What will the tech sector look like after the COVID-19 crisis passes? Who will be the winners and losers? Silicon UK spoke with experts in their fields to gain their insights.
As the COVID-19 crisis continues, thoughts turn to what the business landscape may look like after the crisis passes. For the tech sector in particular, which often includes companies with global footprints, the lockdown the world is currently experiencing, is damaging these enterprises abilities to access the services they need to operate efficiently.
Research from Tomorrow, Tech London Advocates is stark in its assessment: More than 50% of London tech businesses will be prioritising survival in the next three months and 49% are anticipating that COVID-19 will threaten the viability of their business or employer. All in all, 75% of respondents believe that tech companies have a central role to play in the fight against COVID-19.
Russ Shaw, Founder, Tech London Advocates, says: “The London tech community has weathered a great deal of uncertainty throughout Brexit negotiations and elections, but unfortunately this looks set to stay. Tech businesses in the capital, and in particular early-stage start-ups, are fearing for the worst, so it’s crucial that the industry collaborates and shares resources to sustain its global status in the long-term – that’s what the TLA Resource Hub is trying to achieve. The Chancellor has already announced landmark legislation, but it’s important that support reaches tech firms quickly to sustain the fastest growing sector of the UK economy.
“However, the crisis also provides an opportunity for our innovative tech companies to step up and work with Government, public services and society at large, to mitigate the impact of the virus. Whether HealthTech to support the NHS, enhancing workplace tools and network capabilities, or cybersecurity solutions that protect citizens against the threat of disinformation, the tech sector will need to be as creative and resilient as ever to safeguard itself and the broader digital economy.”
Silicon UK Insights
As the business landscape is rapidly evolving as governments roll out more support packages to bolster businesses through this period of uncertainty, Silicon UK wanted to discover what a select group of commentators believed the tech industry may look like post-COVID-19.
Andrew Duncan, Partner and UK Head at Infosys Consulting [AD]
Prof. Mark K. Smith, CEO and Founder, ContactEngine [MS]
Alex Theuma, Founder and CEO, SaaStock [AT]
Achim Weiss, the CEO of IONOS [AW]
Anders Borg, Senior Advisor, IPsoft [AB]
Justin Cooke, Chief Content and Partnerships Officer, FutureLearn [JC]
Hugh Campbell, Co-founder and Managing Partner, GP Bullhound [HC]
Ben Bennett, CEO, Luminous Group [BB]
Andy Ross, Co-founder, Gravity 9. [AR]
What will the tech sector look like post-COVID-19?
[AD] Once the dust has settled, and we get through whatever disruptions this pandemic brings, I expect the technology sector to thrive. According to the 2020 Budget, the UK already has plans to invest heavily in innovation, with the promise of huge investment in UK R&D. This will be further exacerbated through the technology issues companies are experiencing right now; the current crisis will further shine a spotlight on organisational preparedness and the need to have the latest tools, capabilities and security in place to enable a distributed workforce to prosper.
[MS] It is likely to lead to major innovations that are all tech-enabled, home working was still niche, up to, ahem…. 3 weeks ago. Prejudice against skiving ‘oh he’s working from home’ today was always ridiculous – home working where casual interruptions are minimised has been my preferred way to work for decades.
But the innovations I am seeing from my own business have been remarkable – proactive communications (for that is what we do) to customers to make sure they are okay for appointments and deliveries and so on, together with making sure that colleagues are fit and well, has dramatically increased.
Smart NLU seeks out words people use to describe how they feel have already been coded into our own automated AI. There are also other innovations that play to the ‘newly recovered’. As the science shows that people, once exposed and recovered, are immune, it plays to those people becoming the front line in dealing with the ill or swopping out yet to be infected colleagues in customer engagements. This is all a tech play with geolocation and all sorts of tech wizardry.
[AB] The UK’s start-up tech scene will take a hit in the short term with layoffs and halts to funding, but we will see a wave of new businesses focussed on e-commerce, healthcare and gaming – all sectors likely to grow as social distancing restrictions redefine how we spend our time. Ultimately, the UK tech sector will remain strong and will play a vital role in helping put the UK economy back on track following the pandemic.
[JC] The bottom line is, as these fundamental societal changes to the way we work and learn quickly become the new normal, it is highly unlikely that they will be reversed once the dust has cleared. Post-COVID-19, the world will need to continue adapting and learning new skills out of necessity, meaning new demands will continue to be placed on how we train and reskill and how we deliver education at scale. Edtech will continue to be at the heart of the solution.
Who will be the winners across the tech sectors as a consequence of COVID-19?
[AD] Post-COVID-19, we expect to see a rise in cloud computing, as the ability to offer flexible and collaborative working becomes more important than ever in the shift to home working. However, nearly two-thirds of organisations still see security as the biggest challenge for cloud adoption, and this isn’t going to let up as attackers look to exploit any weaknesses amongst the current disruption. I anticipate that cybersecurity solutions will thrive in the foreseeable future, particularly advanced tools that use machine learning to analyse patterns and take a proactive approach to prevent breaches.
