CIOs Must Now Fortify Business Flexibility and Resiliency

The pandemic has put companies’ digital maturity to the test and revealed weaknesses and cracks -- some of which may have been known a priority but consciously de-prioritized. In hindsight, what digital capabilities would you have invested in 2-3 years ago to help prepare for this time?

The current crisis was a wake-up call to increase resiliency, data-driven insight and visibility, and create an anti-fragile and nimble business structure to allow leaders to make quick decisions and respond to an environment with variable and volatile market conditions -- literally changing every day.

Supply chain flexibility in a pre-crisis world was about enabling scale growth, better forecasting and planning, optimized decision-making regarding production and inventory, and product innovation.  Post-COVID-19, we need to be able to do all of those things PLUS make daily production decisions, shift regional production (e.g., from China to Latin America), understand the cost and timing implications of these decisions, and adjust pricing and customer expectations accordingly. Analytics and forecasting embedded throughout the supply chain will be critical to detect signals and optimize the value chain element.

For US companies, we have so far seen three stages of response to the pandemic:

There are three types of business capabilities needed for all stages of crisis response:

For companies that have these capabilities in place and running smoothly, crisis response efforts are focused on strategy and response -- which is an iterative process. However, for companies that have varying degrees of maturity in these areas of capability, companies have no choice but to leverage their people to deliver them manually -- which is slow and error-prone and takes away from efforts to focus on strategy and response.

The CIO’s road ahead: Scenarios and strategic implications

Decisions made now will have profound long-term impacts. The most fundamental strategic question is when the world will bounce back. All other questions around the nature of the bounce, the impact of the bounce, the duration of the bounce -- those are all important, but secondary to anticipating when that bounce will occur. There are three scenarios informing the CIO’s 2020-21 agenda:

Scenario A: Quick Rebound (Q2 2020): Virus is contained with no recurrence, with strong and quick economic rebound to pre-crisis levels. These would drive the business needs to be prepared for fulfilling growth across digital channels.  This would require investments in self-service tools and augmenting e-commerce solutions.

Scenario B: Measured Uptick (Q4 2020): Virus is gradually contained and there is a calibrated economic progression towards pre-crisis levels. This would drive the business need for 6-8 months’ survival plan and the need to reconfigure supply chains, automate manufacturing and develop digital products.

Scenario C: Prolonged Drag (Q2 2021): Virus continues with recurrences and there is prolonged shut-down with slow and uncertain economic recovery. This would drive the business need for a 12-16 months’ survival plan and ensure operations by engaging partners (customers, suppliers, employees, regulators). This would require investments in communication platforms, such as modernizing critical legacy systems with automation of back-office systems.

The outbreak is moving quickly now, and companies need to be prepared to shift and refresh scenarios based on leading indicators of how the pandemic is evolving.

No regrets moves (irrespective of scenario)

Get-rights for returning to normal

Companies must stay committed to broader transformation goals and emerge from this crisis not having just “managed” but becoming stronger despite it all.  IT investments should enable companies to be more flexible and adaptable. Here are some examples of actions every IT leader should take:

Conclusion

COVID-19 has revealed weaknesses in businesses’ digital capabilities. Now is the opportunity to refresh the CIO’s 2020 agenda, building a business that is resilient, agile, and flexible. In the years that follow, we will look back on this time and use our hindsight to evaluate whether we made the best use of it to invest in our long-term success.

Joshua Swartz is a Partner in the Digital Transformation practice of Kearney, a global strategy and management consulting firm.

Suketu Gandhi  is a Partner and Global Tower leader in Digital Supply Chain at Kearney.

Himanshu Jain is a principal in Kearney’s Digital Transformation practice.