Last month, Catchpoint’s CEO, Mehdi Daoudi, took part in episode 3 of the MIT Sloan CIO Digital Learning Series focused on the post-pandemic workplace and customer experience. Episode 4, which took place over Zoom on Wednesday, September 9th, picked up where last month left off with a candid discussion between business leaders, consultants and MIT academics about the ongoing challenges enterprise is experiencing due to COVID-19 and how business leaders and others are handling them.
Handling the Massive Overnight Shift to Work from Home
“When the pandemic hit, it meant moving 30,000 employees around the world into a work from home environment while keeping the company operational”, shared Dr. Aarti Shah, SVP and CIO of Eli Lilly and Company. “IT played a critical role in going from 7,000 simultaneous VPNs to 15,000 to 25,000 simultaneous log-ins. They did everything they could to strengthen our foundations and infrastructure to handle the load. We made sure there was daily monitoring of all our critical systems and platforms. We needed to ensure our employees were able to be productive and have a great online experience; there are already so many other stressors people are dealing with.”
The first panel led by Naomi Eide, Senior Editor at CIO Dive, kicked off with a frank sharing from enterprise leaders from Eli Lilly, Experian and Equinix about handling the massive overnight increase in the use of their company VPNs.
Barry Libenson, CIO at Experian, said they went from 2,000 to 20,000 employees VPN’ing into the company network overnight. The executive team was faced with the sudden challenge of “how to keep all 20,000 productive, keep systems up and running and ensure necessary collaboration tools were working.” For Barry, the experience demonstrated how good people are at rising to a challenge. “I don’t want to deal with it again,” he shared, “but these shifts have made us stronger and better. Now it feels like it’s business as usual again, but with much, that has changed.”
For Equinix, there was an added challenge of keeping essential employees at Equinix’s 250 data centers worldwide safe. “That meant putting precautionary measures in place to minimize the risk to the operational impact and protect the health and safety of operations teams”, said Mark Anderson, Senior Director of Solution Architecture (EMEA). This urgent work took place while the exec team simultaneously worked to ensure other teams working from home were able “to do everything they normally did, but in a new way”. Sales teams were suddenly meeting with customers entirely online. The marketing team was changing its campaigns to 100% digital. Anderson explained that while Equinix has a phased plan for returning to the office, it continues to keep all its corporate offices closed and has postponed or virtualized every event through January 2021.
The Catchpoint 2020 CIO New Normal Survey showed that the experience of these three companies is far from unusual. The number of work-from-home American enterprise employees has swelled from one in four to three in four over the last six months. As lockdowns ease, two-thirds of the enterprises surveyed have announced plans to return workers to their offices. However, as with Equinix, this is by no means a return to the pre-pandemic normal. Of the 200 CIOs and work-from-home managers we surveyed, enterprises said they plan to have 42% of their workforce work from home at least part of the time. What “the new normal” or “the next normal” (a term moderator Naomi Eide introduced in the first panel) will be, remains a work in progress.
Fig 1: Results from Catchpoint 2020 CIO New Normal Survey
What will be the “Next Normal” for the Post Pandemic Enterprise?
At Equinix, Anderson said the pandemic had initiated “a forced test” of many things previously only discussed in theory. It leaves the colocation and data center giant now asking a series of questions about what the next normal could be, including, “If we make a workforce remote, what is the impact on productivity? Can we still meet customer requirements?” Can employees commute less? Can global travel be reduced moving forwards? Anderson stressed these questions were being raised not only to aim for a better work/life balance for employees but also “to use less of the world’s resources.”
In the presentation that kicked off the event’s second panel, Rodney Zemmel, Global Leader at McKinsey Digital, pointed to major shifts in B2B selling in the post-pandemic enterprise. B2B has been harder to digitize than B2C due to the multi-stakeholder process, Zemmel said, but the pandemic has rapidly accelerated a major shift to digital B2B sales and according to Zemmel, “it will represent a profound shift in how companies sell to each other.”
In our CIO New Normal Survey, this was also born out. CIOs and work-from-home managers surveyed said they expected face-to-face interactions to drop to approximately one third (37% compared to 43% pre-pandemic) and be replaced by Zoom, or equivalent, digital meetings.
Fig 2: Results from Catchpoint 2020 CIO New Normal Survey
How Can Enterprises Innovate When Tech Budgets are Forecast to Drop?
Forrester has recently predicted a steep tech downturn, Eide pointed out, anticipating that tech budgets are set to drop by up to 6% by 2021. She asked each of the speakers in the first panel to share how they were balancing the need to build flexibility into their tech budgets while striving to stay innovative.
