The COVID-19 pandemic threatens the health of millions worldwide and has prompted governments to take unprecedented steps to contain the spread. Restaurants, gyms, salons and other types of businesses where people gather are shuttered indefinitely. Millions of people are working from home, and parents are homeschooling children with little advance preparation or support. The human tragedy playing out daily is foremost on people’s minds, but the economic fallout is already severe, with millions in the U.S. filing for unemployment and businesses that were contemplating expansion plans just weeks ago now scrambling to survive Q2.
Social distancing to contain the spread and applying medical science to discover treatments and a vaccine are the immediate remedies. But in the meantime, business leaders are looking for ways to continue operations during lock-down periods and weather a projected recession, which could be lasting and deep. Adapting to changing conditions by embracing 5G technology and remote work can help some companies maintain business continuity. Businesses can also use analytics to adapt during the COVID-19 crisis.
Practical Uses for Analytics in Uncertain Times
In any scenario that affects the economy, business leaders can choose to continue operating as usual and hope for the best, or they can analyze data, assess possibilities and create a plan to mitigate losses and maximize opportunities under each scenario. The COVID-19 crisis is no different in that regard; here are at least five ways analytics can help mitigate the economic fallout of the pandemic:
1. Create a Fact Framework That Drives Decision Making:
Rumors and conflicting information tend to proliferate in emergencies. To support rapid decision making, leaders can establish a fact base that serves as a single source of truth, providing critical information the company can use to expeditiously address business challenges and mitigate risks.
2. Model “What If” Scenarios to Gauge the Impact of Variables:
Uncertainty is an obstacle to business planning. Experts make predictions, but no one can say for certain how severe the outbreak will be or how long it will last. Analytics allows business leaders to model “what if” scenarios and make financial plans to help the company weather possible outcomes.
3. Keep an Eye on Competitors:
When creating an action plan, it’s helpful to watch what competitors are doing. Analytics can reveal what actions other companies took to mitigate risks in similar industries, markets or geographies. Company leaders can learn what to do — and what not to do — by examining competitor actions and learning lessons from their outcomes.
4. Determine Where to Focus and Prioritize Actions:
The COVID-19 outbreak affects everyone, but some regions, markets, channels, and customers will need more attention than others. Analytics can help business leaders determine which geographies, brands, and segments require the most attention and develop plans to address vulnerable groups with targeted action.
5. Plan for Demand, Sourcing, and Production:
With the right analytics, companies can model scenarios and project demand at the SKU level. Business leaders can make detailed plans for sourcing, production, etc., and then make informed spending decisions. Data analytics make it easier to understand downstream effects and optimize production capacity.
Beyond COVID-19: Planning for the Future
Before the pandemic struck, forward-thinking businesses were already preparing to extend the benefits of emerging technologies like AI and 5G. The measures governments had to take to contain the spread of the virus underscore the utility of these technologies from a business standpoint and suggest that AI and 5G will be important allies in helping people contain risks in future outbreaks.
Analytics and modeling tools are essential to estimating disease progressions, predicting outbreaks and helping governments make plans to address service disruptions and economic risks. Now business leaders are using analytics and AI to manage the current pandemic and prepare for other business-disrupting events, e.g., by sharing data and powering devices like delivery drones and sanitation robots.
From both a government and business perspective, analytics can drive a successful response to the immediate crisis, but it’s important not to lose focus on long-term objectives. Now is the time to make plans for disruptions of various lengths and the resulting economic fallout, which could include a lasting recession, or, more optimistically, a period of disruption followed by a rapid recovery.
With analytics, businesses can be prepared for either long-term scenarios. Leaders can identify and address weak links in the value-creation process, such as vulnerable supply chains, and make decisions on how to build in resiliency. Modeling scenarios and business forecasts can take the element of surprise out of uncertain times, ensuring that business leaders are prepared for what comes next.