Automation strategy for the C-level: Facing the challenges during the COVID-19 Pandemic
Apr 06, 2020 | Frankfurt, Germany
By Arnold Kinzel
Consultant | Advisory
By Alex Botar
Partner | Advisory
The Coronavirus pandemic has already positioned itself in history as the most devastating global crisis since the second world war. It is nearly impossible to explain, theorize, or suggest its impact on health, society, or the international economy for the 21st century. The novel Sars-CoV-2 and its related lung disease COVID-19 will change business, risk management / crisis strategy, as well as their digitization and automation strategies henceforth. The current C-suite faces their greatest career challenge juggling cost pressures and investments in the future.
Companies which have not yet properly digitized their business find themselves unable to work effectively during times of self-quarantine. It could indeed mean that more specifically technologies such as RPA, AI, DPA will be more strongly pushed in the short-term to achieve rapid progress in digitization. In fact, businesses need to be armored against a second Coronavirus wave which some experts predict to occur during the summer 2020, others suspect it will break out again at the beginning of 2021 (Roland Berger, 2020).
Current situation and challenges for the enterprise
Predictions on how long the virus will dictate our daily life are wildly different. The only contemporary constant is the remaining uncertainty and its implications for businesses’ strategies and project prioritizations. According to Roland Berger Strategy Consultants, the Base Case for 2020 predicts global GDP growth of 3.3% compared to 6.0% in China, 1.0% in Europe, and 1.7% in the United States. In case of a “profound recession”, global GDP growth slows down to about 0,1% compared to 2.5% in China, -2.5% in Europe, and -1.2% in the United States. In both scenarios it will be a gradual economic recovery where the greatest challenge will be to simultaneously build up the supply and demand side of the economy. In addition, companies shouldn’t distinguish between crisis and post-crisis economic conditions. It is highly likely that the virus will continue to dominate business. This makes it even more crucial to digitize business processes, increase agility and be able to scale productions and services according to demand-side pulls.
Automation: a key enabler to face the crisis
Consumers will limit their expenditures to essential goods and store their remaining wealth in cash or other assets that have proven stable during rough times. As demand is probably decreasing over the course of 2020, the supply-side reacts with higher unemployment and part-time working contracts. What if demand increases again? What if rapid demand expansions occur? The supply-side of any economy is usually much slower in responding to economic expansions as the demand side. However, during the next years, it will be a crucial success factor to be able to scale supply and hence react to short-term demand forces. Automation and, more broadly, digitization are good indications of whether firms can flexibly steer their supply or not.
It is now time to limit losses for the next couple years, initiate cost cutting programs, and get ready for the post-Corona economy where the strongest firms will be those with digitized processes, especially related to bureaucracy and non-core business activities. This opens opportunities for automation as an enabler and risk-lowering measure. This is because workers will be able to work much more effective and increase their productivity per time unit the more processes are digitized.
In-time solutions: Use cases for automation during the crisis
Most use cases for automation so far could be found in finance departments. Business Consulting House has gathered expertise knowledge in automating finance processes using a diverse range of automation tools. However, during the pandemic the world is facing right now, within no time dozens of new Use Cases have risen. Several industries are facing challenges with processes that have either never run in a specific manner before or whose throughput has drastically changed. Pre-requisites of regularly checking the health and well-being of employees and enabling them to work remote where possible now concern all industries. Other Use Cases are quite specific to the challenges of individual industries: Online Retail has to handle a spike of orders, tourism and insurance companies are faced with tens of thousands of cancellation and refund requests, supermarkets have to boost their supply chain to stand strong against hoard purchases, and much more. Together with our partner UiPath we of BCH have compiled a list of Use Cases that have proven helpful and often business-preserving during these grueling times and mapped them to the concerned industries.
The C-suite needs to act now
During the next months, many companies will face bankruptcy. Companies that do not, will still have to deal with a possibly and likely second global infection wave. It is now up to top managers to respond quickly and to initiate cost-cutting initiatives such as the automation of standard processes and the digitization of their work environment. McKinsey & Company (2020) recommends seven core activities as guidelines for every company.
Provide two-way communication channels for your employees in case any questions regarding new crisis policies or risk management conduct arise. Employees need to know that these are unusual times and that there are measured being taken by the firm.
Cross-functional COVID-19 response team:
Cross-functional collaboration and communication is key to formulating appropriate responses to new developments. The team should report directly to the CEO. The team should be able to formulate quick responses in for all departments, e.g., marketing & sales, or supply-chain-management, reacting to demand shocks.
The C-suite needs to identify and examine different company-specific scenarios and pre-defined appropriate responses. Financials should monitored and modeled for each scenario.
Supply chain stabilization:
Model exposure to critical areas involved in the supply-chain and impact on spiking demand due to hording and other factors. Firms must evaluate whether it is sensible to re-focus production to essential products that might experience higher demand compared to others.
Identify core customer segments and anticipate their behavior. In many areas, demand has not vanished but rather moved to online buying. Make sure to provide the customer with options for a given demand, e.g., online marketplace, delivery service.
The risk management team should walk through every scenario and address issues that may arise during each of the scenarios. This practice can be structured like a case-study where each member is providing input ideas on where the process could go wrong. The team should then work out improvements.
Businesses always serve a purpose; to meet customer demand. Evaluate whether this purpose is still intact or whether production could shift to more important and purposeful short-term productions, e.g. masks, clothing, etc.
The C-suite need to act now, and it needs to act fast. The provided guidelines are a good starting point for every company; however, every company is different serves a different purpose. Solutions need to be tailor-made. With any radical change in industries and market conditions, technology is the imperative to weather a storm such as economic recession, natural disasters, or even a global pandemic.
McKinsey & Company. (2020). covid-19 implications for business. Retrieved from mckinsey.com: https://www.mckinsey.com/business-functions/risk/our-insights/covid-19-implications-for-business
Roland Berger. (12. March 2020). Three scenarios for how Coronavirus may affect economies and industries. Retrieved from rolandberger.com: https://www.rolandberger.com/en/Point-of-View/Three-scenarios-for-how-Coronavirus-may-affect-economies-and-industries.html