It goes without saying that the COVID-19 pandemic has wrought changes few could have predicted. From a corporate perspective, some of the tangential impacts of the pandemic have been unexpected — and unexpectedly acute.
When it comes to digitalization, COVID has been a transformational force. As many organizations pivoted — in some cases, literally overnight — to virtual working, corporates were compelled to “walk the talk” on digital transformation plans that may have been in discussion for years.
COVID-19 and Digital Disruption
Christa Steele, board member with OFG Bancorp, summarized it nicely in an episode of Diligent’s Inside America’s Boardrooms podcast, noting that at the start of the pandemic: “those two buzzwords, digital disruption went completely out of the window, but at the same time, digital disruption went on steroids” as companies scurried to enable remote working.
It may have been publicly off the corporate agenda, but companies were living digital transformation in practice. A McKinsey survey carried out at the height of global lockdowns in 2020 found that companies had accelerated the digitalization of their customer/supply-chain interactions and internal operations by three to four years.
The Risks of COVID-Driven Digital Transformation for Businesses
As corporates, public bodies and education all switched to remote operations, digital transformation took instant effect. And while today’s high-tech capabilities made this eminently possible, the change wasn’t without its cyber risks.
Organizations needed to swiftly resolve the cyber-security challenges that resulted from home-working, which fell into several buckets:
- Security risk: The greater the element of digitalization in our approach, the greater the cyber-security risk it entails, whether this is via distributed denial-of-service attacks, loss of hardware or the risk of threat actors gaining access to company-confidential information. Even something as simple as conducting board meetings remotely opens your organization to the risk of strategic documents being compromised if you don’t choose reliable and highly secure platforms to share information.
- Technology risks: Employing sub-optimal technologies not only exposes your business to the security risks we’ve detailed but can threaten the integrity of the data you rely on to manage other business risks or, fundamentally, to run your operations. Decisions made under pressure can lead to poor choices; getting the right solutions to support your digital transformation efforts is essential.
- Supplier risks: Again, uninformed decisions made at speed can have an impact here. It’s vital that you invest time in selecting a Software as a Service (SaaS) provider you can rely on.
The Importance of Data in COVID-Driven Digital Transformation
Christa Steele believes that in tandem with this shift to digitalization, data has become an increasingly valuable commodity — more valuable than intellectual property. Corporate interest in how data is being used, both internally and externally, is at a premium.
Today’s organizations exist in a world of “hyper transparency,” where every action is under the spotlight. This is particularly true in the context of environmental, social and governance performance, something thrown sharply into the spotlight before and during the pandemic.
As companies move from shareholder and investor management to broader stakeholder engagement, they can use data to leverage all their relationships, from those with vendors to customers and employees.
Digitalization is again central here, enabling smooth and instant virtual interactions with all parties. And again, the inescapable cyber risk is ever-present.
COVID Has Accelerated Digital Transformation — But Boards Need To Remain Focused
When we explore digital transformation, COVID’s impact is undeniable. The COVID-19 pandemic accelerated digitalization faster than anyone could have predicted, bringing with it both opportunity and risk.
But while boards talked about COVID and acted on digital transformation, the underlying business risks remained. The megatrends of growing social activism heightened geopolitical risk, and social media-driven hyper transparency didn’t disappear when Covid-19 took over the corporate consciousness. They all remained present — and in fact, some were magnified by the pandemic.
Cyber risk and digitalization are immediate priorities for organizations and their directors. But future success demands that boards also focus on strategic imperatives like corporate structuring (M&A or IPO activity, for instance) or ESG performance.
Make the Right Decisions on Digitalization
In terms of digital transformation, COVID-19 may have propelled you to act faster than you’d planned. It may have pinpointed failings in your current digitalization strategy. Or it may have made you realize that you need to take action to match the digital transformations of your competitors.
Whichever path you are on, making the right decisions on digital solutions and strategies is key. If you want to advance your digital transformation progress, Diligent’s technology roadmap, Building the Optimal Future of Work, will be useful. It provides a clear roadmap for action, enabling companies to deliver tangible actions on digitalization. Download your copy here.