by Emma Pownall      7th October 2020

Episode 10 - Survival and resilience

Hi, I'm Emma Pownall, and welcome to business futures. The show from Datel where we take an honest and challenging look at the technologies and people that are shaping business. And what extraordinary times we find ourselves in.

Since our last podcast, no business has been left untouched by Coronavirus. It's given business leaders new challenges and huge disruption to deal with. But it's also offered a pause for thought, and new opportunities too. Every business is different. But as we all juggle the present and an un-predictable future, there is room for optimism. In this show, we meet some of Datel's clients and see how they've handled the pandemic. But first, some data.

Emma Pownall:
Sage recently surveyed business leaders across the UK to benchmark their view of the economy. And despite the roller coaster of 2020 so far, the outlook is a surprisingly positive one. Here's Hesham El Komy, Sages director for channel partners.

Hesham El Komy:
As you say, 2020 really has been a roller coaster, there were times where a lot of businesses thought the world had stopped spinning, you know, manufacturing took a big hit, all the shops were shot, there's really very little business going on. But when we look at the actual results from the first half of the year, we can still see that the mid market and SMEs in particular are still very buoyant. We're seeing a lot of new companies sprouting up, you know, coming up with some new ideas, innovative practices and processes that they're putting into action. And a lot of that's being spurred on by COVID itself. So, you know, it came to us under a very dark cloud. But it has, you know, in my mind clearly spurred on innovation, which as a result has kept business relatively stable.

Emma Pownall: 
Yeah, definitely. I think innovation and agility are two things that businesses will be remembered for during this period of time. Sage recently published a survey that you'd put together. Can you tell us a bit more about that?

Hesham El Komy:
Yes. So 2000 companies from the UK SME market were interviewed, and some of the results from that are very, very promising, you can obviously understand there's an air of hesitancy in the market. But ultimately, what we were looking to understand was, what's going to help businesses during this pandemic?

Emma Pownall: 
So would you say from the survey that we're seeing some confidence creeping back into the marketplace?

Hesham El Komy:
I would very much say yes, but I think we need to look at the overall picture, you know, have some context around that question. Because if we look at it, there's 15% of the companies that have been surveyed, have said that they would not survive a second spike, whilst one in two SMEs are saying they're not confident that they could survive a further drop in revenue. But at the same time, we're seeing other results in the same report saying that a lot of organisations are very, very bullish about the future. They're making bold moves to improve processes and productivity. A lot of that is being aided by technology. And there's access to new markets as a result of the pandemic. One of the very promising results from the survey said that three quarters of the companies interviewed expect to be profitable by June 2021. And nearly half are taking measures to increase their export revenues. So ultimately, the market is very buoyant.

Emma Pownall: 
So according to the data, there is some good news. But what's life been like on the ground? At Datel we've tried to stay close to our customers in the past six months, even when they've been working from home and certainly under circumstances that are a long way from normal. Typical of our customers is Brian cape, Chief Executive of SIPS, a business which provides catering and ancillary services to schools across the Midlands. As schools largely shut down overnight, Brian's management of lockdown is a useful story for us all. I asked what experience in the early days of lockdown were like for him...

Brian Cape:
We are actually owned by our schools. So we have a mutual status. Every single thing we do is on behalf of the children of the borough, and it's on behalf of our schools. So we needed to take a very, very different approach. It wasn't just a case of "let's just stop doing something" or "let's just cut our costs indiscriminately." And because we are working with schools, we were massively impacted by the closure of schools, as I'm sure you can imagine. You know, we deliver catering, we do something in the region of 15,000 meals a day. And we also provide tuition to around about 16,000 children every year in music services. And that literally stopped overnight. So that created a huge logistical challenge, as did school meals. So we dropped our school meals down from something in the region of 15,000 a day to around 5000 a week. So what do we do? Well, the immediate reaction, bear in mind, I'm two months into the role...this is brand new for me and this is something that I never anticipated. Very, very different from a growth and development and a cultural strategy that I was wanting to implement. The reaction was to focus primarily on safety.

So think about our colleagues, and our customers and focus on the vulnerable, focus on risk assessments, etc. But effectively shut up shop and move everybody into their own space environment. And obviously, operational delivery was the other one, how do we continue to provide services to schools that are still semi-open? And how do we manage our financial sustainability? So as I say, we decanted everyone to home, I've got the benefit, really, really lucky to have a superb IT team on site. So having an in house IT Technical Support Team meant that we were able to get people working from home very quickly, and very efficiently. Furlough scheme came along, which was absolutely a godsend for us, we were able to continue our services to schools, but without having that financial impact. But I'm also proud to say that during this time, we topped up their wages to 100%, as well. And we stopped also essential spend, so we cancelled all of our brands to recruit, we stopped spending money that we didn't need to spend on, on nice to haves and focus back on the service delivery, and again, making sure that people were okay. And we moved a lot of our delivery online so governors secretary at meetings that we normally delivered face to face in schools, we started delivering those online as well, which is interesting, because it's created, they're a really, really scalable platform for us now.

