Weathering the Covid 19 Storm, Reinforcing The Value

11 May 2020

As the world continues to react to Covid-19 there has been considerable debate about our preparedness for a global pandemic. At the time of the earliest reports of the outbreak, it was impossible to predict the repercussions and effects on our well-being, our economy and our working lives. According to the Office of National Statistics over a quarter of UK businesses have shut down temporarily whilst those still operating have reported reduced turnover although there have been some notable exceptions. The changes forced on businesses have catalysed a rapid response from innovative organisations looking for solutions for their staff and customers. A precipitous reaction to the challenges of an increase in remote working, creating new infrastructure, accelerating change-based innovations and managing the ‘new normal’ are currently testing management teams country-wide.

 

During the last recession, sparked by the failures of financial institutions in 2008, some industries were far more resistant than others. FMCG businesses manufacturing household essentials like soap and detergents were particularly resilient whilst many construction and financial services companies went out of business altogether. During the current Covid 19 emergency travel, luxury, hospitality, retail and car manufacturers have suffered adversely whilst many in the technology sectors are overperforming. Accordingly, technology providers with good on-line models, strong cloud-based processes and best practices for home working have responded particularly strongly and, once the crisis abates should realise significant value.

 

It appears that the better-prepared companies in Evolution Capital’s ICT sector have been managing the crisis, both internally and externally, with calm and assuredness. Smart utilisation and the application of rigorous technology and IT processes have been instrumental in combatting many of the challenges thrown up by the situation. Global corporations, government and mid-market businesses are now increasingly reliant on technology to support communities, customers and their employees forced into quarantine or self-isolation to try and contain the virus. In many instances, there has been an acceleration and evolution both in the deployment and roll-out out of technology that may once have been deemed ‘productivity tools’ but are now seen as essential to our working and social lives.

 

Collaborative tools and remote working have rapidly become vital to combat the ‘virus’ effect. Data centres and network infrastructure are facing an exponential increase in the demands that businesses are putting on them daily and real-time, real-world stress testing has been put into immediate, heuristic practice. As the majority of our workforces are currently almost exclusively home-based the critical communications networks are extending far beyond the fire-walls for which they were intended. Security presents businesses with a constant threat as they attempt to extend these capabilities without compromising the ability to counteract the malcontents looking to exploit the current situation. Every single organisation currently fighting to come to terms with their current challenges are reliant on digital services

 

The first thing that many businesses did when the outbreak arrived was to send all their staff home instituting a regime change, standards and best practices for the new environment. For smaller businesses already working ‘within the cloud’ the transition was easily managed but for larger mid-market companies the practice needed a radical and immediate approach.

 

Alex Cliffe, Commercial Director of unified communications supplier Elite Group said, “Our first consideration was to our staff and we had to institute an immediate homeworking practice for nearly all of our people. Obviously, there were still customers that needed a physical visit for essential tasks and our visiting employees needed protective equipment. Our HR team had to work hard to react quickly as we now have over 250 people homeworking. Well-being, as well as productivity, in the new environment, were key objectives and once we had ‘steadied the ship’ it was important to have regular ‘non-work’ contact with everyone. Our first, simultaneous live video call, enabled by Microsoft Teams, which featured the majority of our work-force was a milestone that we passed early on.”

 

The requirement for Elite’s products, services or support has not slackened off as their customers put a greater reliance on technology. While demand has not significantly decreased, customer support requests have taken a different form as security and compliance concerns driven by home-based workforces start to percolate through.

