Leaders across regulated industries are facing challenges on multiple fronts. They’re under increasing pressure to streamline operations and advance their brand’s reputation by delivering new, sustainable, innovative offerings, all while working to drive better business outcomes and stay ahead of their competition.
This pressure comes from a combination of internal challenges and external forces that make the status quo untenable, forcing them to change or be left in the dust.
Internally, digitalization and cloud adoption are integral to the changes companies are incorporating into their operations, but they’re difficult because those processes also require a culture change. At the same time, cybersecurity is paramount.
Additionally, workforce resignations and reshuffling mean ensuring those employees who remain are efficient and engaged.
Companies must ensure they are prepared to manage the risks and disruptions that stem from these internal and external challenges. They need to change not just to avoid negative outcomes, they need to do so to grasp the positive as well.
For many regulated industries, the foundation on which these changes are built is digitization. Undergoing a digital transformation allows companies to stay ahead of disruptions, drive positive relationships and strengthen relationships with those at all parts of the value chain. The new way of doing business requires agility, efficiency, and innovation, driven by people and data and enabled by technology.
Digital Transformation Challenges
The move to modernize and digitize business operations has been underway for more than a decade. At the dawn of the digital age, companies sought to update customer-facing applications via digitalization. Unfortunately, although those changes were popular with customers, back-office functions such as quality, regulatory, and safety were often overlooked.
Today, those functions have become priorities in the C-suite and the boardroom. It’s become painfully obvious that quality, regulatory, and safety functions are core to protecting brand equity, maintaining consumer trust, differentiating, and driving growth in highly competitive markets. Treating the digitization of those functions as an afterthought to customer-facing operations is no longer feasible.
The COVID-19 pandemic shone a spotlight on the weakness of attempting to manage these business-critical functions using on-premises, aging technology systems. With a near-overnight shift to remote work, companies had to quickly find ways to provide a home-based, distributed workforce with access to data and processes that were previously accomplished via paper, email, spreadsheets, and employees’ individual knowledge to survive. Although many organizations were already undergoing a digital transformation, these challenges led many to accelerate their efforts.
“Digital agility is essential to successful transformation, allowing organizations to drive innovation at scale, deliver new initiatives faster, and create the experiences that customers want,” said Kurt Anderson, Managing Director & API Transformation Leader with Deloitte Consulting.
Despite the financial hardships many companies experienced during the pandemic, investment in digitization efforts continues to increase. One study predicts the compound annual growth rate of that investment between 2020 and 2023 will average 15.5%, with total investment over that period topping $6.8 trillion.
Of course, digitization is more than just modernizing customer-facing and internal systems. Companies must look at all of their processes, including those stemming from acquisitions, to avoid being saddled with a siloed mix of legacy and new technology. They need to approach their digital transformation as an enterprise-wide process rather than a set of functional-level technology projects, understanding that a digital transformation will be critical to a company’s success moving forward.
“We call for a shift in executive mindset to project the future of the business with digital at the core,” said Venkat Venkatraman, Professor of Management at the Boston University Questrom School of Business. “That is, to systematically deploy cloud and digital technologies to maximize growth in ways that put solving customer problems first and keep the business resilient from end to end…”
Cloud Adoption Challenges
69.5% OF SPENDING ON APPLICATION SOFTWARE WILL BE DEDICATED TOWARD CLOUD TECHNOLOGIES IN 2025.
Companies across all industries were shifting many of their processes to the cloud as part of their digital transformation before COVID-19 was a part of our vocabulary, but the pandemic played a significant role in accelerating that shift. Gartner estimated that the use of cloud services increased by 23% in 2021 and increased by 16.5% in 2022. By 2025, half of enterprise IT spending in categories that can transition to the cloud will be devoted to cloud services, compared with 41% in 2022. Additionally, Gartner estimated that “almost two-thirds (65.9%) of spending on application software will be directed toward cloud technologies in 2025, up from 57.7% in 2022.”
Although some companies remain reluctant to move processes, documents, and data to the cloud from legacy, on-premises solutions over concerns about security risks, much of that reluctance stems from comfort with the status quo, a reliance on “tribal knowledge,” and fear of professional obsolescence. As a result, a culture change is often required.
