How Digital Transformation Helps Your Business Become Recession Resilient

How Digital Transformation Helps Your Business Become Recession Resilient

When a recession seems to be on the horizon, businesses must prepare adequately by building formidable infrastructures to make them resilient. The good news is there is a solution — digital transformation.

Digital transformation is among the most discussed topics between top-tier corporations and middle-market business executives. Generally, a functioning, well-planned, and properly executed digital transformation strategy transforms businesses into highly-efficient enterprises.

However, most people are yet to grasp the concept entirely. This article will thoroughly assess how digital transformation can help your business become more resilient in light of a recession.

What Is Digital Transformation?

Digital transformation integrates modern technology into businesses to optimize processes, provide value, and drive cultural changes. It accelerates the adoption of both new and existing technologies in business structures. Companies use digital transformation to drive efficiency, improve customer experience (CX), and deliver quality results.

Digital transformation allows you to adopt multiple innovative tools, including artificial intelligence and machine learning, robotics, cloud computing, 3D printing, blockchain, big data and real-time analytics, and the Internet of Things (IoT) to streamline operations and increase revenue. 

Although some companies have prioritized digital transformation initiatives for years, the emergence of the COVID-19 pandemic accelerated the process. The 2021 Middle-Market Digital Transformation Survey shows that out of 500 C-level executives, 49% are revising their long-term strategic vision for a more digital future. Also, 90% of companies planned on maintaining or increasing their digital spending that same year. This makes one thing clear — digital transformation is the future.

What Is a Recession?

The National Bureau of Economic Research considers a recession to be a significant decline in economic activity over months and sometimes years. Economists, politicians and market professionals use multiple indicators to assess the situation.

The White House opposes the widely accepted indicator that two consecutive quarters of negative gross domestic product signifies a recession. Instead, it adopts a more holistic approach, considering consumer and business spending, labor market trends, incomes, and industrial spending. We can benefit from both suggestions because they help us assess the situation from different standpoints and develop a comprehensive understanding of the economy's state.

Of course, a recession can also occur on an international scale. Global recession involves more or less a synchronized recession across multiple economies, creating a string of financial crises and economic disruptions. For example, in 2022, the impact of the COVID-19 pandemic lingers, with the Russian-Ukraine conflict impacting energy and inflation

Central banks worldwide simultaneously hiking interest rates in response to inflation should prompt middle-market executives to implement effective strategies. The reason is that a recession leads to a massive decline in sales and profits, reduced wages and incomes, unemployment, the inability to invest in new products and services and other issues.

Why digital transformation is important during a recession

Why Digital Transformation Is Important During a Recession

There are several reasons why digital transformation is vital during a recession. Digital transformation is an effective strategy that helps organizations hurdle various challenges. Digital transformation during a recession will do the following:

  • Reduce cost and waste: Digital transformation helps cut costs by increasing operational efficiency and streamlining processes. It also allocates resources in the right areas, which reduces waste. Moreover, automated systems mitigate errors and improve completion and delivery times.
  • Provide an opportunity for growth: Digital transformation allows companies to reevaluate their processes. This helps the company tackle inefficiencies, target and acquire talents seeking employment, build a competitive business, and design better customer experience tools.
  • Improve CX: Digital transformation helps organizations improve customer service. It allows you to harness the full potential of digital technologies, such as gathering relevant data to understand and predict customer preferences and behaviors. Analyzing the data will also enable you to create personalized products and services to attract new customers and retain existing ones.

How Digital Transformation Helps Your Business Become Recession Resilient

A company capable of withstanding an economic downturn is agile and innovative, consolidates its operations, upgrades the existing skillset, values collaboration, and makes data-based decisions. Let us consider these elements in more detail:

1. Improves Agility

Businesses must consistently improve and respond to changes efficiently. As technology grows, the approaches to executing tasks may change. This quality is functional, especially during a recession when market predictions become challenging.

Implementing an efficient digital transformation strategy during a recession makes the business flexible. The organization can navigate uncertainties quickly and mitigate risks. It also helps you target and achieve specific outcomes despite the wavering market conditions.

2. Consolidates Operations

A key advantage of digital transformation during a recession is that it integrates the various aspects of the business into an observable unit, making room for synchronized processes. Additionally, when you consolidate operations, you can monitor activities with ease. To survive a recession, you must be aware and up to date with all processes in your business.

3. Enhances Knowledge and Skillset

The pandemic accelerated the shift toward digital solutions, which made it easier to identify and employ talented workers regardless of their locations. You can rely on this experience during a recession to keep your business competitive.

4. Enhances Collaboration

A recession-resilient business encourages smooth and convenient collaboration between various teams and departments. Most entities were affected by the "Great Resignation,” when thousands of employees quit their jobs due to burnout and increased workloads. Digital transformation allows employees at all levels to engage with each other. This improves the employee experience and increases productivity.

5. Drives Data-Based Decisions

Top-tier middle-market business executives understand the value of making decisions based on data. Data-driven insights help you understand customers better and aids in market prediction and resource allocation. Digital transformation allows you to collect high volumes of data, store data securely, and embark on highly-accurate analysis.

Digital Transformation Strategy During a Recession

A strong, carefully designed plan will increase the return on your investment in digital transformation. Before deploying a digital transformation strategy, consider the following:

  • Define your objectives: A good digital transformation strategy begins with clear goals and objectives. These will help you understand which technology to adopt and how to optimize its usage. Defining your objectives also helps in creating a personalized strategy that works specifically for your company.
  • Include all stakeholders: Digital transformation is a cultural change, meaning it can only function when the whole team is in sync. When designing your strategy, involve all stakeholders. This gives you practical insight into the areas you need to adjust.
  • Select the right technology: Many kinds of technology exist, but not all of them will be applicable to your business. Choose the right technology based on thorough research. Personalize the technology stack according to your business needs for the best result.
  • Start gradually: Digital transformation is a step-by-step process that requires commitment. Prepare for change and stay patient for the results. Make long-term and short-term plans to guide you through the process.
  • Employ a partner: Digital transformation is a collaborative process involving your organization and a trusted professional. Select a partner that has the expertise and technology to execute the task. Above all, the partner must be willing and able to study your business goals and processes in order to provide a complete service.

BDO Digital: Your Trusted Digital Solutions Provider. Contact us!

BDO Digital: Your Trusted Digital Solutions Provider

BDO Digital is a digital solutions provider that collaborates with organizations to drive growth and efficiency. We aim to help your business reach its full potential by focusing on its goals and values. We understand that no two companies are the same, so we ensure all strategies are personalized. Contact us today to learn more about our services.