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Coronavirus forces companies to consider permanent policies, culture change


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Coronavirus forces companies to consider permanent policies, culture change

The economic fallout from the coronavirus crisis is forcing companies across sectors to rethink workforce policies long-term, heavily invest in tech infrastructure, and implement strategies to combat future outbreak threats, according to a new survey by 451 Research, an offering of S&P Global Market Intelligence.

Responses from top executives representing small, midsize and large enterprises in private and public sectors offer a snapshot of dramatic operational changes made in response to a virus that has pummeled consumer demand and reduced access to clients.

The Voice of the Enterprise: Digital Pulse, Coronavirus Flash Survey March 2020, conducted March 10-19, also signals the potential of a permanent impact on modes of working, including long-term remote work policies and a hefty pullback on attending events and conferences. It represents approximately 820 responses from decision-makers of public and private sector industries, including retail, manufacturing and health care across North America, Europe, the Middle East, Africa, Asia and Latin America.

Bottom line: The way companies operated before the pandemic is likely to change once the immediate virus threat subsides.

READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here.

"This may have a fairly significant impact on the 'new normal' going forward," said Liam Eagle, research vice president for 451 Research and general manager of Voice of the Enterprise, a product of 451 Research.

Loss of consumer demand, supply chain disruption

A higher percentage of retail organizations said they experienced a loss in consumer demand and reduced access to clients than the broader market as consumer companies began temporarily closing their stores to limit the spread of the virus and protect their workers.

Half the respondents from retail organizations said consumer demand is declining, higher than the 32% of respondents from the broader market. Another 11.5% of retail respondents expect to see a reduction in consumer demand in the upcoming three months.

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Meanwhile, approximately 27% of respondents reported ongoing supply chain disruptions as a result of the coronavirus, and an additional 25% expected to see disruptions in the next three months. Those surveyed from retail organizations responded roughly in line with the rest of the group.

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About 15 survey respondents said supply chains remain one of their biggest challenges, as many of their products are manufactured in China, where the outbreak began.

Even though China factories are coming back online, it will take time for supply chain-focused companies to bounce back to previous production levels, Eagle said.

"If you just stop manufacturing for two months, you don't make that up in two months," he said.

IT strain and spend

Survey respondents also indicated that they were ramping up technology investments to support work-from-home programs and collaboration for homebound staffers. Among enterprises surveyed, 41% are experiencing increased strain on internal IT resources, and another 14% expect to begin experiencing it within the next three months. Additionally, 34% of enterprises plan to spend more on IT resources and assets.

"A lot of the technology that has been put in place up to this point is a little bit stop-gap," Eagle said. "The next step will be those companies formalizing those [technologies] into their normal workflow."

However, 91% of organizations feel their IT systems are equipped to handle new policies resulting from the outbreak.

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The largest sources of IT spending in the sector are going toward purchasing mobile devices such as phones, tablets and laptops to make it easier for employees to work from home. Survey results indicate that 43% will invest in employee communication and collaboration technology, 37% in mobile devices and services, 32% in bandwidth and network capacity, and 28% in information security, among other tools. Eagle noted that companies with more than $1 billion in revenue "are way way ahead" of the others in terms of increased IT spending.

Eagle said the response signals that companies are investing a lot of money in making work from home programs work, and part of justifying the expense may result in reducing reliance on office space.

"Depending on how long this goes on, maybe it justifies permanently closing some offices," he said.

Virtual reality

The virus outbreak prompted scores of companies to implement travel bans, work-from-home policies, and limits on internal and external meetings. Many of these policies could remain in place long term or permanently.

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Virtual channels may become the new norm as companies implement policies and IT investments not just for the next 12 weeks but potentially the next year or two in the event of a rebound of the current outbreak, said Sheryl Kingstone, customer experience and commerce analyst with 451 Research, in an interview.

"We do not know if this is going to turn around and come back," Kingstone said. "It may not be as bad, but we still have to be prepared again for the second and third and fourth wave until we figure out a way for the vaccine to come out."

Rapidly evolving situation

More than half of respondents thought the coronavirus public reaction was a strong or slight overreaction. Still, the survey results could be more severe in future surveys planned by 451 Research in the coming months, Eagle said.

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Eagle noted that the survey was done as the crisis escalated, including the U.S. declaring a state of emergency and the World Health Organization declaring the outbreak a pandemic. Responses shifted significantly between the earliest group to complete the survey on March 10-11 and the latest on March 18-19, Eagle said. The portion experiencing increased IT strain roughly doubled from 24% to 43%, while groups seeing a loss of customer demand rose from 22% to 40%.

"Some of the people took the survey when they were deciding to send people home," he said.

Additional insights from The Voice of the Enterprise: Digital Pulse, Coronavirus Flash Survey March 2020

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