A data-driven journey exploring how the corona pandemic spurred digitization and hybrid work models now and in the future.
Presenting under the title “Digitization Booster?”, our CTO Klaus Unterkircher had the chance to take the audience of the INTACT Summit in June 2023 in Vienna onto a data-driven journey to find answers to these questions:
What was the impact of the pandemic on digitization?
Which changes and trends have come to stay?
What is the present and future of (digital) work? Is the hybrid work model the future for office/knowledge jobs?
What are the risks and opportunities of the digitization for the audit and certification sector?
Although the presentation was delivered to an audience representing the audit and certification sector, we think it contains valuable insights for any business that wants to leverage digitization for their growth and positioning as an attractive employer – and maybe wants to be audited and certified for their efforts. Let’s dive into the insights of the presentation.
The General State of the Digital Transformation
A survey conducted each year between 2020 and 2022 asked executives and high-level IT managers about their priorities for IT technology initiatives. Each year, digital transformation was on top of their mind, even before cybersecurity, pure migration to the cloud, and improving customer experience. However, the 2022 edition of this survey revealed that more respondents than before considered each of these subjects a high priority, with another subject joining them: the business value and growth potential of technology.
IT Spending Is Constantly Growing – But Also Changing Focus to the Cloud
It is no surprise that with all these focus areas – that are often intertwined – IT spending is on the rise. However, there is also a shift in what IT budgets are being spent on. Since about 2015, there has been a shift from allocating IT budget on hardware to allocating it to software and services. The former doesn’t experience growth in IT spending, notwithstanding the temporary boost in spending on IT devices during the pandemic. Instead, the latter is taking an ever larger share of global IT spending.
The reason is that most approaches to digital transformation involve cloud solutions in one way or another. In a global survey by Forrester and IBM, only 36 % of IT decision-makers wanted to focus on repurposing existing on-premise solutions or building new solutions internally from scratch. The other 64 % preferred to focus on extending their solutions into the cloud or completely replace them with cloud-hosted solutions and services. That is also well-documented by the fact that the public cloud is the leading deployment type of IT infrastructure.
The public cloud is also the foundation for the most popular cloud services such as Software-as-a-Service: this kind of software deployment is gaining more and more popularity and replacing traditionally hosted software, as it is often more suitable for the remote work and hybrid work environments of knowledge workers. An example of this shift is the rise of cloud-hosted collaboration software such as Figma and Miro.
In short: cloud-based IT is outpacing traditional IT.
Often relying on the cloud, data analytics and AI solutions are also on the rise. Most IT and business decision-makers already see measurable value from their data and analytics investments. We can expect the same for AI solutions that likely facilitate the biggest productivity boost in our generation. The AI market is still in its infancy – despite the recent hype around ChatGPT. Various studies estimated that the global AI market size doubled from 2021 to 2023. Analysts expect it to double again every two years.
Hybrid Work Is the Future
Working arrangements have shifted dramatically, practically from one day to another when the COVID-19 pandemic started. But what are the preferences for hybrid, remote work, or office set-ups worldwide in 2022? A study by Cisco revealed that in every surveyed country, the majority of office workers preferred a hybrid or remote work model.
Even though in many surveyed countries there is still a sizable minority of employees that prefer to work from the office, they need to work together with those that choose to go hybrid or remote. And so, real-time communication, no matter where – in the office, on the road, or at home – has become the new norm.
It is no surprise that digital collaboration tools such as Figma and Miro have become more popular. And more and more meetings are being held online with tools such as Microsoft Teams, Slack, Google Meet, and Zoom.
Benefits of Enabling Hybrid Work
Companies that set up their IT and communication infrastructure to support all work models gain several benefits. A study in 2022 by HP Inc showed that these companies enjoy:
Increased productivity and flexibility
Higher employee satisfaction and retention rates
Higher business continuity capabilities
Higher operational efficiency and lower cost
Being a more attractive employer
Challenges of Hybrid Work Models for Organizations
The same HP Inc. study also mentioned challenges in enabling hybrid work from a company culture, operational, and technical point of view.
With regards to company culture, the biggest challenges are how to integrate team-building activities and employee support and training into a hybrid or remote work model.
The biggest operational challenge is the maintenance of the technology that enables hybrid and remote work. Some of these maintenance issues include, for example, procurement of additional hardware for employees, setting up a VPN for remote access to the company network, or setting up remote desktop infrastructure.
Another operational challenge is adapting the work processes to a hybrid work model. How to create or revisit a work-from-home policy is part of this challenge and may include various regulations to consider: from tax and social security regulations to environment, health, and safety regulations.
In addition, companies worldwide reported that with remote working, the amount of cyberattacks has also increased. As a consequence, more budget has been allocated to IT security initiatives. All that comes on top of the challenges in their digital transformation initiatives that enable hybrid work and higher productivity in the first place. Lack of skilled staff, legacy systems, and post-pandemic cleanup are major obstacles for many companies.
The digital transformation and hybrid/remote work models are intrinsically linked. The pandemic accelerated the digitization process, making it a top priority for businesses across various industries. IT spending has shifted focus from hardware to cloud-based solutions, which have become integral to digital transformation efforts. Cloud solutions, data analytics, and AI technologies are gaining momentum, showing measurable value and productivity boosts.
These IT trends are the technological foundations that support a mix of remote and in-office work that is sought after by the majority of office workers. Digital collaboration tools have become essential to facilitate communication and teamwork in this new work landscape.
Despite the benefits, enabling hybrid work poses challenges, including adapting the company culture, addressing operational and technical issues, and enhancing cybersecurity measures.
Overall, embracing digitization and adopting a hybrid work model opens up opportunities for growth and positioning as an attractive employer in the evolving business landscape.