Software Got Us Through the Pandemic, and It’ll Get Us Through a Recession, Too
Like it or not, a recession might be on the horizon, and companies are facing related risks. We can learn a lot about surviving a recession from the companies that thrived during the height of the pandemic. One of the biggest lessons? Software is the solution to reduce recession-related risks.
As evidenced by the recent yield curve inversion and rising inflation rates, markets are taking a hit along with consumer confidence. A July 2022 Morgan Stanley survey found that two-thirds of consumers were planning to spend less over the next six months due to inflation. Although we do not know for sure, a recession could be on the horizon, and preparing for market fluctuations is never a bad idea.
How can those fluctuations affect your business practices? The first obvious impact of a lull in business is an increased awareness of unnecessary overhead and costs. When the extra wiggle room dries up, team inefficiencies become even more noticeable and force decision makers to evaluate costs with increased scrutiny. When it comes time to cut costs and focus inward on your budget, operating both Slack and Microsoft Teams is a non-option. Coming face-to-face with the reality that you’re paying for duplicate tools hits home when confronted with the economic effects of a recession.
Any inefficiencies from software to processes to headcounts need to become your first priority when business slows down. You’d be surprised how much money you could save with simplified and streamlined software solutions.
A recent McKinsey survey found that almost 90% of C-suite executives said their companies aren’t sufficiently prepared to address skills gaps in technology and IT. But now more than ever, becoming well-versed in digital operations is a business necessity. The right tools, when used properly, can have significant advantages. A good software solution could give your company the margin it needs to survive a recession, regardless of whether you build versus buy.
Why Some Companies Thrived During the Pandemic
The solution is not replacing employees with software or “doing more with less.” The solution is finding software that allows your company to pivot into alternate sources of revenue.
We saw this firsthand during the pandemic: Companies utilized technology and various digital platforms to provide their services virtually, from telehealth to online yoga classes and beyond. Now that traditional in-person services are back, all of these companies are thriving because they created sustainable revenue streams through the technological innovation spurred on by the pandemic. Who says companies should stop innovating?
According to the U.S. Chamber of Commerce, 47 million workers quit in 2021 during the Great Resignation. Industries such as financial activities and professional and business services experienced the largest labor shortages, with nearly 75% and 70% of their job openings left unfilled (respectively). And although devastating for some, other industries managed to thrive—industries that diversified their traditional service offerings.
Retailers such as Ikea and Best Buy survived Amazon’s retail culling in the 2000s and 2010s by offering showroom experiences that revolutionized their stores into destinations. They encouraged customers to try the things they could only watch and read about online. Then, during the pandemic, they pivoted and started offering curbside delivery, a move that kept them in business during the worst of the global lockdowns.
How to Find the Right Software Solution for Resilience
Just like with the pandemic, the key is figuring out how to use software solutions to create new revenue streams. Software helped companies survive the pandemic, and it can help you survive the next recession. Here’s how you can identify the right software solution that can keep you resilient through an economic downturn:
- Conduct a value audit.
Perform a 30,000-foot audit of your value streams to find inefficiencies to correct. Your impulse might be to stop spending money, lay off workers, or make budget cuts, but those are knee-jerk responses that warrant closer analysis. Taking a careful look at where your money is going and what value each tool is providing your company can give you clarity on which tools to cut and which to press into.
- Keep up with software trends and tools.
There’s a huge constellation of software on the market, and it can be daunting to look through it all. But it’s important to stay in touch with what’s available from current and new vendors. The tooling landscape is vastly different from even three years ago, and there are more specific tools available for almost every business need, especially when it comes to AI. And more of these tools have integration-focused mindsets, making it easier to feed them into middleware layers such as Zapier, your CRM, Slack, or other collaboration tools.
Spending on AI software, for example, is expected to reach $62.5 billion this year, according to Gartner. And Fortune Business Insights forecasts a compound annual growth rate of 33.2% in the AI market through 2027. Many of these software solutions facilitate a single person doing twice (or even 10 times) their typical workload in operational tasks. Meanwhile, content-generation tools such as Jasper and Stability AI help you create more content faster to lower customer acquisition costs.
- Understand all that your current software can do for you.
Maybe you don’t even need a new software solution but instead can pivot your existing software to serve you better. Browsing software doesn’t mean you have to buy, and oftentimes, it’s easier for a business to build its own software solution.
If you’re aware of the landscape, you’re on the right track already. Modern problems require modern solutions, and it is perfectly acceptable to judge a book by its cover. If a software looks dated, it probably doesn’t have the integrations you need for it to be successful. Integrations are key here—especially with so many tools being used in even the smallest businesses.
Staying afloat during economic turmoil requires honesty, innovation, and creativity. Before you jump to rash decisions that could harm your company in the long run, look into what is happening in the world of technology and take advantage of what is available to you. If the pandemic taught us anything, it’s that software solutions paired with tenacity and innovation can get you through the hardest times.
Although your business’s value proposition won’t change, the way you go about finding and servicing customers inevitably will. Leveraging a software solution is the way to optimize your business processes and financials to weather the impending economic storm.
Written by Chris Cardinal.
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