Coronavirus outbreak means CIOS play a central role in navigating the crisis
CIOs are facing the greatest challenge of their careers, writes Aamer Baig senior partner; Klemens Hjartar senior partner in the Copenhagen office; and Steve Van Kuiken is a senior partner at McKinsey and Company.
In a blog on the impact of COVID-19 on CIOs, the senior partners found they were “seeing infrastructure breakdowns, denial-of-service attacks, and sites going down because of traffic load”.
Even as companies grapple with the implications of the COVID-19 pandemic, it is already clear that CIOs are playing a central role in navigating the crisis.
According to the senior partners, the COVID-19 pandemic is “first and foremost a human tragedy”, and “technology is on the front lines of this crisis”.
“Many of the changes reshaping how we work and live—from employees working remotely to consumers shifting their shopping online—rely on technology. And because technology ties so much of every company together, CIOs have a unique view into what’s really going on and how to manage it,” the blog states.
The consulting firm sees the crisis playing out broadly across three waves:
- Wave 1: Stability and business continuity while containing the crisis
- Wave 2: Institutionalising new ways of working
- Wave 3: Using learning from the crisis to prioritise tech transformation for resilience.
“We believe that CIOs who successfully guide their companies through the first wave can not only stabilise core business operations but also emerge with a reputation for effective leadership,” the partners wrote. “In the past months, we’ve spoken with more than 100 CIOs at global companies.”
Based on these conversations and their collective experience in helping businesses through previous economic crises, CIOs should focus their energies in the next 60 to 90 days on the following ten actions:
- Take care of your people:A CIO’s first order of business is to take care of their employees. It’s important to acknowledge that people are focused on caring for loved ones, managing their kids who are no longer in school, stocking up on necessities, and trying to stay healthy, all while trying to do their jobs. This requires empathy and flexibility from CIOs.
CIOs are moving to provide flexible work arrangements — working remotely, in flexible shifts, and preparing for absences.
- Communicate confidently, consistently, and reliably — uncertainty breeds fear and confusion: CIOs have to combat this reality by developing a crisis-communication program based on being transparent with both the C-suite and employees about what the current situation is and the steps being taken to address issues. Setting up regular briefings create a certain routine, which builds trust and confidence. Any delays to major deployments need to be planned for and communicated. The “how” can be as important as the “what.”
- Get beyond the tech to make work-from-home work: The sudden shift to employees working from home—one European institution saw its remote workforce increase by 15 times literally overnight—has created a host of issues, from inadequate videoconferencing capabilities to poor internet connectivity at employees’ homes. CIOs need to move quickly to advise the CEO and direct the company on how best to work remotely before every department goes off and picks its own collaboration tools. Many CIOs are already buying additional licenses and upgrading network to increase access. CIOs can address ISP capacity in employees’ homes by distributing 4G/5G modems or reimbursing upgraded internet plans. In the end, however, tech is just an enabler. New ways of working require a culture change. CIOs can help to drive the cultural change by sharing best practices and providing effective learning sessions. They can drive testing and learning from different approaches and communicating them back to the business. Crisis management is a cross-functional game and the CIO is perfectly placed to facilitate the new way of working.
- Drive adoption of new ways of working: As employees shift their work behaviours, many of them are confronting what can seem like a dizzying array of tools with little experience of how to use them effectively. As one CIO confessed, “ensuring adoption of new tools and protocols has been the most frustrating part of the process so far.”
New behaviours typically take about 30 days to take hold, so CIOs need to promote them assertively over the next month.
- Be proactive on security: Threat actors are already stepping up cyberattacks to exploit confusion and uncertainty. We’ve seen attackers launch email-phishing campaigns posing as corporate help-desk teams asking workers to validate credentials using text (also known as “smishing”). In addition, remote working creates additional risks: employees may try to bypass security controls to get their job done remotely, unprecedented virtual-private-network (VPN) usage complicates security monitoring, and remote working may weaken deterrents against inside threats.
