Addressing the Elephant, or the Black Swan, in the room

The world has experienced black swan events in the past but perhaps none as impactful as the Covid-19 pandemic. The global financial crisis of 2008 is just one example, and we can expect such events to occur at least once a decade. Black swan events can be catalysts to teach valuable lessons and all businesses should take heed. Are you prepared?

There are many business responses to black swan events but two of the more common responses are 1) learn and adapt and 2) tough it out and return to business as usual. In light of recent events the second approach may not be a survivable option as Covid-19 will most likely have a more enduring effect on businesses and the global economy than some prior black swan events.

The new realities of working from home will have long-lasting effects for some companies as they have been pushed into supporting work-from-home initiatives. Enterprises are struggling to support the rapid increase in remote workers needing secure connectivity, as well as having to scale their business services quite literally overnight. Cloud service providers have worked quickly to adapt their product roadmaps to work life both during and after the pandemic.

Business impact

Demand for online services and, in turn, cloud and data services, are increasing as both households and businesses economize their spend. As in any economic crisis, the primacy of cash and a loss of confidence promotes price competition and deferral of major purchases or long-term contractual commitments wherever possible, be it households or businesses. Cloud-based services offer exactly that and the more savvy businesses will make the move to cloud if they haven’t already done so.

With much of the global economy and social lives scaled back, demand for virtual goods and online services is on the rise, underpinned by a global footprint of datacenters and data services. Better still, This demand is arguably resilient against economic blows, which may come with a prolonged pandemic crisis hitting various economies at various times. Cloud platforms and digital services can offer businesses a high level of support as well as a refuge for an economy in distress.

What we observed

As hundreds of millions are forced to stay home, and a significant portion must economize on going out, online services are winning. Data traffic at major internet exchanges across Europe, such as Frankfurt, Amsterdam, London, Paris and Milan, jumped 10-20% in the immediate aftermath of national lockdowns, and eventually stabilized at this higher level. This tells us a few things: people use more data bandwidth when at home; the extra data flows are nowhere near overwhelming networks; and that data consumption was already high even before the pandemic.

Media and Entertainment impact

Coronavirus lockdowns boosted screen times, which also increased consumption of video streaming services. A US survey by Kagan at the end of March showed that 61% of Americans watched more television; while half said they watched more videos on demand.

Video streaming services and internet subscriptions appear to be resistant to economic hardship. Even as economies shrink, households are, on balance, still planning to add new streaming service subscriptions, while free video services such as YouTube, Vimeo, Facebook Watch and many others are also attracting greater use. As a consequence, roughly 14% of US households have already upgraded to faster broadband connections, with an additional 10% considering following suit.

On the production side of the business, television and movie production has now moved into homes and other non-traditional locations with workflows now including and increasing the use of cloud based solutions.

Other Impacts

Video streaming, social media, video conferencing, online gaming, and now online home exercising, and product tours all drive increased need for data and cloud services. Online shopping and food delivery volumes have been skyrocketing and such a change in habits will not just disappear once lockdowns are lifted.

Even in economies that have been in recession, such as Brazil, people and businesses alike have turned to digital income streams and have utilized the cloud and data services to cut costs. Datacenter capacity and cloud data services, concentrated around São Paulo and Rio de Janeiro, boomed in response to this shift to digital.

Strategy

The lesson is for businesses and vendors to look for closely aligned use cases that will broaden the opportunity to find new customers. There is time for businesses to adapt to the new normal but businesses that start adapting their workflows and roadmaps to the growing distributed workforce will be in much better shape in the coming years than those that don’t.

Evaluate trends in your target customer base. 

The distribution of workers into smaller offices has been steadily growing over the years, and the COVID-19 pandemic with government mandated office closures has accelerated work-from-home scenarios. A lasting outcome of the pandemic is that a significant number of employers will expand their work-from-home policies once the pandemic passes. That will lead to a reduction in demand for branch offices while increasing the demand for remote connectivity and cloud services.

The Solution: Provide or enable cloud services. 

Pandemics like the coronavirus are black swan events and cloud and data service providers were able to quickly ramp up capacity to meet demand. Granted, the demand will likely fall back to just above pre-pandemic levels as people head back to offices, and the remaining users can be absorbed into existing remote connectivity strategies, but the ability to meet demand and capture new business is the definition of agile. Businesses adopting and adapting to cloud services and cloud workflows, will be in a great position for future growth and can survive and even capitalize on black swan events.

As you consider a move to cloud data services look for providers that offer flat rate pricing, global distribution, fast data movement, and no regional charges. To learn more, visit our resource center and download our whitepapers and e-books offering strategies for transitioning to cloud.

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