Even with 2022 rapidly approaching, it is still difficult to get away from news about the COVID-19 pandemic.
While the rapid onset of the pandemic created a highly disruptive and challenging environment for all businesses, midsize enterprises (MSEs) were especially affected. According to a recent Gartner report, some of the challenges MSEs faced during the pandemic included the need for a rapid adoption of new technologies to support remote work, new norms for internal and external communication, and the rapid acceleration of digital initiatives.
As businesses continue to slowly return to “normal,” it is time to reassess business strategies and processes for digital transformation.
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Challenges Faced by Today’s Midsize Businesses
Thanks in part to the pandemic, MSEs are currently facing the following challenges:
- Transitioning to a digital-first world: while large businesses had the budgets that allowed them to quickly pivot to a work-from-home model, MSEs struggled to offer that same support to their own employees. At the same time, the lack of in-person events in 2020 and 2021 slowed client acquisition and networking opportunities for some MSEs. Finally, brick-and-mortar businesses had to completely start over and build up their digital businesses while contending with changes in customer behavior.
- Difficulties in future planning: due to the unpredictable nature of the COVID-19 pandemic (and shifting regulations), it’s been tough for businesses to cohesively plan marketing efforts, anticipate staffing needs, and understand customers’ needs.
- A rise in burnout: MSEs were no stranger to burnout during the pandemic. With the rise of WFH came a lack of concrete boundaries between people’s professional and personal lives. Now, businesses that have been working around the clock to stay open during the pandemic (while taking the necessary protocols to ensure employee safety) are feeling the repercussions.
- Increased production costs: due to the impact of COVID-19 on overseas shipping prices, some MSEs are experiencing a steep increase in cost. Further, the disruption experienced by the supply chain is upsetting production around the world, resulting in longer shipping times and inventory shortages.
- Overloaded information systems: does your business spend a lot of time putting out fires? If so, it is possible that your information systems are not providing the right information at the right time, which could be hindering company growth.
A Risk Management Strategy for Midsize Businesses
For MSEs, managing risk will always remain top-of-mind. In an increasingly disruptive environment, what are the best ways for MSEs to avoid risk? Or, to put this question a better way – why should MSEs have a risk management strategy in place?
First, it starts with the reality that exposure to risks is practically unavoidable for all businesses, even when the threat of COVID-19 isn’t looming over their heads. Therefore, all MSEs need to be risk-aware by having controls and procedures in place to handle cash flow, protected documents, and more.
This approach includes having the correct insurance coverage and policies in place to protect employees and proprietary knowledge, and limit liability risk. Then, MSEs need to plan how to reduce business-specific risks by identifying the organizations’ primary assets and how best to protect them.
In terms of strategy, MSEs should conduct risk reviews once a year that involve conversations with representatives from all departments. These talks should identify internal and external factors that changed in the previous year, as well as if these changes introduced any potential risks to the company. By having these kinds of regular, transparent conversations, MSEs can be more proactive in reducing any effects a risk might have.
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Activities Midsize Businesses Should Stop Doing
A recent Gartner report found that accelerating post-pandemic recovery may require MSEs to shift their focus from investing in low-value areas to protecting current resources. In fact, an MSE roundtable hosted by Gartner found that rather than rethinking legacy initiatives, many MSEs are still focusing on making needed changes to existing working environments and business initiatives. In reality, very few had even started this process.
To streamline IT operations and expand new business models, Gartner recommends that CIOs take the following actions to minimize business interruption:
1. Reduce spending on underutilized infrastructure – At the beginning of 2021, the Gartner CIO Survey found that 35 percent of respondents planned to reduce spending on data center and infrastructure in support of new work and business modes. For MSEs just beginning this process, Gartner recommends starting with reduced investments in commodity and legacy areas of infrastructure and communications – specifically reductions of technology in headquarters and remote work locations.
Based on expectations for new usage requirements, projects can target rightsized, more-cost-effective architectures to reduce operational overhead and infrastructure costs. At the same time, MSEs can leverage colocation services to reduce or eliminate data center real estate and the physical management of data center locations while gaining higher-speed access to cloud resources.
Organizations that do not need a refresh should reevaluate annual service contracts and downsize based on the number of devices that can be idled (like printers and copiers, for instance).
2. Reduce on-site maintenance costs – Thanks to the massive shift to WFH, MSEs can take the opportunity to evaluate which tools are needed for virtual communication, and then eliminate those that will not be utilized as much. This move can include eliminating desk phones, reducing software licenses for traditional/IP PBX voice and related services, and decreasing the number of phone extensions provided by local carriers.
In their place, embrace unified communications as a service (UCaaS) offerings like Microsoft 365 Business and Teams and Google Workspace. By 2023, Gartner predicts that 83 percent of spending will be on UCaaS, which will significantly reduce the need for maintaining on-premises telephony equipment.
3. Embrace more targeted collaboration tools by strategically downsizing – To rightsize targeted areas like infrastructure and collaboration, Gartner recommends that MSEs first determine the needs of their “new normal” by comparing their present working environment to the pre-pandemic one.
Then, they should identify which activities are no longer needed or can be de-prioritized; this move can be followed by reducing and/or eliminating operational activities that are low-value and labor-intensive. Finally, MSEs should redirect resources to more strategic efforts in IT agility and business expansion.
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Stefanini’s Strategy for Digital Transformation
As a midsized enterprise located in the Midwest, Stefanini understands the unique needs of MSEs working toward digital transformation. While we’re small enough to be customer-centric, we’re also backed by a global presence that includes partnerships with giants like Servicenow, IBM, Microsoft, and SAP.