Shah described the bind that Eli Lilly and many businesses find themselves in of seeing an increased demand for technology, analytics, and data, yet not being able to invest at the rate business is demanding because “it would break the bank”. She said this was forcing Eli Lilly to balance budgetary challenges with the need to support new business models, such as the recent explosive growth in telemedicine.
Libenson described a series of measures Experian had taken to make savings and prioritize its badged employees but said that, in fact, the company had been fortunate to avoid a worst-case scenario and had actually seen better business results during the pandemic.
At Equinix, Anderson said he hoped that overall in business, IT cuts were happening in areas that could “make the enterprise a more agile, stronger business in the future.” He highlighted the way in which this crisis had shown how many businesses still rely on supply chains underpinned by paper contracts. There is great potential, he urged, for organizations to think about optimizing the digital infrastructure around their supply chains.
In the second panel, MIT Media Lab Professor Alex ‘Sandy’ Pentland also talked about this, noting that governments and companies worldwide (he cited examples in Singapore and Switzerland) were creating new logistics chains using blockchain and other “forward-looking technologies” to build “more efficient and reliable systems to make themselves more resilient.”
Investing in People
One of the main themes that emerged from the whole event was the need for companies to invest in their people, helping employees navigate the impact of the pandemic and its associated stressors, including unplanned for homeschooling, health concerns, and the racial justice movement.
Shah described their employees as “the foundation of the house we stand on.” For Eli Lilly, “emotional and physical health and wellbeing are of the highest priority.” All three enterprises had put into place wellness initiatives, aimed at encouraging a healthy work/life balance. All three were also seeking ways to create space for dialogue around social justice issues in the workplace. Shah had initiated a series of supervisory discussions and panels to enable “uncomfortable conversations around racial injustice”, helping Eli Lilly “put interventions in place to make the company a better place and contribute to society” more broadly.
Anderson shared Equinix’ global mantra, “I’m safe, I belong, I matter” as being more than just words, but “touchstones that shape how things are done across the organization.” He said this set of values not only impacts current employee wellbeing, but also acts as a differentiator to attract top tech talent who are looking for a workplace that is “not just a place to build experience and draw a pay check”, but which allows them a space to be themselves and help move society forwards.
Three Categories of Enterprise: Thriving, Surviving, and Struggling
“We’ve only seen the beginning of this pandemic”, Pentland reminded the other panelists in the second panel. “We will see an enormous hit for any community that isn’t fully virtual or an owner of productive capital,” he said, describing the financial distress that has been provoking protests.
Sebastian Grady, President of Rimini Street, who also spoke on the second panel, shared the view “our human mettle has never been tested in the way it is today.” As the President of a company focused on replacing Oracle and SAP maintenance, Grady said he was concerned about what would happen to enterprises and the wider economy when the government stops supplying “such unprecedented levels of stimulus to the economy.”
Grady described his view that US companies were falling into one of three categories: (i) easily work from home companies that are thriving, such as Apple and Microsoft; (ii) companies in a stabilized mode, “most companies” he said are in this position; and (iii) companies that are in a “what can I do to survive mode”? All three categories are having to make decisions about priorities. “In the post-pandemic and pandemic enterprise, tough decisions are being made”, he warned.
In the Catchpoint CIO New Normal Survey, we also found “a tale of two enterprises” with some enterprises doing surprisingly well during the pandemic while others faring substantially worse.
Back to the second panel, James Manyika, Senior Partner at McKinsey, echoed Grady’s concerns. “Of all workers right now, only about a third have the luxury of working remotely. The rest of the workforce are having to show up someplace to work or can’t because their sector is shut down. CIOs are having to create a digital infrastructure to support workers in very different systems. The human picture is important to keep in mind. It has implications on two other things: as people work from home, the nature of IT architecture has had to shift.
What is the Role of Enterprise in a Two-Path Society?
In his role at the MIT Media Lab, Pentland has come to work closely with Mastercard. He asked what would happen to Mastercard if the small businesses they do business with go bust? If they are in trouble, the government is in trouble too. For their own good, Pentland said, companies “need to think about how they can build a broader base in socioeconomic terms for what they do.” He described how companies in other parts of the world have developed strategies for reaching out to small businesses and individual companies that are “more nuanced and higher trust than just advertising.”
Pentland equated the current era of “a two-path society” to that just after World War Two, another time with “high debt and destruction everywhere. A lot of the answer came through enabling communities to control their future to build out the infrastructure they needed”, he said. “I hope that happens now.”
Look out next month for our Event in Review writeup of episode 5, which will involve business leaders from Slack, Adobe, Packet, and others discussing digital transformation with MIT academics.