 

“Our internal experiences using collaborative products like MS Teams have greatly enhanced our proposition to customers. Given that we are now confident in applying technology to the complexities of homeworking quickly we are able to pass on the benefits of those lessons to customers. We have turned our own experiences with technology into a number of positives for our customers in productising the process.”  Alex Cliffe, Elite Group

 

VTSL, a leading provider of VoIP business phone systems, have also adopted a change-based approach both internally and externally. CEO and founder Rob Walton said, “We adopted the ‘cloud’ some time ago for our work-force. We are very comfortable with this approach and overcame the obstacles and issues a while back. We have been using video to ‘conference’ internally for a long time so it is part of our modus operandi. However, this experience has helped us get our customers into a new, remote way of working very quickly and the simple expedient of supplying ‘softphones’ to all their staff has been incredibly efficient. They are also far more effective than mobile phones in protecting brand identity. We have been inundated with enquiries from customers about setting up remote environments, in fact during the first week of the crisis our order book doubled. This demand has extended to our proprietary tools and products, which we have had to develop and rollout quickly. It is not just about supplying units, the second phase is about ensuring that they are deployed properly and new behavioural changes are made. Our customer success teams ensure this happens through an ongoing follow-up and support programme which has proved very good for long-term loyalty. Zoom, Google Hangouts and MS Teams are getting a lot of press at the moment but to use them effectively, for business, needs planning.”

 

The crisis has accelerated the evolution of best practices and the deployment of software solutions and tools. However, the traditional voice call has perhaps been overlooked as an efficient device in the technical toolbox. Walton explains, “ I think that voice calling, having been written off for years, has refound its place. Our inbound and outbound calls increased by 25% in the last month alone. Whilst group video calls need to be set up in advance, voice calls don’t. Getting a telephone call in these trying times can be supportive and reassuring.”

 

Despite reports of the voice call’s demise it is not only alive and kicking but very much in demand.” Rob Walton, VTSL

 

The effects of Covid 19 have tested the resilience of many companies in the ITC space at both an operational and transactional level. Brighton based MSP, Ideal Networks are among several innovative organisations who have reacted to the situation rapidly protecting their staff and helping their customers get through the crisis.

 

Ideal’s Chairman, Terry Hancock, explains, “When the lockdown started we were inundated with enquiries from our customers who were desperate to manage the situation. There was actually a considerable uptick of business although there have been some transactions that have simply been pushed back as the uncertainty continues. What the current circumstances have highlighted is the overarching requirement for every organisation to have a robust business continuity plan. As part of our ISO 27000 compliance, we have to make sure that our plan is fully road-tested before we ever have to put it into practice and this has served our clients well in challenging conditions.”

 

Although Ideal is a Cisco ‘house’ they have utilised different video conferencing tools and found that each of the market leaders has their own strengths and weaknesses depending on the nature of the application. The crisis has accelerated the drive from many of their customers toward cloud-based services and there is a pressing need to plan for productivity and efficiency in the new environment.

 

Hancock continues, “Covid 19 has turbo-charged a number of issues that businesses need to confront and we are currently helping our customers with this challenge. It has meant that we are engaging with them on a strategic rather than a tactical level as we help them get to the next stage. It is a very fluid environment at present but I believe that by making our technical and support staff fully available to customers we have enabled a highly proactive approach.”

 

If there is a silver lining it is that businesses need to structure their approach to be resilient in the most testing of times. To emerge from the crisis in a good condition, businesses like us need to ensure they are well-capitalised and have a robust subscription model.”

 

“Whilst we don’t know exactly where we go from here as an industry what is certain is that is without a strong management team it would be impossible to see a light at the end of the tunnel.” Terry Hancock, Ideal Networks

 

Whatever the future holds for ICT it is becoming increasingly clear that better-prepared organisations with clear continuity plans, good capitalisation, proactive support structures and robust business models are well placed to realise value earlier than most.

 

Graham Purvis, Evolution Capital’s Chairman said, “During the Covid 19 crisis many ICT businesses with high subscription ‘cloud models’ have weathered the storm far better than those supplying traditional services . Many of those enterprises providing home working connectivity and solutions have grown in both revenues and value. Interestingly enough, businesses with largely cloud revenues have achieved market values of more than twice those solely focused on traditional products. From the many deals we are concluding during this period, so far none have seen any deterioration in the multiple being offered, However, buyers are very keen to fully understand the effect on future profits and this is more likely going to be the key factor in any adjustment in value over the next few months whilst the dust settles.”

 

 

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