Navigating the Post-Covid World Requires Flexibility

The unforeseen circumstances of the pandemic have exposed a need for higher operational flexibility. Businesses have reshaped their models to build long-term resilience. The extreme movement restriction measures implemented during the pandemic have caught millions of companies with unnecessary long-term financial commitments on the balance sheet.

Knowledge-intensive organizations had to cope with the heavy burden of leases on hardly utilized office facilities. The office as we know it is over. Many organizations have downsized office space, others have either renegotiated terms or switched to flexible office spaces. They have all invested heavily in their hybrid work roadmap and clearly want to maximise the return on investment.

Conversely, real estate managers are facing new market disruption and are  having to reconsider how to best manage their assets. Addressing its high demand for offices and low vacancy rates, the greater Paris region of Île-de-France had on-going record-high office developments for over 1 million sq meters of new office space for 2020. Now it’s having to convert most of those offices into residential space. Governments are backing the shift. The state of New York, another heavily-hit business hub, is considering altering local zoning rules to allow New York City building owners to get around local zoning rules to convert hotels and offices into residential use.

Retailers are navigating similar waters. Also for them, the future model requires a higher degree of flexibility. Being forced to shut their physical stores overnight, many retail businesses quickly realized that their omnichannel strategy was not fit for purpose. Most of their products remained stuck on store shelves and could not be repurposed to feed online orders. Retail players are increasingly realizing the importance of integrating different channels and achieving greater flexibility on the last mile delivery so that stores can become local fulfillment centers when needed.

The pandemic has caused an acceleration in the ongoing shift from balance sheet liabilities to operating costs, and has forced organizations to shift to shorter planning cycles. Across verticals, organizations have learnt their lessons and are now on a quest for highly flexible solutions and, ultimately, long term resiliency. Now more than ever, whether renting offices or selling accounting software, it is paramount to offer flexible as-a-service solutions conceived for today’s challenges.