How technology can make your company more economically resilient
While Australia managed to successfully evade the last global recession, it may not be safe yet. The International Monetary Fund recently predicted a “bumpy ride” for the global economy in coming years due in part to the downturn in China’s economy. Considering China is one of the country’s top trading partners, Australian businesses would be wise to do whatever they can to ensure resilience should a recession occur.
So what role does technology play in economic resilience? Investing in tech can help businesses improve efficiency and cut costs all while keeping a focus on long-term innovation.
Reducing customer defections by 5 per cent can increase profits by 25-85 per cent.
Streamlining IT needs
With so many IT options available for multiple functions, businesses should analyse their IT needs and find technology that incorporates them into an efficient package. Entrepreneur recommends streamlining business technology by using web-based accounting software with automated invoicing features, for example.
Furthermore, as highlighted by allBusiness, a company’s focus during a recession should be on its bottom line and businesses should seek out technology that will attract and retain their customers.
Customer retention itself is a strategy businesses should look to when preparing for a potential recession. According to a study from the Harvard Business Review, reducing customer defections by 5 per cent can increase profits by 25-85 per cent, instead of trying to attract new customers in a potentially difficult market. Having an easy-to-use and efficient software system for customers to interact with might help retain them when times get tough.
Cut operational costs
Increasingly, human resources departments are simplifying their roles and cutting costs by outsourcing HR tasks to external services. A study by the Society of Human Resource Management found that 56 per cent of HR professionals using outsourcing are doing so to reduce operating costs. According to the study, common HR functions such as payroll administration and recruitment are being outsourced at least partially by 48 per cent and 30 per cent of respondents respectively.
By using outsourced technology to aggregate the various aspects of human resources, HR departments are able to save on costs associated with time-consuming areas such as training and hiring. Indeed, a recent report from Penn State suggests that American companies used technology in their HR departments to cut costs and survive the latest recession and that HR technology is here to stay.
“It is also likely that technology will remain entrenched in future human resource processes,” says Elaine Farndale, an associate human resources professor at the university. “With the capabilities and possibilities of technology, combined with the economic growth, we are seeing a shift in the way that HR will be carried out.”
Keep investing in innovation
Finally, while the threat of recession may prompt some companies to avoid looking into innovative strategies and technologies, carefully investing in innovation can actually help businesses survive.
When economic times get tough, it can be tempting to buckle down and focus on the bottom line while avoiding trying to find new ways to do things. Because many companies do think like this during a recession, innovation throughout this time can be what sets a business apart and what primes it for even further success once the downturn is over.
Innovation accounted for 51 per cent of labour productivity growth between 2000 and 2008 in the UK.
A UK report on innovation recently revealed that, according to the Nesta UK Innovation Index, innovation accounted for 51 per cent of labour productivity growth between 2000 and 2008, 19 per cent of which was entirely due to investments in intangible assets including training, software and marketing. According to the report, these ‘intangible assets’, as opposed to direct investments into research and development, are what improves innovation on a broader level.
By investing in productivity software, businesses can ensure that they are cutting costs while also investing in long-term innovation – a recipe for success no matter what the economic climate.