In the foreword of the second annual Unit4 2022 Business Future Index, Mike Ettling neatly sums up the findings. He writes: “What the last three years have shown is that if an organization is prepared to take risks, be agile and cope with uncertainty, it will perform better. Organizations which have coped with accelerated change have prospered.”
Based on 3,450 respondents across 12 global markets from services organisations in both the private and public sectors. The report looks at how digitisation and constant changes have impacted organisations across the globe. It also looks forward to the challenges of 2023. Few of the findings will come as a surprise, considering that they align with most of the other recent reports that Enterprise Times has seen. However, the report makes some interesting points and shows an evolution of thinking in evolutions from a few months ago.
The report is only 24 pages long (though only 14 in pdf, a mix of A3 and A4) and a mix of data, graphics and analysis. It also includes some interesting takes outs from specific countries. For example, Singapore has seen the greatest acceleration in cybersecurity strategies (48%), almost matching the working-from-home practices (51%).
The report is divided into several sections. It begins with an introduction, foreword and the key takeaways before the report looks back at the acceleration of change during the pandemic. Arguably this looks back over two years rather than just the last year. The main findings focus on business performance, ESG, people and technology. The report finishes with a brief conclusion.
Overall the message is that success is enabled by organisations that embrace flexibility and change. They cannot be complacent, though. They need to apply the lessons learnt and continue to evolve in an ever-changing business landscape.
Key Takeaways
The benefits of digitisation are huge, with different technology offering benefits to different areas of the organisation.
- Organisational resiliency improves from 63% (2021) to 67% in 2022, with 49% citing the ability to hire from nearly anywhere with flexible working policies.
- Workflow automation has seen improvements for staff, with 84% citing they are more productive and 86% have a better work-life balance.
- Only 7% of organisations have not accelerated transformation over the last two years. According to Unit4, there was no specific sector within this group. The largest minorities came from IT and technology, the public sector, education, retail/distribution and transport.
Investment and hybrid working
Investment in technology is key to the changes, with 52% aiming for digital transformation and 45% adopting tools to improve employee productivity and experience. Despite the introduction of flexible working, 76% don’t feel they have got it right. 39% have seen staff leave to find flexibility elsewhere. The report notes that only 18% place no restrictions on flexible working. There are three common approaches:
- 37% Flexible hours (e.g. working 9 am-3 pm, making up the time in the evening)
- 31% Completely flexible hybrid working (office and home-based)
- 31% Mandated proportion of time in the office (e.g. 20% of the time in the office)
Enterprise Times asked Richard if there was a right solution for this
“It depends on the type of organisation because flexible working means different things to different people. It depends on where you are in your career. Whether you’re just entering a market and you’re a young grad, a trainee, learning a new skill or job at the end of your career, or somewhere in between.
“The reasons organisations can’t get it right is because there are so many different people with different views on what they really need.
“From a personal perspective, I like the hybrid where we can get people together face to face because we share knowledge, share experiences, make people sticky and build those real relationships in an organisation. It’s a really tricky one to get 100% right for all organisations because there’s so many different roles, and people want different things.”
Some organisations will need to be prescriptive about days in the office but not controlling. How to solve the puzzle is an article in itself.
The impacts of acceleration on the bottom line
As war often accelerates the development of weapons, the pandemic has improved the operational efficiency of organisations. The crisis has forced change and helped build organisational resilience. Many have embraced and accelerated those changes and seen advantages from doing so. The benefits are real, with 51% ahead of revenue targets in 2022, compared to 34% in 2021. Only 16% (2021:30%) have fallen behind the target.
However, without qualitative data, the report cannot say why the improvement happened if, indeed, it is an improvement. Were targets cut over the same period, and why did the 16% miss target?
Vanson Bourne, the report’s authors, answered this question: “It’s a fair assumption given the way the data has fallen to say those who embraced accelerated change (digital transformation, flexible working, tools for employee engagement) were more likely to see improved performance. We also saw 28% who didn’t embrace change not perform as well so it would be a fair assumption that the 16% who fell short didn’t make sufficient investments.”
The impact of accelerations on ESG
ESG is increasingly important, though, unlike other surveys, it was not a top five priority for service businesses. However, the survey showed that ESG is improving partly due to flexible working. That improvement is minimal, though, with 24% (19% 2021) believing their organization was doing very well when it came to meeting sustainability goals.
While ESG was not a top priority, Richards noted a new trend.
“One thing we see, certainly in public sector bids, is more of a focus on social value. Prospective customers are expecting it of their vendors and partners, and they put a weighting on social value.