Also, COVID-19 may well be the black swan event that finally compels companies to transform their global supply chain model. Business leaders will need to look at how new tools and technologies can provide greater intelligence and build greater resilience into their supply chain against future disruptions. I expect a huge investment in platforms that support applied analytics, artificial intelligence and machine learning to mitigate risks from these black swan events.
[AT] Any startup that left it late to seek funding and doesn’t have enough runway to survive this period. VCs are now really focussing on their existing portfolio companies. We are hearing of them pulling term sheets. If a startup was forward-thinking enough to raise in advance, they will be fine. But if they were just on the cusp of getting investment now and they don’t have enough runway to survive that investment being delayed, this will have an impact. We could see the number of startups shattering because they have run out of money.
[HC] Whilst the surge in the use of work-from-home software like Zoom, Microsoft and Slack might subside, they have impacted the way people do business on an international scale. Zoom alone has seen a 40x increase in revenue and doubled the intake of new customers. Home entertainment platforms like Ubisoft, Tencent, Netflix and Spotify have also naturally had a surge and have affirmed the rise of subscription-based models. Companies like Amazon, Alibaba and PayPal will also likely come out well as people increasingly look to paying online. As was the case in 2008/2009, the large cloud players will continue to hire and be dominant given their scale, including Google, Amazon, Microsoft, Salesforce, Zoom and Slack.
Has the contingency planning the tech sector had in place proved to be strong enough?
[BB] I don’t think anyone has a contingency in place for such a drastic change like a countrywide lockdown. However, most tech companies have very quickly adjusted to this new way of working and many have even embraced it. This may lead to greater productivity and more flexible working across the sector. For us, it’s the little things like access to passwords, or critical documents that have caused a problem, or if a server crashes having someone who can physically go in and reboot it.
[HC] For many leaders in the technology sector, this is their third or fourth crash – so, yes, many of them have seen it before, have robust contingency plans as well as cost bases that are fit for purpose and not too bloated. Many companies in the sector have managed to adapt well in the current circumstances by being able to repurpose their technology.
Ravenpack has just launched a completely new service, their COVID-19 sentiment analysis engine, in just a matter of days – just one company showing the resilience and creativity within the sector. We have also seen many examples of tech manufacturing companies, such as Dyson and Mercedes, collaborating with the health sector to manufacture ventilators. This shows the robust systems in place to be able to adapt when the going gets tough and make a positive change rather than collapse under the difficult circumstances.
Has COVID-19 revealed hidden weaknesses in the communications infrastructures the tech industry counts on to function efficiently?
[AW] All in all, both telecommunications and cloud services have proven very robust during the COVID-19 crisis. On the telecommunications side, data volume has increased much less than expected – only spikes that usually occurred in the evening now appear during the daytime. Data usage in mobile networks has not seen a huge increase at all, as most people working from home use their DSL or fibre connection for their work.
The one challenge that both tech companies and many other industries initially faced is that even with the increase of flexible working policies, hardly any business was prepared for 100% of the workforce to work remotely.
[HC] The technology provided by Zoom, Slack and Microsoft has proved to enable a business to continue if not as usual then certainly to adapt well to the current situation. I think it has been amazing how well the infrastructure has coped with the enormous surge in demand 24/7 – just think of the growth in video calls in the UK after schools migrated from face to face lessons to Google Classroom or Microsoft Teams. Of course, there are some outages but far less than I was expecting.
Will COVID-19 change what it means to be a CTO?
[BB] There will be a lasting impact on how we work, with a transition to more working at home and hot-desking and, making office spaces a place to collaborate with different teams. We could even have different teams in on rotation or different weeks which would reduce overheads.
[HC] The best CTOs have always had a strong sense of what the business and ultimately the customers really want to buy. This tougher climate will require productivity in the R&D teams to improve and those CTOs that have developed a strong team culture will prosper. Looking after distributed teams is always difficult but it is more important than ever as a CTO to lead with a strong sense of EQ as well as the traditional high IQs that many of them already possess.
[AR] This crisis will further raise the profile of CTOs, as technology and the delivery of a digital first strategy will be the key to securing the health and success of their organisation. Part of this will involve risk and crisis management to improve business resilience in the face of adversity. Given the globalised interconnected world we live in, the modern CTO’s remit will be to consider threats and opportunities on a global scale, rather than be limited to those of their respective industry. Afterall nobody saw COVID-19 coming and only the best prepared have been able to recover quickly.
There will also be the need to effectively manage the “new normal” of distributed and remote working. This will take a lot of planning and organisation to make it work but also the buy-in of senior management to ensure that these working practices are respected internally, and not perceived as being unprofessional or unproductive. It is a lot to ask and will be a challenge for even the very best CTOS. The good news is for those who pull it off, the position of CTO will have even greater status within an organisation.
Photo: Juhasz Imre from Pexels.