Fortune favours the bold..

Fortune favours the bold..

As many businesses struggle through this downturn I feel very fortunate that Acclimation and our employees have remained unaffected to date. I think this is due to a combination of factors, including being in the midst of several large-scale implementations and projects that have rigid go-live dates. We have also been fortunate in the sectors within which we are operating with many of our customers in logistics, energy, government and grocery sectors, all of which remain strong during this time.

In the last six months we’ve commenced three medium-to-large S/4HANA projects and seen many projects gated by companies wanting to take advantage of  key people during this slower period. We are seeing companies looking to be agile and ready for opportunities to be revealed as an inevitable market-share reshuffle will favour the prepared. Acclimation is also in this category and we are actively planning towards potential opportunities and new areas to service.

 The current global crisis has afforded many businesses significant downtime. We’ve seen many customers using this opportunity to start undertaking projects that were too large to implement during BaU. Projects are being brought online earlier to help companies be more competitive, position themselves better for return, and be more prepared for potential market changes post pandemic. Others are in a holding pattern while maintaining focus on building liquidity. I believe the former will be more successful and will allow efficient transition when the time comes. 

Hershbein and  Kahn (2018) published a comparison of more than 100 million online job listings posted from 2007 to 2015 with economic data to see how the Great Recession affected the types of skills employers were looking for. They found that the U.S. cities hardest hit by the recession saw a greater demand for higher-order skills including computer related skills. In those hard-hit areas of the US, companies also increased their investment in information technology, driving the surge in IT skill requirements in their job postings. 

Why do companies invest in technology during a downturn? Shouldn’t they be building liquidity? Economists theorize that it’s because their opportunity cost is lower than it would be in good times. When the economy is in great shape, a company has every incentive to produce as much as it can. If it diverts resources to invest in new technologies, it may be leaving money on the table. But when fewer people are willing to buy what you’re selling, operations need not be kept humming at maximum capacity, which frees up operating budget to fund IT initiatives without dampening sales. For that reason, adopting technology costs less, in a sense, during a recession. 

If you’re a decision maker and in a leadership position remember that while you’re in a ‘wait and see’ mode, one of your competitors is taking a risk that will make them first to seize opportunity. Fortune favours the bold.