By: Andy Dunbar, Services Director at SoftwareONE UK, Ireland, South Africa and Nordics
The COVID-19 pandemic started a two-year transformation. Everything has changed, from the way that people work and play through to the supply chains that power our economy. It also changed businesses for good.
The pandemic was tough on companies, but many seized the nettle, responding by becoming more resilient and resourceful. It has accelerated their digital transformation. McKinsey research found that on average, the share of digital or digitally enabled products in a company’s portfolio advanced by seven years during the pandemic – and it is showing no signs of slowing down.
Software subscription models
Subscription-based services are increasing across the board. The rise of companies like Netflix and Spotify changed how consumers interact with entertainment. Even cars now come with subscription services, accessed via in-car systems and mobile apps.
The pandemic accelerated this trend. People staying at home consoled themselves with consumer-oriented subscription services for everything from movies to food. Companies also served home-bound employees with subscriptions for cloud-based software. They flocked to services like Microsoft 365 and Google Workspace, renting productivity by the month.
This move to subscription-based IT services has gained traction. The cloud is playing an increasingly important part as companies chart a new hybrid future where people split their time between home and office. Cloud services are heavily based on subscription models, and UBS expects a 13% CAGR for cloud subscriptions from 2021-2025.
Software subscriptions carry multiple benefits for businesses, helping to drive digital transformation even further. They reduce up-front capital expenditure because companies don’t have to buy software upfront.
This shifting approach lends itself to a more entrepreneurial IT approach by lowering barrier to entry to new projects. Companies can adopt a ‘fail fast, fail often’ approach, experimenting with ideas in a more agile, forgiving business environment. The subscription model’s lower initial investment might even help sponsors to justify a project’s initial results by showing lower costs, increasing its chance of leaving the pilot phase.
Subscription models also offer the flexibility that is so crucial to digital transformation. It gives businesses access to multiple software products from the same vendor. If requirements change, companies can often alter their chosen software combination to suit their evolving needs.
They can also scale internal initiatives, adjusting their subscriptions to suit the number of people working on a project. If a service takes off, it’s easy to expand the user base for the software that supports it.
SoftwareONE sees this subscription model affecting on-premises software contracts, too, as companies pay monthly per-user for installed software. We see customers moving away from traditional perpetual licensing arrangements to subscriptions. Software companies like Adobe now offer this as their primary sales model.
The pandemic has also fuelled another significant trend in digital transformation: hyper-automation. This advanced form of automation takes an aggressive approach to efficiency. It quickly identifies as many candidate processes for automation as possible and then uses technology to vet, prioritize, and automate them. It often combines multiple technologies, including machine learning, event-driven software architectures, robotic process automation, and low- or no-code tools.
Whereas traditional automation targets discrete processes, hyper-automation takes a more joined-up approach. It spans individual processes to unify automation from end to end, creating more value as part of a digital transformation initiative.
SoftwareONE has seen hyper-automation take off during a pandemic that changed business priorities. It helps companies shift from a preoccupation with growth to refocus on operational efficiencies as market conditions became more volatile.
Gartner has already charted a growth in some of the technologies underpinning hyper-automation. By 2025, it believes that 70% of new applications developed by organizations will use low-code or no-code software development, up from fewer than a quarter in 2020. This, along with other innovations such as RPA, draw directly on workers’ own knowledge to create robust automation reflecting real-world activities in the company.
Hyper-automation will become more prevalent in the wake of the pandemic. SoftwareONE expects this to drive commercial automation for the everyday consumer. Companies originally drove efficiencies into their existing workflows to accommodate pandemic-related constraints. Now, they will use it to drive new products and services. These will serve an increasingly demanding customer base used to an unprecedented level of digital convenience.
The third area that the pandemic changed irreversibly was cybersecurity. It forced a more resilient approach to rising digital threats.
Ransomware is on the rise. According to the 2021 Verizon Data Breach Investigations Report, these attacks doubled in frequency year-on-year and ransomware is now a factor in 10% of all breaches.
The shift to remote working during the initial lockdowns prompted businesses to review their security as they adjusted to new hybrid working practices.
Overnight, most people switched to working on home networks that their employers did not control, often using devices that the company did not own. This accelerated a concept that has been around for two decades: de-perimeterisation. It erodes the traditional firewalled network perimeter, acknowledging that assets can lie anywhere – on a company’s premises, at someone’s home, or in the cloud.
Companies responded by focusing on formerly under-served security practices such as endpoint management. They explored solutions that either prevented the storage of sensitive work data on remote devices or separated it from personal data.
Stricter access controls have become a critical need. Zero-trust security architecture will be a strong post-pandemic security trend. This supports privilege-based access to any enterprise system from anywhere, acknowledging the distributed infrastructures that underpin digital transformation.