COVID-19 is creating unprecedented social and economic disruption and generating anxiety for many about their future job and income security. It is also giving rise to questions about the likely impacts on government use and purchase of technology.
Will government purchases differ from what was purchased in the past? Almost certainly – but in what aspects, and why? And how will market dynamics change between well-established suppliers and the new challengers that are bound to enter the market?
While nobody can foretell the future with anything approaching complete accuracy, developing likely scenarios and assessing their probability of occurring will be vital to business survival in the post-COVID marketplace.
This certainty has led to Intermedium developing a ‘Four Horizons’ framework’ to help our clients understand and navigate the challenges and opportunities arising from political responses to the COVID-19 pandemic and shutdowns. This model also factors in the likelihood of lengthier and fiercer bushfire seasons each year in Australia, bringing with it the potential for additional disaster-related shocks to Australia’s economic and social fabric.
Increasing the complexity of our model, many governments will face elections over the Four Horizons timeline.
Reaction: January 2020-October 2020
The ‘Reaction’ horizon began with the initial responses to reports of the coronavirus outbreak in Wuhan, China.
Australia was at that time still preoccupied with the triple impact of widespread drought, the 2019-20 bushfire season and subsequent floods. Australia (alongside Taiwan and New Zealand) appears to have controlled the initial pandemic by late April 2020 as a result of an early closure of the border to arrivals from mainland China and rapid implementation of other measures culminating in severe social isolation measures on 22 March.
According to Mannakkara et al., the first post-disaster phase is marked by chaotic change to the previous social and economic order and rapid action by governments in establishing special agencies and coordination efforts.
In Australia, these actions are manifest in the establishment of the ‘National Cabinet’ of Australian governments, the National COVID-19 Coordination Commission, Resilience NSW and emergency stimulus measures such as JobKeeper.
The requirements for social isolation immediately saw agencies at all levels of government seeking to enable their staff to work from home. Incumbent suppliers of end-user devices (particularly laptops), managed services (particularly networks, compute/ storage and end-user security), telecommunications (and videoconferencing) as well as collaboration platforms have all told Intermedium that they have been extraordinarily busy meeting these demands.
Such is the demand for laptops, it is understood that it is unlikely agencies will be able to see their full requirements met before mid-year, meaning that many of the staff who have been asked to work from home will be unable to do so effectively, leading to significant processing and other backlogs to be dealt with in future horizons.
Such is the urgency for the implementation of collaboration platforms and ability to work remotely that it is understood that an agency which had planned a roll-out of Office 365 over an 18 month period, instead requested its supplier to achieve the full roll-out as quickly as possible – and saw it done within the space of 48 hours.
Suppliers of analytics, apps and contact centre capability are also in high demand and are having rapid results demanded of them – in terms of time from solution conceptualisation to launch.
Agencies can ‘directly source’ (i.e. suspend normal procurement guideline requirements) the required solution from a supplier they deem the best positioned to deliver during any disaster and it would appear that a significant amount of direct sourcing is occurring in the Reaction horizon.
Direct sourcing nearly always favours incumbent suppliers. This is because they have a current contract with the procuring agency resulting in agency familiarity with the supplier’s ability to deliver efficiently and effectively.
Conversely, suppliers whose solutions are not in immediate demand to help ameliorate the chaos situation are currently finding it almost impossible to engage in any meaningful way with government. Not only are there no opportunities for face to face meetings, Intermedium has found that many senior government executives are often working 12 hour days and focussing only on the demands of managing through the chaos.
The Reaction horizon will continue until October 2020 due to the release of the delayed state, territory and Federal 2020-21 budgets.
These budgets will be the first insight into the degree to which governments are prepared to fund ICT-related projects and as such a bellwether of how the market will play out over the next horizon – Mobilisation.
Mobilisation: November 2020-May 2021
It is expected that the October budgets will mark the beginning of Reaction horizon ‘exit strategies’ for governments across Australia and a move into the Mobilisation will see a sense of social, economic and political order gradually return.
Mannakkara et al., suggest that during this phase there will be a focus on establishing mechanisms to better manage any future disasters (in this case, pandemics).
There will also be strong citizen and business expectations to retain popular emergency measures such an increase in welfare payments and childcare subsidies in the post-pandemic environment.
Citizens who have remained distressed by the catastrophic climate events of 2019 and early 2020 will likely start voicing their concerns and demands around climate change measures and there may be some coalescence between the desire for the rise of new industries and a boost to green energy industries.
Resource limitations will be one of many difficulties that governments will have to reckon with while undertaking recovery activities. There will be strong pressure to boost health care delivery and capacity, improve health equipment supply chains and asset management systems, increase data analytics and increase health research resources.
Expansion of revenue and taxation systems are likely to come into consideration as part of strategies to start paying down the extraordinarily high debt burden resulting from the support measures given to many sectors of the economy.
Governments are also likely to be signalling what commitment they have to digital transformation in their future service delivery strategies.
Intermedium currently believes the Mobilisation horizon will end in May 2021 – the time at which governments would conventionally bring down their 2021-2022 Budgets.
Transition: June 2021-December 2021
The Transition horizon marks the latter stage of social, economic and government repositioning towards ‘recovery’. The initial pandemic can be expected to subside during this period according to some experts. Governments will shift focus further towards rectifying revenue and economic impacts.
While governments can be expected to prop up industry sectors, it is likely they will cancel or defer previously favoured new policy initiatives to help reduce government expenditure on both administration and programs.
Some strong indicators of the ‘New Normal’ are also likely to become evident in the economy and broader societal practices.
2021 will likely also be a transition period for the global geopolitical order. The next President of the USA will have been sworn in and both it and Australia will be contending with the continued economic, political and technological rise of China, with Pacific Rim and South East Asian countries coming into even greater focus.
The Transition horizon will likely be the most unpredictable of all horizons, with economic and social impacts as well as the threat of a return of the pandemic on the cards. At this stage, Intermedium suggests that government use of technology will settle into the ‘New Normal’ around January 2022.
New Normal: Beyond January 2022
The New Normal will see the conclusion of government exit strategies and a return to many aspects of pre-2020 life. However, it is almost certain that some of the significant changes to societal and government practices (such as significantly increased work from home arrangements and videoconferencing replacing business travel) that arose as a result of the COVID 19 impositions will become firmly entrenched as the now normal way of doing things.
Geopolitical issues surrounding the rise of China, climate change, increasing use of cyber warfare by nation states, greatly increased working from home arrangements and continued implementation of technologies such as artificial intelligence could constitute some of the global megatrends that are characteristic of this new normal.
Intermedium will continue to use the Four Horizons model in its articles and other products and services to analyse government policy and provide an outlook for ICT markets.
This article provides you with only an indicative sketch of the ICT implications of these scenarios. Intermedium has a comprehensive strategic planning methodology, complemented by PEST, TAM, CAGR, partner & competitor analysis as well as horizon opportunity identification, to assist you in formulating your plans for these four horizons. Talk to us irrespective of whether your focus is Federal, State or Territory.
 Intermedium’s model is adapted from ‘Resilient Post Disaster Recovery Through Building Back Better’ by Sandeeka Mannakkara, Suzanne Wilkinson and Regan Potangaroa.