In response, CIOs, working closely with their chief information-security officers, must focus on security operations, especially de-risking the opening of remote access to sensitive data or to software-development environments, and implementing multifactor authentication to enable work from home.
- Stabilise critical infrastructure, systems, and processes: Massive shifts in employee work and customer-behaviour patterns are putting unprecedented strains on each institution’s infrastructure. There are also much longer than normal lead times for infrastructure components (such as, servers, storage, parts, networking gear) given the disruptions to Asian supply chains.
In the fever to act quickly, it’s easy to get caught in a “whack a mole” situation—reacting to the latest issue. CIOs should take a step back and develop a clear perspective about which systems and applications are most critical to stabilize, and then prioritize that work. That includes scenario planning to help prepare for issues lying ahead, such as building up a supply of needed parts and hardware (for example, PCs, iPhones) and a distribution process for getting them where they need to go. Besides addressing key issues (such as, rapidly scaling up infrastructure capacity, network bandwidth, VPN access), CIOs should be thinking through second and third order effects.
- Enable the shift in business processes:Stress on the system has come from spikes in several specific channels: call centre, help desk, websites, and consumer-facing apps. In one McKinsey survey of Chinese consumers from three weeks ago, online penetration has increased significantly (+15 to 20 percentage points), for categories with higher purchasing frequency. In Italy, e-commerce went up from the last week of February by 81 percent.
CIOs should upgrade capacity to handle more traffic loads on consumer-facing websites and apps, roll out self-service tools and interactive-voice-response capabilities for customer-support needs.
- Stay the course on key priorities:In this high-stress situation, the instinct is to think about what programs to cut and revert to old ways of working. It’s important, of course, to revaluate priorities, shift resources, and track progress closely. But it’s also crucial to see that this current crisis is a major turning point and a competitive situation. We know from past crises, in fact, that companies that take a slash-and-hold approach fare worse than those that both prune and thoughtfully invest.
CIOs need to take a through-cycle view and stay committed to broader transformation goals they’ve been leading such as programs on data, cloud, and agile. Cloud migration provides the flexibility to manage the current spikes and changing employee and customer needs rapidly and cost effectively.
- Stay focused on customers:Customer behaviour is shifting radically during this time, and in many situations, to digital channels. There will likely be a residual stickiness of these learned behaviours, as with the explosion of Chinese e-commerce following the severe acute respiratory syndrome, or SARS, epidemic.
At the same time, there is reason to believe that there will be pent-up demand when the worst of the crisis is past. A recent McKinsey survey of Chinese consumers revealed that they are optimistic about overall economic recovery post-COVID-19, and more than 80 percent of them expected to purchase at the same levels or more as before the outbreak. And they’re much more likely to continue to spend through digital channels.
CIOs should accelerate investments that create competitive distance for their companies. One fintech CIO who focuses on online payments took this opportunity to aggressively test and market the company’s product, recognizing that it was “now or never” to get the product to succeed at scale.
- Understand implications of the ‘new normal’: While the economic consequences of COVID-19 are still far from clear, we believe that the end of the crisis will not mean a return to business as usual. The business impact of COVID-19 will inevitably require CIOs to cut costs, particularly in the short term. That includes, for example, evaluating fixed capacity that’s not being used and deprioritizing initiatives. As CIOs work to mitigate downturn impact from this outbreak, they should also start to identify ways to drive productivity.
More important, CIOs will need to understand what that shift means and what the new tech-enabled operating model can look like. Some CIOs have started thinking about these new ways of working to lock in new behaviours, such as eliminating attachments for internal emails and only using Slack for communications. Some also see the opportunity to build improved routines around work intake and demand management to ensure the ability to pivot toward only the most essential and valuable work in a time of crisis or reduced capacity.
CIOs can become leaders of innovation, rather than merely effective managers of the downside. How companies react to the new employee and customer needs will likely shape their competitiveness in the years to come.