From 2020 to 2021 the world changed.
In early 2020, companies were mothballed and economies suffered as a result of the overall lack of demand for products like white goods, electronic components, aerospace parts, and so on.
And towards the end of 2020, the opposite happened. The whole supply chain has been pared to the bone, with everyone scrambling for materials, both raw and tertiary.
Car manufacturers struggled to get hold of parts, and PC & hardware companies could not get hold of enough microchips (and still cannot to an extent).
Managing Director, Xynomix
Add in the Suez canal blockage which cost global shipping around £7bn per day(!), and Brexit-related supply chain issues, and it’ll likely take at least another year for us to get back to pre-covid inventory levels – if not longer.
Thus, I believe we will have galloping inflation. It’s actually already here, which in turn leads to pressure on Governments. The big question will be what they do with the underlying interest rates.
If they raise them, it will hurt a lot of businesses.
How has Xynomix Fared?
Our bookings were significantly down between April and June 2020 as people adjusted to the uncertainty created by the pandemic.
But as a niche IT services company specialising in managed database services, we’re fortunate enough to have been resilient throughout the pandemic. After all, nothing works without a database – no supermarkets, deliveries, e-commerce , stock control, holidays, online banking, no Amazon, Netflix, and so on.
And, as of April-May 2021, we were thrilled to see our bookings return to pre-covid levels, with our 3-6 month forecasts indicating a significant increase in demand for services. All very encouraging.
Our engagement has certainly shifted significantly. For example, the demand for cloud technology has seen an increase from 25% to around 80% of all our new enquiries. Many existing projects have since been altered in order to include a cloud solution too.
The Importance of Proactive Management
Ultimately, regardless of the surrounding market, it’s down to the management team to prepare, change where necessary, and ensure that their company is adaptable.
I don’t think anyone had a pandemic down as the biggest risk to their business at the turn of 2020. However, it happened and businesses have had to adapt. It was, admittedly, more straightforward for us to do as a tech company, but it still presented significant challenges.
My point is that some companies are incapable or unwilling to adapt. And it’s these businesses that won’t survive.
Look back to Blockbuster – a video rental store that, when faced with the challenge of streaming, refused to adapt. They even turned down an offer from Netflix to merge. Blockbuster is no more and Netflix is a $30bn company.
Other businesses that suffered from poor management include Nokia, Blackberry, Kodak, Sun Microsystems, Toys ‘R Us, Yahoo, and even DHL to an extent (previously world leaders until Fedex and UPS). The list goes on.
But there are success stories.
Take the Marvel brand, for example. In 1996, Marvel Entertainment Group filed for Chapter 11 bankruptcy protection following market saturation woes and mismanagement. Following a range of calculated business risks taken in the early 00s, and Disney’s 2009 buyout of the Marvel property for an eye-watering $4.3bn, the Marvel Cinematic Universe alone has grossed almost $23 billion.
Other high profile disruptors in industry include Lidl, Aldi, Tesla, Airbnb, Uber, Deliveroo, Brewdog and, of course, a little known online storefront called Amazon. All of these companies challenged the norm, exploiting gaps in the market.
The point is this – companies come and go depending on management’s ability to adapt. Lockdown has shown that, even in adversity, new jobs and companies can still boom. The food delivery industry has grown exponentially – as have video call software businesses like ZOOM.
What Does the Future Hold?
I’m optimistic and hope that we’ll see a positive economic rebound in the UK. As places open up again, people will have places to spend their cash – improving local and national economies in the process.
And with a higher vaccination take-up, with a steady unlocking of the country, there’s a greater chance of us achieving herd immunity from COVID, instilling more consumer confidence.
Hospitality and the High Street
I would imagine that spending on hospitality will go through the roof. However, with companies adopting flexible working and more people working from home, bars and cafes that were abundant in the city, will need to innovate or die due to less footfall.
But despite this, there will be opportunities in the suburbs for new cafes and bars…. Lets face it, people will still want coffee and cake! If cafés and bars get it right and implement technological solutions (apps, for example), they can cut costs on serving staff.
Councils have a part to play here by undoing the damage done to small towns as a result of making them car-free or pedestrian only. If consumers don’t visit, they can’t make purchases. Even pre-covid, plenty of small towns in the UK are in need of redevelopment.
With the new world we’re in, let’s make the high street more easily accessible by car so that people can pop to high street shops and get in-and-out far more easily.
I am also thinking there will be an ever bigger demand from the younger workforce to drive changes in work life balance. Nobody wants to go back to an hour commute each way.
Someone I know who runs a firm of accountants has decided to sell 80% of their property, instead just using meeting rooms. This has led to more cases, better throughput, lower expenses. Just another example of management adapting to the changing nature of work.
Interestingly, our own internal questionnaire showed that the majority of the respondents wanted a return to the office, averaging 3.5 days/week. So there is a demand for office life. However, we are a more aged workforce than most, due to highly skilled people with an average age in the late 40s.
On the whole though, there will be a massive swing to digitisation, online, and automation. And we’re seeing this pan out in the requests from customers and prospects.
Andy Elcock is Xynomix’s Managing Director. When he isn’t providing expert database consultancy to our customers, you’ll often find him fishing or cycling.