The global economy is reeling in the wake of COVID-19. But even before COVID-19, over two-thirds of CFOs and 59% of economists believed a recession would hit by 2020. For unexpected reasons that possibility became a certainty. In this article, we’ll talk about a few of the ways that technology leaders can prepare for the inevitable economic challenges and possible economic downturn ahead.
1 – Reduce on-prem CapEx in favor of increased cloud OpEx
Most organizations are used to dealing with predictable capital expense (CapEx) when it comes to IT budgets and spending. However, the uncertainty of the current financial situation means operating expense (OpEx) is becoming favorable, as you are essentially leasing, rather than purchasing your services.
Enterprises can achieve significant cost savings by moving to the cloud and OpEx expenditure for flexible usage and infrastructure in areas such as data storage and e-commerce platforms. This allows organizations to scale up or down, according to their needs, with changes available instantly.
“In the past, when you had to budget capital to pursue an opportunity, the process meant the increased spending was quite predictable, as it had to be planned for and slotted into the yearly budget. Today, when cloud computing makes resources available in minutes, there’s little to prevent you from starting right away,” reports CIO.
2 – Prioritize initiatives that keep existing customers happy
90% of consumers have left a business because of poor customer service, reports Customer Think. The need for excellent customer experiences will only increase we enter a period of economic uncertainty.
You don’t want to let your operations get to the point where the customer experience is so poor, it drives people away. During periods of economic instability, you want to keep your customers more satisfied than ever as the world tightens their purse strings to adapt to the financial climate. After all, acquiring a new customer can cost five times more than retaining an existing customer.
Customer expectations have risen exponentially in the past few years as consumers become used to technology providing instantaneous feedback. 90% of customers expect an email to be answered within an hour – and less than one minute if they have sent an SMS message. Yet, the average business takes 12 hours to respond to a customer request, according to The Telegraph.
This time gap can be filled by automating customer responses using AI and intelligent process automation (IPA) to deliver employees with relevant employee information to fulfill their requests. Old Mutual saw customer point of contact resolution improved by 30% thanks to the holistic overview they gained of their customers. These contributed to the bank being able to improve its net promoter score by an impressive 15%, demonstrating the power of a borrower-centric approach.
The financial services industry has experienced huge pressure following COVID-19 with a huge increase in the demand for loans, loan forgiveness, and mortgage forbearance. By automating the loan origination process, not only do customers receive a better service, but loan providers can approve more loans and generate more revenue.
3 – Accelerate automation to unlock efficiency and cost-saving
A call for cost savings is always the first response to economic downturn, and it can take many forms. A survey by EY has found that 41% of businesses were speeding up plans to implement new technologies and replace jobs held by employees in preparation for the post-Coronavirus economy.
The surge in automation technologies is comparable to the increased use of BPM technologies following the last economic downturn. According to Forrester Research, “Some argue that BPM emerged as one of the heroes during the downturn, helping enterprises boost productivity and gain efficiency and greater control over key operational processes.”
BPM helped multiple financial service institutions to quickly develop processes that could help their organizations to survive during the economic downturn. For example, Banco Popular was burdened with toxic assets, which it needed to dispose of quickly and legally, while also delivering a fair deal for homeowners. The bank worked with Bizagi and in 24 weeks, Bizagi created processes which allowed the bank to buy, approve, sell and instigate judicial proceedings for its entire property portfolio, worth €12,000 million.
Indeed, many organizations were experimenting with Intelligent Process Automation before COVID-19. McKinsey reports that companies they surveyed have seen results such as automation of 50 to 70% of tasks, which has translated to 20-35% annual run-rate cost efficiency with return on investments in triple-digit percentages.
With results like that, combined with economic pressures, it’s no wonder that Forrester found that companies are set to invest more in automation than in rehiring in the wake of the Coronavirus pandemic, corroborating earlier reports, like those from EY that found businesses were accelerating their automation plans.
Whether automation is being used to fill manual roles while there is decreased manpower available, or support employees by completing tasks to free up their time, it will prove instrumental in helping organizations to operate efficiently during this time.
4 – Prepare now for responding to regulatory changes
Following the last financial crisis, many organizations were turning to BPM to meet compliance mandates. “Increased control over processes and greater visibility into process exceptions will be key requirements for these industries to minimize the financial impact of new compliance mandates,” reports Forrester in its 2010 BPM Wave Report.
The same is true now. We have already seen that COVID-19 will lead to a lot of policy change and legal amends that will require new compliance processes. Already, many organizations will have made changes to their internal governance processes to enable employees to work from home, such as changing permissions to access data and files remotely. An intelligent automation platform brings a level of flexibility to processes so you can rapidly respond to the changing regulatory landscape.
“[Governance, risk and compliance technology] can automate the workflow of compliance activities including issue resolution and also increase the accountability and visibility of compliance across the enterprise,” reports PWC. “Automation is a key strategy for organizations to efficiently keep pace with [digital] trends and assure controls are in place to manage the associated risk and regulatory requirements.”
Intelligent Process Automation can also help ensure compliance by establishing workflows and automating tasks within the process to guarantee that steps are completed as necessary. For example, rather than relying on disparate documents, spreadsheets, and emails to complete essential paperwork, IPA can unify the information into one workflow. Automatic start dates and timed reminders aid the completion, approval, and storage of documents to save time and effort for employees. With agility built-in, these requirements can be changed in accordance with rules and regulations, so you always remain compliant.
For additional advice on how to respond to the challenges of COVID-19 and economic downturn, take a look at our ‘3 Step Guide to Business Continuity’. For more information on bringing the benefits of automation into your organization, read ‘Planning Your Path to Intelligent Process Automation’.