Top trends businesses need to keep up with in 2021

Nigeria slipped into its second recession in 5 years, as the GDP in real terms declined by -3.62% in Q3 2020, leaving business leaders on the edge.

The uncertainty in both economic, political, as well as global outlook due to the impact of the pandemic will have a far-reaching effect on companies in 2021. However, business leaders are expected to begin the process of implementing innovative ways of protecting shareholder value and meeting their needs.

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It is expected that months from now, the impact of the recession will take its full toll on the revenues of companies, credit availability and debt recovery. Leaders will begin to make shrewd decisions to ensure survival and one key feature will be cost-cutting.

While survival strategy will defer from one company to the other, experience has shown cost-cutting strategy that blindly seeks to reduce expense without a clear path to growth often lead to negative impacts.

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There is a need to analyze which cost is clearly avoidable and which, though avoidable, should be considered an investment.

Before now, the type of costs that often fall casualty of economic downturn are employee cost, research and project costs, including technology initiatives.

However, the current digitalization trends and unintended dependence on technology due to the Covid-19 pandemic should signal that the cost-cutting strategy of the past will require a rethink.

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The justification to prioritize technology projects in an uncertain time like this requires CIOs and IT Managers to convince the business to invest in technology. To achieve this, the benefits of implementing the right technology should be presented in a simple, understandable and measurable manner.

The following measures should be adopted by organizations seeking to not just survive, but turn around their business for growth in times like this.

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Clarity on the impact of technology on the business

How does the technology project address real business problems, including projected problems the business is likely to have in the future?

For example, a technology project focused on automation of receivables and customer relationship providing solutions like payment reminders, escalation notification, risk assessments, may be considered a problem-solving project for a business with high volume credits sales or cash flow issues.

A business environment with high growth in bad debt and slow receivable collection should easily be able to justify a technology aimed at solving these real business problems.

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Ability to measure impact

Before investing in a technology project in a recession, technology managers need to be able to measure the benefits the organizations will derive from such investments.

There needs to be a simple and clear business justification that is trackable and measurable. Will the project increase our revenue? Will it reduce our cost or will it make us run more efficiently? Will it save us overhead time and cost on the long run? Using Receivable automation project as an example, the business needs to able to measure and monitor performance indicators that validates the success of the project.

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By investing in receivable automation, by creating automated due receivable reminder, by setting risk and limits to credit availability based on past behaviors and automating these processes, what percentage reduction are we expecting on overdue receivable? What is the target number of customers we hope to be able to convert with these payment methods? What is the time saving due to the ease of receivable reconciliation and reporting?

All these should be well documented as part of the business case. Value gatekeepers need to be assigned to ensure those value delivery can be monitored and realized before project closure.

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Does technology foster innovation for future opportunities?

Implementing a technology project that has been in the plan for the last 2 years will not lead to innovation if not re-planned to meet its future needs.

A business technology project in 2020 should consider new innovations that will shape business in future, using receivable process as an example, Automation of Account receivable and collection process should consider solutions such as robotic process automation where customer can make basic enquiry and the application has bots capability to respond based on artificial intelligence, making it easy for customers to get basic information like customer balance, amount due this month and amount paid for the year.

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This should be possible without a need to wait endlessly on customer service lines. Data analytics solutions with predictive technology and machine learning should be considered. Can the technology predict the consistency in a customer payment compared to due date, to determine the future behaviours and likely cashflow of the organization. These are initiatives that will be critical for future growth.

While this is the time for businesses to be prudent in their expenses, smart organizations should also consider investing in technology-driven innovative solutions in order to address real business needs.

The CIO must have the courage to articulate these gains as well as work with business people in ensuring the benefits of technology projects are understood and are seen as investments not an expense, in relation to shareholder value.

About author

Olawale A. Kolapo (OAK) is a technology consultant with a finance background, for over a decade implementing technology solution that has helped various private and public sector organizations integrate and automate their business process. He is interested in building a digital approach to solve Africa’s business challenges.

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Source: Nairametrics

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