are also given access using company computers distributed out to the home office. High-tech companies and others are giving their staff the ability to work from home through the use of laptops.
The problem in providing the new work environment in the office, is much more difficult for office workers. Specifically, with open plan offices, shared office space, restrooms and office canteens.
Currently, those office workers that can work from home are working from home, and apart from essential work that has to be carried out in the office, the work is not being done. Maintaining the company’s computer servers to allow others to work is allowed, as is the preparation of employee’s salaries and other specific and essential tasks.
So what will the new office look like? A survey by Morgan Stanley has shown that less than 50% of office workers in Europe spend a full 5 day week in the office, with 25% not spending any time in the office. In countries like France and Germany the number not going at all to the office is closer to 50%. This could be due to the fear of Covid19 and the lack of ability of current office structures to take in all staff whilst maintaining social distancing rules along with the fear or discouragement to use public transport.
One of the lessons that appears to have been learnt over the last few months is that people are happier to work from home. This work-from-home-happiness has also made workers more productive. Meeting lengths have been reduced and some even replaced by emails. That can be great for wellbeing. A study from 2004 by Daniel Kahneman of Princeton University and colleagues found that commuting was among the least enjoyable activities that people regularly did.
There are many other factors that need to be considered, and having children at home during lockdown may not be the most ideal environment, but also the fear of losing one’s job in the current crisis might have caused staff to up their game.
The “new office” for sure will be different to what we were used to. The necessity of space for social distancing has resulted in either empty offices or a much reduced capacity, with some staff working from home, and some in the office. Some companies have experimented with a rotation process, one week at home, one week in the office. There are a few companies in the high-tech environment that for years have been based on the work from home principle, with periodic meetings in the office. This has helped them maintain a minimum sized office for those required to be in the office, and for those that need to come in periodically.
Will we see a trend for the smaller company office as businesses check how productive they can be with staff working from home?
And where does that leave some of the more traditional functions such as the finance department? Businesses can develop and sell their products, run operational systems and work globally, but the heart of the company is finance. When it comes to technology, the finance department has been the last in-line for investment. Digital transformation is not a high priority, less so when finance is both heavily regulated, and more difficult to transition to remote working. It is a back office function that is not at the front of the organization.
The biggest problem for the finance department, particularly if it is traditional, is that it will likely be stored on a hardware server on-premise, due to the sensitivity of the data. Up until now, this hasn’t really been a huge problem, but with the repercussions of the pandemic still very much present, the complications that go hand-in-hand with on-premise hardware have been noticeable.
But what happens when customer invoices are not issued, suppliers not paid, and when employees do not receive their salary? The finance department has to work only from the offices risking their and their family’s health? They do not have children at home because the school or kindergarten is closed, or the lessons have moved on-line?
Organizations are going to have to seriously review their finance software along with their other “back-office” systems and begin to opt for cloud-based platforms. Things aren’t going to go back to ‘normal’ any time soon. If anything, ‘normal’ as we once knew it will change forever, and businesses are going to have to seriously consider how they can operate with increased agility, added value and securely.
As everyone watches carefully to see how the lockdown measures start to ease and the new office order develops, businesses need to start thinking now – if they haven’t already – what changes will best help them survive. Those businesses that rely solely on government loans and grants, and other assistance without planning and introducing digital transformation for their business may not survive.
Ian Grant, a UK and Israeli accountant, in Israel for over 30 years, provided consultancy services to some of Israel’s largest companies. Currently helping start-up companies build their finance function. Using cloud software, Ian has partnered with a UK company, Aqilla providing multi-lingual, multi-company and multi-currency business solutions for the new today. Married with seven children, 5th generation Israeli, and six grandchildren. A family that took a significant part in the creation and building of this country.