“What are you going to deliver? You’re going to deliver the solution at the right cost, but there’s a percentage of the bid that will be allocated to social value. So what are you going to do? For example, (for) Surrey County Council, a big component was what are you going to do in Surrey County Council outside of delivering the ERP solution, and that had quite a big weighting. We’re seeing that more and more as a vendor.
“In terms of it being more of a priority, I think it’s increasing. People are looking at ESG policies to see whether they want to join a business, diversity, and certainly, social impact. The next generation of workers find that far more important when selecting an organisation.”
ESG in services businesses is often overlooked, but it is increasingly important for customers. Hopefully, next year the report will expand on this area.
Talent and people strategies
This section looks at organisations’ business priorities for 2022 and the strategies they are adopting. It focuses on the importance of flexible working and notes, “Flexible working is a must-have – but it must be embraced by leadership, not tolerated.”
The authors believe that the pandemic accelerated the shift to flexible working. The productivity improvements it delivered came as a surprise to some business leaders showed. It also opened up new options for hiring. 49% of organisations have recruited from further afield, also 42% of those managed to increase their headcount.
The report also highlights business priorities for 2023
- Attracting and retaining talent (people) – 62%
- Building out new products and services to deliver added value – 59%
- Digital tranformation – 59%
- Re-skilling talent (people) – 51%
- Implementing a successful flexible/hybrid working policy -50%
This is the average across the survey. However, the report also pulls out statistics from different industries and countries. It is interesting that re-skilling, often touted as a necessity by the tech sectors, may now be increasingly important for businesses as they look to address the talent shortage.
What about the next generation of workers?
Do you see organisations hiring more junior and growing staff? How will they address the apparent desire for the next generation to move between organisations?
Richards replied, “It’s really difficult. It has to be a hybrid of both. If you haven’t invested in the talent, who will train the youngsters coming in? You have to be prepared that the generation of workers is now looking for an experience. They’re looking for two to three years. They’re not looking to stay there for life. So you have to have the expectation that you’re creating skills which will only probably be in your organisation for a number of years because they will move on. There’s a significant cost associated with that.
“There’s a whole rethinking on re-skilling people because you’re not re-skilling for them in a manufacturing organisation and be there for 25 years. That isn’t happening anymore, particularly in IT. I also think that our universities, our whole education system, which is probably a whole other discussion, also needs to rethink the skills that businesses need today. How ready are they coming out as graduates to go in and start making an impact on organisations and then developing appropriately?”
The technologies that underpin these accelerations
This section highlights the technologies that organisations are adopting. There are a few surprises here, with cloud migration (84%) slightly lower than data management tools. That may be only because organisations have already moved to the cloud. However, it has accelerated since 2021 (44%). In the education sector, there are opportunities for Unit4, with only 17% adopting workflow automation, 10% AI/machine learning and 28% adopting real-time reporting tools.
Education is not the only laggard, with consumer services behind the curve in cloud migration (37%) and data management tools (39%). The latter is perhaps more surprising
Consumer services, according to Vanson Bourne, is a fairly broad category which includes domestic repairs/services, beauty/wellness, tutoring, caring services, architecture, and automotive repair services.
One investment that organisations are or should consider, the authors feel, is financial management. 52% of organisations are looking to invest in financial management technology. This is partly to help improve forecasting across the organisation, enabling the flexibility and adaptability that organisations must have in an economically unstable world.
Will Unit4 be changing anything based on these findings?
Richards replied: “I don’t think we will be doing anything different. It just reconfirms that you will reap the benefits by investing in your people and processes and underpinning that with technology and continuing to do that, even when times are tough. It isn’t about taking your foot off the gas and thinking things are a bit too difficult; let’s not invest. It’s about investing wisely and investing in key areas.
“Where organisations continued to look at best practices around people processes and underpinning that with technology, the results show that they’re more likely to deliver on the profitability and KPIs and be more successful. It won’t change anything. It underpins the fact – don’t delay and procrastinate over these decisions; continue to invest. Because if you don’t, the chances are you will become one of the laggards and have bigger problems to deal with.”
Enterprise Times: What does this mean
There is a lot in this report which makes it worth reading. There are opportunities for some vendors, as inferred in the report. Some sections could have been explained more with a qualitative survey.
However, the main take out from the report is that organisations must continue to adapt and evolve, continue investing in technology, and continue to look forward. The latter point means that forecasting is of critical importance for finance and across the wider business.
Ettling concluded: “As with every crisis, the pandemic showed that organizations which were prepared to be more innovative and progressive in their people and technology strategies, as well as company policies, came out ahead in terms of business performance. Looking forward to 2023, businesses worldwide will face various pressures, such as geopolitical issues, inflation and rising energy prices, and the continued competition for talent. Adapting to such challenges is key, with no room for hesitation or inertia, as it can have a lasting impact on future performance.”
