The Covid-19 Pandemic Hit Businesses Very Differently
By Erik Damgaard, CEO Uniconta
Uniconta has experienced increased growth during the pandemic. It honestly came as a surprise to us, but on closer inspection makes good sense. The Covid19- caused pandemic has affected companies very differently and has, in many cases, helped to stimulate the introduction of alternative working formats and new IT systems.
I was in Brazil visiting my wife’s family when Denmark closed its borders in March 2020. I was 10,000km and four hours behind my colleagues who were working at the headquarters of the company I started in 2016. Uniconta now serves thousands of customers, across 40+ countries worldwide.
I did not know when I could return from Brazil, but that was not my biggest concern. Our business model, where customers run their finances and many other business processes on our software in the cloud, means that they can cancel their subscriptions with one month’s notice. How would the shutdowns and restrictions affect the economy, and how would it affect us? Would customers slow down their activities? How would the influx of new customers develop? How would that affect our many resellers and business partners, who in most cases are taking care of sales, implementation and support?
Erik Damgaard, CEO Uniconta
We hoisted the sails
Uniconta A/S was, from the outset, a genuinely virtual company. Our developers were already spread across several countries, and our policy of primarily hiring experienced people meant that the company could continue to operate, even if those living on Zealand could not physically show up at our office in Ballerup.
Our marketing activities, which in most cases, result in demos for customers or the setting up of test accounts on the system, could also continue to run on the virtual channels. Organisationally, we could easily keep the company afloat and continue without significant disadvantages. Still, we could not eliminate the uncertainty surrounding the development in market demand.
The management team simulated a series of scenarios and decided to hoist the sails. We reduced administrative costs while reorganizing – but maintaining the level of – marketing activities. We had to say goodbye to three employees and took advantage of the government’s salary compensation relief for staff that were furloughed. At the same time, everyone, including the board of directors, agreed to take a reduction in salary until we had a better understanding about the consequences of the crisis.
But the storm never came
As early as April, we noticed that customers remained on the system. Only a few reduced the number of active users. Of course, we were sad to see users go, but it also proves the strength of our business model. When customers face a recession and have to lay-off staff, they can reduce access to the system at short notice and save that cost. As soon as the activities pick up again, they can return and become operational in a matter of minutes.
We were pleasantly surprised when it turned out that the influx of new customers in April 2020 was higher than in the same month in both 2019 and 2018. We suspected that it was a result of decisions made before the Covid-19 hit us. However, as the increase continued over the summer period, we became convinced that many companies were using the involuntary respite to replace and upgrade their business systems.
Deciding for and replacing the ERP (Enterprise Resource Planning) system puts increased stress on any organization. Although we have conversion tools, making the transition to Uniconta from the most common ERP systems as easy as possible, there is always plenty to do. New document templates must be designed, users must get familiar with the UI and the new functionality, and integrations to banking and other systems must be completed. Taking advantage of a quiet period to modernize your digital platform, getting ready for better times, makes perfect sense.
One should never let a crisis go to waste
The increase in the influx of new customers continued after the summer period. At the time of writing this article, we are more than 10 per cent over the same period last year. Many companies have been directly affected by the pandemic and have suffered significant financial losses. Still, we have so far escaped successfully, and in many ways, strengthened our position. Not only have we increased our customer base, but it also consists of companies that now have an updated digital platform ready to take advantage of the expected upturn.
In the past, the procurement of a new ERP system was a major undertaking and investment. Not anymore. Uniconta runs in the cloud and, therefore, does not require the acquisition of new servers and software licenses. Instead, you sign up for a monthly subscription, which doesn’t represent a drain on your cash flow.
Companies that are not negatively affected by the Covid-19 related restrictions or that enjoy a healthy balance sheet have, like us, considered how they could use the situation to improve their operational platform and stand stronger when the world returned to normal. The considerations have also included how to adapt so that they became more resistant to new recessions, including situations where there may again be restrictions on mobility and physical contact.
Moving your IT systems to the cloud and introducing software where employees can perform their functions and continue collaborating, even when they are not physically together, is a solution that creates maximum flexibility.
The law of diffusion of innovations
You may call it a blessing in disguise that the pandemic came now. Nevertheless, although we certainly would have been better off without it, the timing is optimal.
Cloud-based solutions, which were introduced at the turn of the millennium, have been through a long period of maturation. Many IT technology components had to be commoditized before the new delivery format could offer solutions that were on a par with the systems it was to replace. In my opinion, we reached that level of maturity around 2015. Since then, the technology has been in place, with the enormous benefits it brings to users.
However, many companies have not had the capacity or courage to switch and have continued with ten- to twenty-year-old ERP systems.
Thus, software delivered in the cloud format has also had to follow Professor Rodgers’ old theory of the law of diffusion of innovations.
First, the technology enthusiasts come on board, and then the visionaries join. After that, it takes some time before the mainstream market follows suit.
In the last few years, we have found ourselves in the transition from what in the illustration is called early adopters to the early majority.
With the restrictions imposed by the pandemic, the benefits of running your business remotely became apparent to anyone. There was no need for discussing for and against remote working. Instead, we had to make it work.
A crucial factor in such a transition is the underlying IT platform. With cloud-based solutions, the change can be done from hour to hour. For some employees, it requires that they have roughly the same display setup at home. Still, access to the systems only requires a good internet connection, which virtually all Danish homes have.
The paperless office
Even great ideas take time to mature and become widely accepted. It is also the case of the concept of the paperless office with which I first became acquainted in the late 1980s. When you are familiar with Professor Rodgers’ theory, then you understand better why things take time. The breakthrough and general adoption of innovative technology only happen when all the components have reached a high degree of standardization, and when prices have fallen to a level where the investment payback period is counted in months rather than in years.
For cloud-based software, all the components were in place when the pandemic hit us, forcing companies to virtualize their processes, whether they were organizationally prepared or not.
A key area for a system like Uniconta is the generation and receipt of documents. For those companies that do not already exchange data electronically, the pdf-format has now become widely accepted. It means that companies send documents such as proposals, purchase orders, order confirmations, notifications, invoices, and account statements as pdf-files, which in turn means that other companies can receive them directly into their IT systems. In a situation where we have to switch to virtual working quickly, it is an immense advantage not to have processes based on paper documents.
When the processes are digitized, and documents only appear electronically, it is irrelevant where the manual part of the processing takes place. Once the IT systems are cloud-based, the elaborations for and against remote working no longer need to consider the practicalities of exchanging documents and information.
Several companies have experienced that working from home has led to an increase in productivity. Even though many had their family buzzing around them, they still achieved more at home than in the office; at least more of what you can measure.
Perhaps the pandemic has contributed to more companies taking the final steps to digitize their processes, including using employees’ idle time to replace old IT systems with modern cloud-based alternatives. At the same time, they have gained experience with working virtually and seen that it can function. Not everyone loves it, but some do, and the majority would like to be able to switch between the two formats in the future.
Once we have all been vaccinated and can travel and physically get together again, those companies that have had the opportunity to spend time making themselves more flexible and agile will be well prepared to take market share and grow. In any case, it will no longer be their IT platform that sets the limit.