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8 August, 2020 08:02:26 PM
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Covid-19: Economic impact and gearing up for a digital transformation

Standfirst: Both the recovery and the rebuilding need simultaneous execution to better prepare the businesses to deal with disruptions and survive future competitions when the market become fully active
Liton Chandro Sarkar
Covid-19: Economic impact and gearing up for a digital transformation

Today we live in an epoch of turbulence and ever-changing technological landscape. The Covid-19 shock has left everyone flat-footed and is forcing businesses to embrace digital alternatives much faster than before to face the emerging new norms triggered by corona virus itself. On the other hand, uncertainty caused by the pandemic can turn complete attention of the leaders to a rapid recovery without imagining a path to rebuild the businesses to face future challenges. Covid-19, the current global pandemic which has created greater chaos, is forcing every individual and organisation to think out-of-the-box. When a situation of chaos is in the spotlight, two scenarios will be up for grabs: for those who can adapt as the opportunities will be countless, and for those that cannot, it could be a disaster. In such a context, businesses need to position their rationale to be on the front foot, prioritising ‘digital agility’ in this time of uncertainty.

The Covid-19 pandemic has revealed a great deal of vulnerabilities in our world and our way of life. But in this time, technology has revealed itself to be an invaluable tool to help us to continue to meet our basic needs even as we stay home and socially distanced. Whether it is e-education for our kids, tools to help us work from home, or services that allow us to get the products that we need to survive, our reliance on technology has deepened during the pandemic, and it has accelerated the technology takeover.

We have seen different companies react to this period differently. Travel, hospitality and ride sharing companies have suffered during the pandemic predominantly because the industries that they operate rely on direct services to people. Few businesses have seen an increased patronage during the lockdown, and only experience a small drop when it ends. Ultimately, the momentum gained through the new customers won during the lockdown may allows them to continue to grow their customer base, even after the lockdown ends. These include video conferencing software like Zoom, online retailers like Walmart or Amazon, and paid online streaming services like Netflix. Companies like this may thrive as they are well positioned to provide good customer digital experiences and only increase market share from pre- Covid-19  situations.

According to Forbes, e-commerce retail orders in the US and EU have increased by 146% while revenue has increased by 68% during this pandemic. Amazon and Walmart have both reached their highest market caps to date at $ 1.23 trillion and $ 376.54 billion respectively. But it is not just retail where e-commerce has exploded. If this trend continues, global online grocery sales are set to double by 2021 from $189.81 billion to $ 391.7 billion. Children outside the classroom, e-learning services have grown too. Google Classroom alone has experienced a 150% increase in its user base, and this is all on top of a pandemic prediction that Forbes made; forecasting that the e-learning market would reach $ 325 billion by 2025. The digitisation of banking has seen a significant change as well. In many countries, the use of ATMs has dropped by 60% while 63% of customers have been inclined to try out their bank’s mobile application. The rise of online gaming has been a major trend with the annual revenue generated through online gaming reaching $ 18 billion. Leading games like Fortnite are earning over $ 2 billion annually. Usage is up during the pandemic as the amount of non-virtual entertainment available declines. The artificial intelligence (AI) and automation acceleration that we have been witnessing over the last few years has only accelerated during the pandemic. The use of AI to handle unforeseen loads in critical situations has been useful during the pandemic, as chat-bots have dealt with high traffic in the healthcare sector and beyond. The deployment of robotics in supply chain management has also allowed work to proceed with indirect physical involvement from human employees. According to SEO Audit Agency, few Bangladeshi companies that succeeded well in this environment are evaly, Daraz, Chaldal.com and foodpanda. 

Now it is easy to misinterpret this as a phenomenon brought about by the pandemic, a closer analysis reveals that it is simply an acceleration of a trend that we were already witnessing: the increased use of tech to meet customer needs. In truth it isn’t a question of tech vs. non-tech, but a question of how technology can empower a company to provide a superior customer experience. In truth, Uber didn’t kill the taxi business through technical wizardry, it simply increased access to cabs, provided customers with greater transparency over their fares, and a more convenient way to make bookings. Likewise, foodpanda didn’t disrupt the restaurant business in Bangladesh, it simply used technology to increase the availability of different food and offer a greater array of pricing options. Although we may perceive the trend as a ‘tech-takeover’, it is really a ‘customer-experience’ takeover driven by technology. The shifts in cash, and the changes in customer behaviour caused by Covid-19 crisis are simply accelerating this trend.

According to Fortune, the five largest companies in the world by market capital are all tech companies: Apple ($ 1.4 trillion), Microsoft ($ 1.39 trillion), Amazon ($ 1.2 trillion), Alphabet ($ 984 billion), and Facebook ($ 642 billion). These companies have continued to earn revenue during the pandemic while other companies have struggled to survive. Today, they have a combined cash reserve of $ 458 billion; so, a likely trend is the acquisition of struggling non-tech businesses by these tech companies who will then work on transforming them into businesses that harness tech to meet their customers’ needs.

What this experience has taught us, or should teach us, is that businesses need to remain agile and adoptable to latest digital trends to navigate through this kind of crisis. Therefore, finding a balance between recovery and rebuilding according to an entity’s own interest and environment are essential to cut through the clutter. Both the recovery and the rebuilding need simultaneous execution to better prepare the businesses to deal with disruptions and survive future competitions when the market become fully active. If businesses fail to adopt the technological swing, it’s a question of survival and possible, wipe-out! No firm wants to follow the footsteps of Nokia and Kodak. Most of the firms chose digital transformation to rebuild the business. Covid-19 indeed is a dark cloud but even within that obscurity, there is a bright, silver lining which is the spur of effort and spirit for digital innovations. With numerous digital developments taking place, many firms have become more conscious of the need for a strong case of digital transformation. When businesses start to slowly recover from the aftermath of this pandemic, business priorities will gradually shift, making a digital transformation a case of ‘when’, not ‘if’.

When developing business strategies and policies post Covid-19, the focus should be on improving data protection and digital inclusion policies as well as on solidifying the policy and technical capabilities of public institutions. Public-private partnerships will also be essential for implementing innovative technologies and to tailor digital solutions to countries’ needs. At times of crisis, it is really important that private sector companies to bring about new innovations or integrate the already existing technology to make it more disruptive and convergent – not solely to capitalise on it, but to pay more attention on how it can benefit the society. Agility, or the ability to respond promptly via technology, not only helps the country to be aware of the current situation but, in the future, will also be able to prevent an oncoming issue in the foreseeable future. To re-emerge from the challenges and constraints imposed by COVID-19, the Government would need to look at accelerating the implementation of innovative digital technologies like AI, machine learning and Internet of Things (IoT) in the long term. We have in-house experts on these technologies where we would like to engage with the government to create long-term roadmaps as these technologies can tremendously support the future resilience of Bangladesh’s economy. 

The writer is Deputy Director, Bangladesh University of Professionals. E-mail: liton.aioc@gmail.com

 

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Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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