What are the immediate effects on the technology sector?
Whilst it is impossible to escape the inevitability of COVID-19 impacting business, there is no doubt that IT and Technology is one of the more unscathed sectors; due in part to the nature of how business is already conducted, and the pace of change that is demanded from those who thrive within it.
The ability to work remotely may be perceived by more traditional sectors to be a kind of ‘new-age’ philosophy, along with ‘dressing-for-your-day’ and flexible working. However, for most technology companies it has been a cultural norm for many years now.
That being said, just because everyday working life will be able to adjust comparatively seamlessly, it is unrealistic and unreasonable to assume that there will not be major challenges in the delivery of these companies’ products and services, and in their ability to drive new business.
Seldom does a technology company sell exclusively to other technology companies. It is extremely likely that financial shocks will be felt from an operational slowdown in other sectors. Whether it’s a manufacturing firm putting the selection of new production software on hold, or a large bank halting progress on a ‘Blue Sky Digital Initiative’; there are undoubtedly going to be significant revenue shocks across consulting outfits, SaaS providers and professional services firms.
A very interesting economic development that has already been observed is the fact that certain companies have actually experienced a boom during this period, due to the nature of their offering. In the consumer goods market, we have all witnessed the surge in demand for basic necessities such as hand sanitizers and long-life food. Within technology, it is those applications concerning productivity, telecommunications and entertainment that have seen the most drastic increases to their respective user bases.
Undoubtedly, companies that were more mindful in the development phases of their platforms, have been better able to leverage the opportunities that have arisen. Scale is a consideration that is important for every application. ‘How will our servers cope if a successful ad campaign drives a 20% increase in our monthly active users?’ is one example of a commonly posed hypothetical that would be discussed throughout stand-up meetings across development teams. However, few could have predicted the kind of volumes that are being seen, often in cases where it was not immediately obvious. Collaborative games, video conferencing tools, home workout apps; the list is much longer than you first suspect.
The most prominent short-term challenge will be for those companies not utilising cloud infrastructure services such as Amazon Web Services’ (AWS). Through their Elastic Computing (EC2) product, companies can scale up and down without causing issues in the performance of their software. The weaknesses in any kind of on-premise solution is surely now being laid-bare for all to see. The old arguments of not wanting to surrender control to a company of Amazon’s stature are not standing up anymore.
It’s a mindset that can easily be empathised with, but not one that can withstand scrutiny in this age. The fact of the matter is that you are tied to any infrastructure that you implement. The question becomes whether you would rather your business was tied to cloud computing, that reduces the headaches of scaling up and allows you to roll out new developments with speed and agility, or a floor full of servers in your own basement?
Ayming’s clients have responded with a number of key measures such as:
- Putting non-essential projects on hold.
- Moving all resources on to major accounts.
- Re-evaluating the timelines of existing deliverables.
- Stress testing effectiveness of server capacity and ability to respond to sudden fluctuations in usage.
How could this change in the near future?
Just as in the immediate term, the “business as usual” mantra will continue to dominate throughout the sector. And for good reason. As highlighted, technology companies are better positioned than many to carry out their day-to-day operations as usual.
Larger companies with extremely high volumes are likely to look to negotiate more favourable packages with their cloud infrastructure provider as the costs skyrocket. However, this approach will obviously be balanced with the current need for dynamism.
The best mindset to adopt is maintaining your drive, whilst continuing to innovate and solve problems. The reason that many people get into the Technology sector in the first place is an ambition to change the world we live in, overcome challenges and generally make life easier. Nothing about the current health crisis should impact that desire. If anything, it may even stoke the fire further.
Out of the last recession came global tech juggernauts such as Uber, Instagram and Airbnb. They all pounced on opportunities within industries that were not fully leveraging the advantage of technology. There is no doubt that from this crisis too, winners will rise out of the ashes. It will be fascinating to see which opportunities open up.
On the topic of dealing with isolation, it is clear that working remotely cannot be effective across the entire economy. You are unable to construct buildings, or mass produce clothing, or host events from home. However, software development occupies a rare niche in which companies can operate through teams that are working entirely remotely, and all around the world. In fact, many of them already do.
Both during this crisis and in the immediate aftermath, there is no telling just how high even the smallest company can climb by focusing on agility, big ideas and a growth mindset. 12 weeks is not a particularly long time period in the business world, particularly within a sector in which the most successful companies think in decades and not years.
Last updated: 8th April 2020, 10:40am