Having emerged as a major health crisis, the COVID-19 virus has also severely disrupted the global economy, causing demand and supply shocks, and affecting the production of goods and services throughout the world.
The crisis has been felt throughout all industries and will continue to have far reaching impact as the situation develops. Following is our view of what some sectors may be facing in the short and medium terms.
Effects of the Pause
Tourism, Hospitality, and Travel-related industries
These businesses have been among the hardest hit as authorities push for social distancing measures and consumers are encouraged to stay at home. The International Air Transport Association has predicted that airlines could lose up to $113 billion in 2020. With drastically curtailed flights and cancelled travel plans, many companies in the industry are facing the possibility of bankruptcy. Future aircraft orders are being deferred and reconsidered, impacting profitability of both aerospace and airline companies.
Communication has been essential throughout the crisis and will continue to be. The telecoms have strongly supported globally distributed and remotely located workforces. However, global 5G rollouts will be slowed to due to supply chain disruptions in China. Data indicates that the ICT market in China will be impacted by 10% in the first quarter of 2020.
Pharma and Medical Equipment
In a health crisis, naturally businesses oriented toward health will be on the front lines. As the world scrambles to respond to the pandemic, this sector will be called upon to develop tests, therapies, and ultimately a vaccine.
Like pharma, the insurance industry will be on the front lines of this crisis. The surge in hospitalizations will bring an increase in insurance claims. Combined with a curtailed travel insurance business, this will likely put a large dent in the industry’s pockets.
The disruption in global supply chains will have a massive impact on manufacturing. The automotive industry, including electric vehicles, which imports more than $34 billion in parts from China annually, will be significantly impacted. A leading device manufacturer, whose supply chain also leans heavily on China, warned investors it was unlikely to meet revenue targets for the first quarter of 2020.
Energy & Utilities
With much of the world on lockdown, global energy demand is greatly reduced. According to the International Energy Agency, global oil demand has dropped for the first time since 2009 because of the deep contraction in oil consumption, and major disruptions to global travel and trade. Electric companies could see up to 40% of their workforce out sick as the coronavirus continues to spread, according to a bulletin issued by the Edison Electric Institute (EEI).
Drug and grocery stores have remained open as essential businesses, allowing people stock up on basic needs. However, they are facing challenges maintaining supply chains and also keeping their work force on the ground. As retail deemed non-essential is shuttered, online retail is thriving and is poised to grow further as consumers spend less time in public.
Looking beyond the pause
In the chaos and confusion of the crisis, most organizations have postponed making new strategic decisions. Priority is being given to the immediate future, committing resources to additional infrastructure for screening, quarantining, and treatment of properties and staff. Everyone is working to find suitable mitigation measures and many companies are being forced to consider spending cuts and conserving budgets to reduce the impact on the bottom line. But what about the world beyond the crisis?
Now is the time for companies to figure out how they can reduce leakage, stay relevant and be ready to meet the demand surge that will come when the worst of the virus passes. In this crisis, there is an opportunity to find innovative ways to increase efficiency and enhance the ability to not only survive the current challenges and prepare for similar ones, but also to take a giant step forward.
In our view, there are many technologies that will get attention in this moment and evolve to achieve their next level of maturity, supporting day-to-day business as well as contingency processes. Additionally, there will be innovations that arise as a result of working through these challenges. Following are few areas that we believe may be different on the other side of the crisis:
- Innovative Business Contingency Plan Measures: The biggest change this pause may bring is to the way we work. Cloud-based platforms have been critical to allowing work to proceed. Digital workspaces with organizational and personal endpoints have allowed workers to access applications from wherever they are on the planet. We expect to see accelerated performance of organizational applications on remote connections and elastic capacity making it possible to scale new users on demand.
- Smarter and Resilient Supply Chain Business Contingency Plans: Supply chains have been tested as never before. Technologies like additive manufacturing / 3D printing will provide an innovative solution in traditional supply chain networks, enabling assembly replacement, on-demand manufacturing; streamlining the process and reducing reliance on constrained suppliers and regions.
- Increased Automation: As Social Distancing remains necessary, interactive/ autonomous applications and chatbots will allow businesses to connect with customers while reducing direct human interaction. Automation will take an even larger role in manufacturing. Expect to see more robotics being used for machinery and control equipment. Sensors, IoT-based systems, and VR applications will come into play for remote configuration, monitoring, diagnostics, and troubleshooting, as well as maintenance, repair, and operations.
- Enhanced Digital / Data Security: An increased focus will be put on protecting all endpoints that access organizational assets remotely as well as data and applications hosted on enterprise servers and in the cloud. Emphasis will be on robust security architecture design, implementation, integration of supply chain devices, sensors, network and application stack, testing, and assurance services.
- Emergence of New Smart and Connected Medical Devices: The ability to measure the health of individuals will be a key to reopening the economy. IoT devices such as fitness/ health-tracking wearables and mobile health applications have already seen wide adoption. These, along with remotely controlled infrared thermal and laser scanners, biometric health sensors, and screening software will also become mainstream, allowing doctors to monitor health remotely and implement early interventions and treatment when necessary.
- Increased Role of Big Data and AI: Big data & AI can help to ramp up efficiencies in network planning, predict demand, set up smart warehouses, optimize delivery times, and reduce costs. Chatbots enabled by AI can be used for collaboration with customers as well as partners. Big Data Analytics and AI also have great potential for designing zero trust security frameworks, fraud and malware detection, and 24/7 intrusion detection.
- 5G Acceleration: There was already a growing need for faster remote interactions, the current crisis, with new wrinkles like the rise of “Work from Home” and telehealth, has highlighted it even more. 5G technology is instrumental for applications like virtual presence, distance learning, and virtual classes. Connectivity is a key component of Industry 4.0 and 5G will enable next level bandwidth, faster throughput, truly low latency, and high reliability communications.
- Digital Business Models: As we change the way we work and shop, existing business models are also being challenged by the crisis. Moving forward many companies will be looking to initiate or expand digital & contactless business models, like ecommerce, drone-based delivery, remote workforce training, and collaborative innovation platforms.
The repercussions of the COVID-19 crisis will be felt far and wide, perhaps for years to come. However, with lessons learned from past crises and an increasing connected world we may be better equipped than ever before to emerge from this with a more secure and sustainable future. To create a resilient business , organizations can rely on the power of innovation and engineering to navigate this disruption.