Companies that fail to embrace cloud technology will find themselves falling behind their competition because they aren’t able to act as quickly. That’s especially true for companies operating in consumer goods industries. Consumers adopted new behaviors in buying and consuming goods and services during the pandemic; many switched brands and developed new tastes and preferences. Companies that were digitally prepared were in the best position to make the adjustments needed to capitalize on these new behaviors.
Digital Transformation Security
Of course, the role of cybersecurity in a digital transformation can’t be dismissed. Cyberattacks and the cost of combating them are on the rise in part because of the remote/hybrid workforce, bring-your-own-device programs, a rapidly increasing number of IoT devices, and other trends which create vulnerability and multiply the avenues for attack.
Attackers often find that a company’s vulnerability lies with its suppliers, who may not be transparent about security breaches. An attack against a single supplier can be enough to bring down a whole network of providers. As a result, companies must not only ensure their own cybersecurity is up to par but their suppliers’ is as well.
Workforce Trends Affecting the Digitalization Age
The COVID pandemic dramatically altered the labor market, and those changes will likely be with us for years if not forever.
More than 47 million U.S. workers voluntarily quit their jobs in 2021 as part of “The Great Resignation,” and the United Kingdom and European Union were hit equally as hard. The trend continues, with 40% of the global workforce considering leaving their employer in 2022. Reasons include poor working conditions, a desire to achieve a more satisfying work-life balance, and what workers consider to be a lack of respect from company leaders.
At the same time, corporate workers are job-hopping as part of “The Great Reshuffle.” Many employees are leaving their current jobs in search of something more fulfilling. Some have started their own businesses, while others changed careers altogether.
This shift is forcing organizations to rethink the way they engage employees to retain their existing talent and attract new prospects.
The great resignation
Service, manufacturing, shipping, and blue-collar jobs that can’t be done remotely have been hit harder by resignations than corporate jobs because they are riskier and less flexible. Some workers either contracted COVID at work or weren’t willing to take the risk they would. Others found themselves without childcare as those services shut down.
The labor shortage has hit manufacturing particularly hard as wages have stagnated, especially in nondurable manufacturing such as food & beverage. Front line workers felt as though they were putting themselves and their loved ones at risk while their back office counterparts shifted to safe and comfortable and remote setups.
“There are likely two broad categories of people participating in the Great Resignation,” said Martha Maznevski, Professor of Organizational Behavior at Western University, Ontario.
“One is people who are professionals, who are making a choice between ‘good’ and ‘better’,” Maznevski said. The other category is people who are making a choice between something that is really terrible, unhealthy and toxic, and survival. Those are two very different dynamics.”
The great re-shuffle
Although the idea of remote work was a temporary solution during the pandemic, at least some form of the concept will likely be permanent. One recent study found that 97.6% of those currently working remotely would like to do so at least some of the time for the rest of their careers. That’s led many companies to re-evaluate their business models.
Additionally, the popularity of remote work has changed the way companies seek and recruit corporate employees. Remote work has allowed companies to broaden their pool of potential talent beyond their physical location as they adopt policies such as “work from anywhere” while they focus on facilitating productivity regardless of location.
Recruiting and retaining top talent poses an enduring challenge for companies. In general, workers are more likely to seek opportunities at companies that empower employees with the use of modern tools and technologies that allow them to be productive, and thus more engaged and satisfied.
“The labor shortage is causing a total rethink of how to incentivize employees and how to retain existing employees,” said Julia Pollak, Chief Economist with ZipRecruiter. “We’ve seen a very rapid spike in the kinds of keywords in job postings that indicate that companies are prepared to offer very attractive incentives and much more flexibility.”
Managing the Changes
Companies are facing an ever-increasing set of concerns in all aspects of their operations, from the cybersecurity of their suppliers to the digital tools they use to manage their labor force. With so many moving parts, managing them with outdated legacy systems is an impossibility. Companies that take the plunge in moving their processes to the cloud will likely find themselves with a competitive edge, while those that don’t will be left behind.
Solutions such as Veeva’s enable leaders to protect their brands, raise the industry bar, and advance their reputation among consumers, employees, global regulatory bodies, suppliers, and manufacturers by making trust core to a company’s digital transformation strategies. Veeva can help build and maintain a competitive lead through a commitment to continuous innovation, and by shifting market share in your favor with the ability to respond to industry trends and consumer behaviors faster.
For more information on how Veeva can help your organization with its digital transformation strategy, reach out to one of our experts.