How tech companies can stay agile in an uncertain world

(Second of two parts)

Technology companies are stepping into a new era of uncertainty as they develop their global operational models. Decisions on sourcing, supply chains, product and service manufacturing, and distribution are impacted by the accelerated changes affecting complex economic, political, and regulatory changes in the larger corporate environment.

To better understand the additional risks and challenges that technology companies must deal with, EY undertook a global research study with 750 technology executives to help consumers comprehend what technology companies must do to flourish in a changing environment. Moreover, the EY Global Technology Sector team supplemented the findings with additional insights and recommendations.

In the first part of this article, we discussed how technology companies need to withstand uncertainty, address critical regulatory issues, optimize their supply chains, and choose the right operating model.

In this second part, we continue by discussing rethinking the workplace, focusing on continuous change, ensuring worldwide compliance and reporting, and adopting ESG commitments.

RETHINKING THE WORKPLACEInertia and uncertainty are frequent obstacles to change. In a recent EY return-to-work study, roughly 54% of employees worldwide shared that if they were not given sufficient flexibility in where and when they work, they would think about leaving their jobs after COVID-19.

Because of this, executives in almost all of the surveyed industry sub-sectors regarded employee satisfaction and well-being as the most crucial factor. Tax and other statutory requirements were ranked as having the highest priority by FinTech executives, followed by the capacity to access or manage labor and skills and employee satisfaction and well-being.

When redesigning work, important factors to keep in mind include:

• Examine what new opportunities will arise as a result of the new, more collaborative ways of working and how roles may alter as a result.

• Check to see if the organization’s new working methods complement its mission, culture, productivity, and performance.

• Determine how much space is needed and how it will be used, while making accommodations for at-home workplaces and technological enablement.

• Consider the ramifications for payroll, regulations, corporate taxes, international employment taxes, and cybersecurity before making decisions.

Technology businesses claimed they are also taking steps to address the evolving nature of work. Talent is an essential resource for the sector, with key performance indicators that include the availability of talent, employee happiness, and attrition rate.

As a result of COVID-19, 87% of executives from technology businesses reported that their organizations had reduced the number of physical workspaces they occupy, and 66% intend to expand their employees’ alternatives for working from home during the next three years. In the post-pandemic context, new operating models and modes of working should successfully combine people, place, and technology, changing how people operate across numerous working environments while keeping essential values and cultural characteristics.

FOCUSING ON CONTINUOUS CHANGETechnology firms will need a comprehensive and holistic global trade strategy through an agile operating model to thrive and accelerate growth in this continuously changing business environment. It must be able to adapt to changes in international compliance regulations, rethink its staff, and make a commitment to environmental, social and governance (ESG) needs. Every C-suite executive will have to ask themselves if their operating model is prepared to support new initiatives and propel future success in the face of an unpredictable future.

Two out of three technology executives emphasized the need to be flexible and agile, as well as the need for plans to change their operating model over the next three years to serve both current and changing business needs. However, the question of whether they have the tools and systems in place to make changes in real time while considering the overall effects each discrete change will have on the financial conditions and operational effectiveness of the business remains to be answered.

Overall, the executives surveyed indicated that the most important areas they will invest in as enablers to improve their operating models over the next three years are technologies and tools related to customer transactions, relations, and support (58%); supply chain optimization (53%); and supply chain transparency (45%). Majority at 64% intend to alter the organizational structure to enhance tax planning and financial reporting. Due to the increasingly complicated compliance and reporting requirements everywhere in the world, there is a demand for global visibility and risk management.

ENSURING WORLDWIDE COMPLIANCE AND REPORTINGCompanies can use combined tax and financial operating systems to support their complicated requirements, which can be easier said than done and expensive for businesses that must continually adjust their own capabilities. To reduce risk and improve both visibility and efficiency, finance functions can utilize standardized methodologies and advanced analytics to stay ahead of the digital curve.

Technology companies will have to keep these key considerations in mind to ensure effective worldwide compliance and reporting:

• Adopt a coordinated strategy for adjusting global tariffs.

• Reduce trade network costs, risks, and delays.

• Create a solid data foundation to increase the effectiveness of reporting and compliance.

• Leverage the proper technologies.

Over the next three years, technology companies will restructure their operational models, prioritizing the commitment to a sustainable future. Nearly two-thirds of the IT leaders who participated in the EY survey agreed that ESG considerations were important when developing their operating model. Reduced shipping costs and energy consumption will also be crucial considerations in operating model design. Long-term sustainability and ESG value can be created by applying the appropriate strategy and optimizing the supply chain, capital allocation, and portfolio, as well as by developing assessment frameworks to measure both financial and non-financial outcomes.

ADOPTING ESG COMMITMENTSThe relevance of ESG, agility, speed, and flexibility are also high on the agenda in specific areas of change and focus over the next three years. ESG emerges as a factor in changes to the supply chain and operations. By implementing the following actions, technology companies can achieve high sustainability performance while giving shareholders profitable returns:

• Recognize the development and efficacy of the present ESG strategy.

• Examine ESG opportunities, impacts, and risks.

• Include ESG in your organization’s overall strategy.

• Communicate with stakeholders and provide performance reports on ESG.

ADAPTING TO HANDLE CONSTANT CHANGEThe one constant in the world economy and the technology sector is the unrelenting and accelerating rate of change. Even the most adaptable firms are finding it difficult to keep one step ahead in this era of extraordinary change, whether it be a game-changing breakthrough or a once in a thousand-year black swan occurrence.

The EY survey discovered that technology company executives are frequently attempting to respond to concerns that impact their functional issues while continuously reviewing their business and operating models. Addressing the immediate problem instead of realizing that there will always be problems requires a comprehensive, holistic strategy to handle ongoing change and expand the company.

The study also notes that changing the operating model to increase company resilience and concentrating on issues like ESG are not separate initiatives. Instead, in the search for technology businesses to become truly adaptive, these become guiding principles that influence practically all upcoming organizational change initiatives. These changes progressively extend into the connections between the key stakeholders of a technology enterprise, from suppliers to consumers.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

Rossana A. Fajardo is the EY ASEAN business consulting leader and the consulting service line leader of SGV & Co.

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