We spoke to Columbus’ CEO, Søren Krogh Knudsen, about what companies can do in this situation, and how IT and automation can lessen the blow. Is this the right time to invest, or should we save? What about hiring new people, is it better to outsource as much as possible?
Or watch the entire discussion on YouTube:
In this blog post, we go through topics such as:
- How unemployment rates might affect your actions going forward
- Long-term IT investments VS an instant feedback loop
- If you should outsource or hire talent
- How automation can prepare your organization for change
We're seeing an extremely hot job market in combination with what's supposed to be a downturn in the economy. I think that's slightly new.
An eventful year
Søren Krogh Knudsen stepped into his role as CEO at Columbus in February 2022. A lot, to say the least, has happened since then. And things are most likely not going to calm down for a while.
“We're seeing inflation at rates that we haven't seen for decades, and a general perception that we're heading into a slightly more difficult times from a business context,” says Krogh Knudsen.
“One thing which is very relevant for us as a company is the unemployment rate, because it drives the need for digitalization. We're seeing an extremely hot job market in combination with what's supposed to be a downturn in the economy. I think that's slightly new.”
Krogh Knudsen is talking from experience: He has spent the last 20 years working in business and IT management, and has helped many different types of companies and clients handle change. In 2008 and 2009, when Krogh Knudsen was working as a managing consultant helping companies prepare for future growth, many were restructuring because of the ongoing recession.
This time, a lot of industries experience a skilled labor shortage, which means that they need to focus on other things, such as new technology:
“They experience this skilled labor shortage, and they know they're going to experience that for quite some time to come. And so, they continue to invest in technology initiatives that help to relieve that burden.”
Quicker projects, quicker results
According to Krogh Knudsen, this new situation might affect companies’ investment approach.
“Prior to the current situation, you might have a slightly different philosophy where you were prepared to take a big risk on technology investment that you're going to be investing in for quite a while until you start to reap the benefits. And as such, the benefit realization curve is going to be in the negatives for quite a while before it starts to deliver,” he explains.
In the last two decades big investment projects with a waterfall style of planning have been the norm, but this might be about to change, says Krogh Knudsen:
“I think what everybody is trying to do now is to flatten that curve. So, what you're looking for is a quicker value realization, short duration, and a less spiky investment profile. I think that's beneficial regardless because it creates a more efficient way of investing in technology.”
“I think some of the things we're seeing now is a more instant feedback loop. Was it working? Do we want to increase our investments? And you can better adjust for uncertainties or assumptions that didn't prove to be true along the way.”
Outsourcing VS hiring talent
In order to handle this new way of conducting IT projects, it is probably a good idea to invest in talent. But not for every task or project.
“Many are very knowledgeable about where they need to hire - and where not to hire, because you can't build centers of expertize for everything. And this is also one of the areas where we've seen tremendous improvement that I think benefits everybody”, says Søren Krogh Knudsen.
For the more complex or specialized parts of a project, it is still better to outsource. Otherwise, you need to build a large team with every expertise, something that we already have established can be tricky considering the low unemployment rates.
When it comes to outsourcing, you might also want to consider bringing in a change management expert from the start. This way, you can avoid some of the issues that otherwise might appear at a later stage, helping you reap the rewards faster.
“Everything that can be automated, should be automated”
Another thing you need to consider is automation. Are your employees still doing mundane, time-consuming tasks, that could be automated? This is an investment that you cannot afford to wait with – simply because you’ll lose valuable time, and employees, if you do so.
“Everything that can be automated, should be automated, to free up the time from for more interesting work. Which I also think will do wonders also in on sort of the long-term sustainability agenda.”
Søren Krogh Knudsen is hopeful for the future. If the past has taught us anything, it is that challenges usually drive change.
We really have the ability to go out and change the way our customers conduct their business.
“We need to come up with smart solutions to all these challenges. And I think that's positive because it drives us in the right direction. It's a very, very nice challenge to be a part of.”
“That's what I joined Columbus, because we have a lot of very skilled technical resources here within commerce, within data and analytics, within CXE and so on. We really have the ability to go out and change the way our customers conduct their business.”