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Investment Currents: How COVID is Impacting Enterprise Technology

woman participating in a video conference callJuly 28, 2020

By: Thomas Kozior, Investment Strategist, Girard, a Univest Wealth Division

There are so many profound new technologies that have been introduced over the past few decades that it’s impossible to list them all. In many cases, these new technologies have revolutionized the way Americans live their daily life and the way we do business. Because of this constant innovation and drive forward, technology has become one of the most dynamic and rapidly changing industries in the world. The rate of change within the industry has only been exacerbated by the COVID-19 pandemic, which has forced businesses to make decades worth of transformation in a matter of months. More specifically, the pandemic has forced companies to find new areas of efficiency, new ways to collaborate both internally and externally, and how to more effectively engage with customers. This transformation has provided a unique opportunity for a number of technology companies that have the products and services that address these changes.

Notably, the COVID-19 pandemic has accelerated migration to the cloud for many companies. At its core, cloud computing is about changing the way businesses manage their data. Everything done online, whether it be sending an email or browsing the web, requires the use of data. This data is processed behind the scenes on computers called servers. Managing these servers with on-premise infrastructure presents a multitude of difficulties. First and foremost, on-premise infrastructures require a labor force to manage and operate. Also, these servers cannot quickly scale up or down to accommodate changes in use. As a result, in-house IT infrastructure must maintain enough server space to account for peak demand. That can mean a company has a bigger data center than it needs on a consistent basis, creating unnecessary costs. When a company moves to the cloud, it is essentially outsourcing these IT tasks.

Cloud infrastructures are much more agile and flexible as customers can quickly scale up or down to accommodate fluctuations in demand. Furthermore, the pricing of cloud services is a lucrative reason for companies to shift to the cloud. Cloud computing has led to the emergence of usage-based pricing models. In other words, you pay for what you use. Outsourcing these IT responsibilities ultimately allows companies to cut IT spending and focus more on their core business.

The coronavirus pandemic has largely shut down offices across the country, forcing employees to adjust to a new normal of working remotely. Working from home has not surprisingly changed the way many employees collaborate. Through the proliferation of smartphones over the past decade, many employees have grown accustomed to digital communications in their daily lives and expect their workplace communications to be similarly seamless and flexible. Team messaging applications are enabling businesses to give their employees a similar modern digital experience. What’s more, team messaging applications now offer more than just quick team communication. Through integrations with third party software applications, like customer relationship management software, companies can incorporate additional functionality and drive even greater efficiency. The abrupt shift to working from home has also pushed video connectivity more into the mainstream. We expect the pandemic will drive faster adoption of these emerging workplace technologies.

Since the start of the pandemic, companies across various sectors have found themselves unexpectedly not able to sell products due to missing components. When disruptions like this occur, many companies lack the data to determine where failures are occurring and to make swift corrections. Enterprise-grade Internet of Things (IoT) is another compelling new technology that directly addresses these issues. IoT solutions ingest real-time data derived from a range of various devices/applications and provide visibility and insight into supply chains. Further, artificial intelligence techniques such as machine learning can be coupled with IoT to analyze supply chain performance, predict problems, and suggest alternatives. The combination of these solutions will ultimately lead to more informed decision making. In addition to better insights, companies have a strong incentive to invest in IoT solutions as they otherwise would need to collect and process their own data, which can certainly prove costly and time consuming.

These are several of the reasons why it could be wise to include technology as part of your investment strategy. Given the ongoing changes due to the global pandemic and the significant investment implications, working with a financial advisor can help you navigate the markets and create an investment strategy that matches your time horizon and risk tolerance. To have a conversation about your financial goals and how we can help, please reach out to a Girard advisor.

 

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This article is for general information purposes only and is not intended to provide legal, tax, accounting or financial advice. The information in this article, and any opinions expressed therein, do not constitute a recommendation or an offer to buy or sell any security or financial instrument. Viewers should consult with their financial and/or legal professionals before making any financial decisions.