DigitalCFO Newsroom | 23 December 2021
Overcoming supply chain logistics challenges now critical to business continuity
Increased volatility rising out of the evolving COVID-19 pandemic has led to a reshuffling of priorities for the global technology industry. Emerging as the top opportunity for the year ahead in this landscape (up from fourth position last year) is the imperative to attract and retain a motivated workforce. This is according to the annual EY report, Top 10 opportunities for technology companies in 2022, which ranks the biggest industry success drivers based on EY analysis.
The COVID-19 pandemic has increased the urgency to address already pressing issues around talent strategy in a hybrid working world. Tech companies are exploring how best to introduce a staged return to the office, with 9 out of 10 employees indicating that they are prepared to resign if they are not offered flexibility in where and when they work. At the same time, demand for engineers and salespeople is growing exponentially for those investing in growth.
Barak Ravid, EY Global TMT Strategy and Transactions Leader, says:
“The COVID-19 pandemic has challenged tech employers to re-examine the entire value-proposition for talent. In order to build a motivated workforce, employers must prioritize finding ways to solve the puzzle of optimizing rewards, flexibility and experience, to create a package that cultivates the best talent while managing the associated costs.”
Supply chain disruption presents existential challenges
In 2021, supply chains came under extreme pressure from market volatility, due to the COVID-19 pandemic and Brexit, among other market-defining geopolitical events. For the tech industry, two major bottlenecks have been around logistics and the availability of components. The report reflects this, ranking the need to de-risk the supply chain in order to secure business continuity in third place for the second consecutive year.
Ravid says: “Tech companies need to holistically review their entire supply chain. Different risk profiles in the chain require different policies around inventories and sourcing contracts. Logistics issues could lead to changes in preferred manufacturing and distribution footprints. Real-time visibility will help mitigate problems at an early stage, while new technologies such as digital twins and 3D printing could reduce the degree of disruption.”
More than just environmental sustainability
The call to take a strong position on environmental, social and governance (ESG) issues debuts at fifth position on the ranking, with stakeholders now demanding more from tech companies. Employees want to make a tangible difference; investors are seeking sustainable investment options; and customers are looking to the industry to implement new tech that drives sustainable outcomes. The report highlights that companies must respond by taking the initiative to draw up a long-term value proposition and adopt transparent KPI-led reporting.
Meanwhile, leveraging mergers and acquisitions (M&A) to strengthen the growth profile rises from tenth position last year to second place on the 2022 ranking. With 51% of technology executives stating that organic growth could be a challenge in the near term, M&A will be key to sustaining growth for many. The report indicates that despite increased regulatory scrutiny and financial uncertainty, the deal market is expected to remain healthy.
Ravid says: “Acquisitions across the industry will reignite growth by adding solutions, technologies, end markets and distribution channels to a companies’ portfolios. Divestments could also help companies steer away from slower growth market segments or solutions that require the business to build new capabilities. Overall, having the right M&A strategy in place will be critical to realizing a better growth profile.”
The full list of top 10 opportunities in technology for 2022 are:
- Attract and retain a motivated workforce in a hybrid working environment
- Leverage M&A to strengthen growth profile
- De-risk the supply chain to secure business continuity
- Embed security into the design of new activities
- Lead by example in ESG to strengthen stakeholder relations
- Transform business to excel in consumption based sales
- Realign tax organization with digital business models
- Streamline operations to increase agility
- Instill customer trust to drive digital engagement
- Prepare for adoption of 5G