Q1 2020: COVID-19 triggers “watershed moment” for remote working

Strict rules aimed at slowing the spread of COVID-19 have forced millions of people around the world to work from home in recent months. Although flexible working has in many ways already become the “new normal”, the pandemic and ensuing government restrictions in many countries has taken this to unprecedented levels. 

Companies have had to adapt at speed and scale; ensuring that all necessary IT systems, hardware and protocols are in place has been “mission-critical to sustain business”, an industry expert told Third Bridge Forum. Albeit temporary (though the exact duration remains unknown), the dramatic uptick in remote working has had a range of knock-on impacts within businesses and across the broader technology industry. Many commentators also believe it will fundamentally change how vast numbers of organisations operate in the future. “If you look at what’s happening now, this is going to change the way American corporations, and actually on a global basis, work in the future,” one expert said. Barclays’ CEO reportedly said last week that having thousands of workers in big city offices “may be a thing of the past” as the bank rethinks its long-term location strategy.¹https://www.bbc.co.uk/news/business-52467965

In recent weeks, though, the focus has been on responding to an emergency situation — technologically and culturally. Companies and businesses of all shapes and sizes have been affected, with some harder hit than others. Many were already set up to support large-scale digital ways of working, with “WFH” part of their organisational culture. For others with tighter IT budgets and fewer resources, gearing up for the new rules has been more of a scramble — but in some cases an illuminating one in terms of what can be achieved. As noted in another Forum Interview, fully equipping an individual with a laptop, software and any other necessities could cost USD 1,000-plus per employee.

Regardless of preparedness, one expert anticipates long-term projects across the board will be put on the backburner — not just for the duration of the crisis but as companies begin to ramp back up and refocus on their core activities. “I can see organisations that were either contemplating or about to start some large ERP-type implementations, core system implementations, I can see those being stalled and rethought,” he said. Security spending, however, should be largely insulated from cost challenges. In fact, Forum Interviews point to “a little bit more sophistication” in how companies are using VPNs, including migrating workloads to the cloud. This has been a recurring theme across Forum Interviews in recent months, with companies increasingly adopting cloud-based services for a host of reasons including to reduce overall IT spending and streamline their operations. Google Cloud Platform (GCP) has been gaining market share and is currently the third most dominant player in the fast-growing cloud market, with Microsoft Azure and Amazon Web Services rounding out the top three. 

On the security side, the pandemic could see identity management and authentication as “quite hot in terms of investment” as companies seek to ensure they can verify both their employees and clients. As another specialist warned, this is an opportune time for hackers: “There are 16,000 new ransomware viruses that hackers release every single day,” he said. “This is going to be a great opportunity for them, unfortunately, to prod and explore the vulnerabilities of companies that are working from home.”

Demand for communication technologies for work and leisure has, unsurprisingly, soared during the COVID-19 crisis. But as one expert told Third Bridge Forum, this is an area where many companies are constantly trying to reduce costs by negotiating with suppliers and evaluating different tools. “The market is definitely consolidating on tools,” he said. “I would say, in the last three weeks, because of the virus, things have changed drastically, including how everything is really shaping up for the video industry.” 

US-headquartered Zoom has been doing particularly well, although it has experienced some teething issues around security and privacy in recent weeks. The company reported Q4 2019 total revenue of USD 188.3m, up 78% YoY,²http://www.globenewswire.com/news-release/2020/03/04/1995406/0/en/Zoom-Video-Communications-Reports-Fourth-Quarter-and-Fiscal-Year-2020-Financial-Results.html while its share price has been on a strong upward trajectory in the past six months, and particularly so since February. The app has been lauded for being easy to use and, in terms of market share, one expert believes it has the greatest ability to win business from legacy players like Webex and GoToMeeting. This is not to say that GoToMeeting and Webex will not experience growth. “… I’m just saying that Zoom is growing faster and they’re grabbing the premium customers,” he said. “Anyone that has the budget to buy a video conferencing tool is buying Zoom. However, Zoom faces a tougher battle against Microsoft given that Teams is now included in most Microsoft licences. Although this period of intense remote working could “turbocharge” the growth of Office 365 and Teams, it’s “more of a two-party solution versus just one”. One expert highlighted that businesses are choosing Zoom as their video and conferencing provider but using Teams for collaborating and file sharing. 

It is clear that responding to COVID-19 has accelerated many workforce trends already underway. Companies that might have taken a year or more to think through how they would implement remote working have addressed this need in a week or two. Once the situation normalises and everyone has returned to work, our research indicates that levels of remote working could increase by 25% to 30%. Many companies may also embrace a “different profile of operational expenditure” to drive cost synergies, with a heavier focus on technology. In fact, some will come through the COVID-19 crisis having already started to generate efficiencies from adopting a more digitally-savvy and security-conscious mindset. Indeed, this is “a watershed moment”, according to one specialist. However, he believes that “the potential upsides will be much greater after the crisis passes.”