Recession — it’s a scary word, especially for businesses. But when a downturn hits, it opens up opportunities to drive digital adoption within your company. Lower opportunity costs and embattled competitors make it the perfect time to invest in new technology.
Digital adoption can help you both prepare for and weather a recession and recover faster when the economy starts to improve. Improved flexibility, decreased training costs, and higher efficiency are just a few of the reasons to drive digital adoption during a recession instead of focusing solely on budget cuts.
Opportunity Costs Are Lower
During an economic boom, companies generally focus their resources on maximizing production. As a result, digital adoption has a higher opportunity cost because companies have to divert resources from product development. But when preparing for a downturn, companies have less need to focus on maximum output.
Effectively, this means implementing digital adoption costs less during a recession. Opportunity costs are lower because investing in new technology doesn’t take necessary funds away from production and sales. In fact, the technology itself may even be less expensive during a recession, because the companies selling the technology are preparing for economic troubles as well.
For example, if a car company is selling fewer cars, it can’t simply raise prices to cover costs. At the same time, it doesn’t need to use significant resources to increase output. Instead, it can invest in technology that makes its production process more efficient, so the company can keep per-car costs as low as possible.
Instead of focusing only on lowering costs, take advantage of low opportunity costs. Take resources slotted for output expansion, and divert them to internal company improvement. Focus on new technology that will improve your production process as a whole. That way, you can ramp up production quickly and be more efficient than ever.
You’ll Become More Flexible
Recessions are unstable by nature. The market shifts up and down, sometimes rapidly. Preparing for a recession means making your company more agile and flexible, able you to react quickly to change and make adjustments in product output and development. Digital adoption is a way to improve access to data throughout the company and empower local decision-making as a result.
When managers can quickly access the data they need to make decisions, they’re better prepared to rapidly address changes in pricing and consumer demand. Cloud migration, for example, enables employees to access their data and applications from wherever they are. Managers can view data and make adjustments as needed without having to wait for reports to come in or having to sort through physical files.
If you run a SaaS company, basing your applications in the cloud also allows you to easily scale up and down according to demand, saving money on unnecessary storage and computing capabilities. This increases the efficiency of your applications and protects your investment by ensuring the new technology stays relevant and continues to be used even during economic shifts.
You can see the benefits of digital adoption in the way some health care companies have recently adopted blockchain technology. The new technology enables health care workers and facilities to access patient data as needed, without having to send requests to other offices and wait for responses.
Similarly, improved communication technology can help you gather and analyze feedback from employees at all levels of the company. Even if your company is highly centralized, quick data collection allows for fast, informed decision-making that takes the whole company into account.
It’ll Decrease Training Costs
Employee onboarding and training can be costly and time-consuming processes. Training technology that enables self-paced learning decreases training time and reduces overall training costs. When team members don’t have to wait for scheduled training sessions, they can move through the onboarding and training process at their own pace and more quickly become productive employees.
Technology that enables self-paced learning also frees up managers to focus on more important tasks. They no longer have to spend time on scheduling and running training sessions or personally taking new hires through the onboarding process. This is especially important when you need all hands on deck to prepare for a recession.
This kind of technology is an investment. Once it’s established, it will still be there for future hires and ongoing training. This gives you an advantage once the economy improves: Sales will start increasing again, and you’ll still be spending less on training and onboarding than you were previously.
Training technology also serves as an insurance policy to protect your investments. Efficient training ensures complete employee adoption of newly implemented technology and speeds up time to productivity, increasing your overall ROI.
Experian, a global information-services company, used this strategy to implement a digital adoption solution to help with training. As a result, Experian cut training time by 50%, enabling employees to reach productive levels much faster.
Technology Makes You More Efficient
When you start preparing for a recession, your ultimate goal is to reduce spend as much as possible. Digital adoption can enable you to streamline processes and reduce waste, lowering costs in a different way than simply cutting budgets.
Running your reports and data through analytics will help you see where you can streamline and what processes you can automate to cut costs. This will help you save money in anticipation of a recession, and it will continue to benefit your company as you make more sales again. Increased automation is also beneficial if you have to cut hours or lay off employees as a result of the economic downturn.
You can see increased technological efficiency in action with the Lufthansa Group, a worldwide aviation corporation. Lufthansa is a company significantly driven by data, and it implemented Tableau in order to have a centralized platform for collecting and analyzing reports. This resulted in its reporting and data analysis becoming 30% more efficient. The new technology enabled each department to see and analyze their data without having to involve the IT department every time. Tableau also made it easier for executives to access data live during meetings and make informed, data-based decisions on the spot.
It Will Give You a Competitive Edge
It’s easy to take a narrow view during a downturn and focus solely on dealing with problems as they arise. But it’s still beneficial to look at the big picture and make decisions that will help you now and also benefit you later.
When a recession hits, your competitors are facing the same struggles as you. By aggressively driving digital adoption, you position yourself to rapidly outstrip them once the economy begins to improve. You will have reconfigured your company to be more streamlined, with improved training processes and less waste.
Your competitors will have lost the period of low opportunity costs and have to spend more and divert resources away from production in order to revamp their technology. While they are catching up, you can focus on ramping up production and increasing sales. As a result, you’ll be positioned to see a much more rapid ROI for your tech stack.
This is the strategy retail giant Target used during the recession in 2000. It used the economic instability as an opportunity and invested in new credit card technology and other technology to improve efficiency and productivity. Thanks to its aggressive digital adoption strategy, the company grew profits by 50% during the downturn.
You may not be able to predict a recession, but you can take steps to prepare for one, minimize the effects if it hits, and help your company come out strong on the other side. A strong digital adoption strategy is key to bolstering your company and giving you an edge over your competitors.
Leverage Digital Adoption to Survive and Thrive
When you think about getting your company ready for a recession, it can be hard to look at anything other than how to cut costs. But in reality, it’s still crucial to plan for the future. Investing in digital adoption helps your company through the downturn by reducing costs, improving efficiency, and helping your company be more flexible. At the same time, it gives you a competitive edge and sets you up to outstrip your competitors once the economy improves.
You can increase these benefits even more by implementing a digital adoption platform (DAP), such as Whatfix. DAPs enable employees to learn new technology efficiently. This cuts down on training time and costs and helps employees reach higher productivity levels more quickly.