By Spurring Digital Transformation, COVID-19 Is Preparing Orgs for an Uncertain Future

December 14, 2020 Derrick Harris

What made the COVID-19 pandemic and subsequent lockdowns so novel in recent history is that they were true existential threats to many businesses. This was not a case of getting “Ubered,” whereby the erosion of revenue can take years to fully materialize. Rather, this was a case of companies needing to—sometimes literally overnight—expand their digital operations and adopt new business models. The alternative to adaptation was that the revenue spigot turned off for weeks or even months at a time.

It’s no surprise, then, that corporate leadership has since rallied around digital transformation. According to a recent Forrester Research recontact survey of global CIOs and SVPs, 58 percent of respondents now rank “changing our business model” as a top priority (the recontact survey was carried out in July 2020 with n=204 for recontact vs. n=614 in the original October 2019 survey). When the same question was asked in the original October 2019 survey, that number was just 41 percent.

It’s also worth noting that organizations’ definition of digital transformation has evolved over the past several months. For example, 61 percent of respondents said the pandemic has accelerated innovation efforts to support remote work, and 45 percent said they are accelerating innovation “to meet new digital demands”:

Unfortunately, although their priorities appear to be in the right places, the majority (55 percent) of respondents are having to evolve in the midst of budget cuts, while 78 percent are dealing with hiring freezes and/or layoffs. Moreover, within the majority of organizations, “reducing costs” is now a top priority. These are not ideal conditions under which to attempt significant changes to business models, office logistics, or IT systems and application architectures.

Hear more about the survey, as well as advice from Forrester’s Dave Bartoletti and VMware’s Padmaja Vrudhula, here: Modernization in the Age of COVID.

To prepare for the future, invest in the future

The best bet against the next unforeseen event is to implement systems—both technological and procedural—that make it easier to adapt digitally. For example, by implementing the right application platform, collaboration tools, CI/CD pipeline, and application architecture. That way, whether you need to build and deploy a new app in a hurry, fix a critical bug, or add resources at the drop of a hat, you’re ready to act.

During our recent SpringOne conference, grocery chain Albertsons explained how VMware Tanzu Application Service enabled it to scale far beyond its normal traffic in order to handle online shopping during the lockdowns last spring. Here are the highlights, from a blog post on that session (you can get more details and watch the full presentation in the post itself):

During the initial months of the COVID-19 pandemic, Tanzu Application Service running on Azure allowed Albertsons to achieve:

  • More than 100,000 orders per day

  • A 450 percent growth in digital and e-commerce sales

  • 10 times normal e-commerce traffic with zero downtime

  • A 39 percent increase in sales

  • 700 percent of projected load, which broke all records within the organization

As [Alberstons’ Bhuvan] Padakanti put it at SpringOne 2020, “What [Tanzu Application Service on Azure] has done for us over the past four months...is unprecedented. The kind of order volumes that we saw and the orders we delivered went way beyond anyone’s expectations.”

Another VMware Tanzu customer, DICK’S Sporting Goods, also fared better than many other businesses during the pandemic—aided in large part by its ongoing digital transformation, which had already resulted in a smooth buy online, pick up in-store experience (read more about that here). The company saw a 194 percent increase in e-commerce revenue during its fiscal second quarter, and a 95 percent increase during the third quarter (after all its stores had reopened). According to a Pittsburgh Post-Gazette article on the retailer’s results:

[U]sing brick-and-mortar stores as hubs for curbside pickup and offering in-store pickup have proven to be popular. [DICK’S CEO Lauren] Hobart said sales through those services increased over 300% when compared to buy-online-pick-up-in-store sales last year.

Read more about the experience of building the buy online, pickup in-store capability—and converting it to curbside pickup—here: VMware Tanzu and Microsoft Azure Help Keep DICK’S Sporting Goods in the Game During COVID-19 Lockdowns.

Neither digital transformation, cloud native technologies, nor anything else that falls under the umbrella of IT modernization is about fighting a battle that’s already underway. Rather, they’re about being ready for the battle you don’t see coming. It might be impossible to predict the future, but recent history gives some good examples of what can happen: economic crashes, digital disruption, broad government regulations, and global pandemics, to name just a few. As VMware’s Sutha Kamal explains it his post, The 5 Pillars of Digital Transformation

For most businesses, the days of 10-year plans are long over because it’s impossible to know what the world will look like that far out...Today, optionality is the game. Twenty years ago, it was enough to have a “China strategy”; today you need five. Once upon a time, having the “killer app” was enough; today, you need a portfolio of killer apps.

Things will eventually get back to normal. Budgets will recover, and hopefully more organizations will take the opportunity to future-proof their digital operations. Uber and COVID-19 already happened; what comes next is anybody’s guess.

About the Author

Derrick Harris

Derrick Harris is a product marketing manager at VMware.

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