Behaviours that we didn't think would have came around in this generation have actually been learned and assimilated and developed. In a very, very short period of time. We did a lot of work to make sure that our places were safe for people who needed to be in them. And we were planning to get them safe so we did a terrific amount of work with schools, created a handbook for schools that we delivered, to all of them free of charge, even those that weren't our customers, just to hopefully take away some of the strain, some of the worry. We did a terrific amount of work on the risk management side of things.

Emma Pownall: 
Let me also introduce you to Simon Oliphant, Simon is Managing Director of Ufrom, a kitchen components supplier based in Belfast, and he's also a Datel client. He's also had to deal with the immediate challenges of the pandemic. And so I asked him how he's approached it.

Simon Oliphant:
Firstly, it was such an uncertain and difficult time for ourselves in terms of where we were going. And we had strategic plans. And those strategic plans just basically, were ripped up overnight, and the government announced the furloughing scheme, etc. And I think at that stage, we actually set up a crisis management team, which would involve about six of our senior managers with a Uform. And we got together from the very beginning, and we came up with plans to address the situation straight away. We took the decision that we would actually close the business for three weeks. And we did that not just as a business, but as a sector.

So what I actually did was contact our competitors, our four main competitors... it was the first time I've actually talked to them, because this is exceptional circumstances. And as a sector, we decided, actually, the best thing would be to actually all of us close at the same time and reopen again. And that was very critical for us to show a bit of ethics within the sector that we operate in. It was very clear to us that we had to go out as a united front. And we agreed that we would send communications out to all our customers at the same time, give clear instruction or when we're closing and when we're going to reopen again. Thereafter, I think it was just the senior management team.

We furloughed about 90% of the workforce. I kept the senior management team in place, the crisis management team, and we worked together to look at things like cash flow and Hedren to make sure that we could trade through the next six to 12 months. We looked at our budget or forecasts, we created a model that would break the business in terms of our cash prepared a paper to go to funding in order to plug that hole. There were big decisions that needed to be made, such as we were going to bring a sales director into the organisation. We decided that that was the right thing to do, even though we had furloughed 90% of our staff. The guy started and is doing well. So it's very important not to panic, but still make the investments.

Emma Pownall: 
And so you had a large portion of your work for some furlough, how did you manage that process with those people and make sure that they stayed engaged and focused?

Simon Oliphant:
We've got a great HR department here, and the HR manager was obviously part of the crisis management team. So firstly, from our perspective, it was very clear that we needed to understand the government rules, guidelines, and be able to communicate that very clearly to the staff. So we actually sent out a weekly communication newsletter with an update on trading conditions and where the market was, but also, health and well being was a big part of the newsletter every week, like we went to a science department who gave us a few, you know, science experiments that you could try at home, like making ice cream, and things like that. And we put that in the newsletter, and we find out quite quirky and quite engaging.

The other thing we did we set up a helpline, so staff could phone in if they've got problems or need to understand anything with regard to health and well being or their role within the organisation. So we could come back to them and reassure them on all levels. I think it's very important as well, that we set up a daily sunrise meeting with the management team, to review where we're at what customers still needed serviced, post lockdown after we reopened again, because obviously, all the customers - we've got about 2000 customers - and we had a large order book, but we couldn't ship the orders because we didn't know whether the customers were open or not open. So it was really important to engage with our customers, and try and understand, you know, what their needs were even if they wanted the product. So I think the first thing we did when we opened up again, was we put all the orders in hold. And we contacted all the customers by email, and then by phone, we give them the options - when do you need your orders? Or do you still need those orders? Because the worst thing we could have done was 'business as usual.'

But very important that the management team that 10%, that was in the business, we were considered and understood that it's stressful for them too. I think one thing that it's taught me is that you've got to watch for fatigue within your management team as well. So be considered, trust in what they say, fill in the gaps, give them good direction, and really trust in what their expertise is and use them for that purpose.

Emma Pownall: 
With very different businesses. Our CEOs have both dealt with the COVID challenges with a blend of practicality, empathy and financial discipline. But what does the future look like? How should companies invest their time, energy and money to develop their businesses, while minimising risk and looking after their teams and customers? Here's Sag's Hesham El Komy...

Hesham El Komy:
Yeah, this is a very, very interesting question. One of the key elements to that, in my mind is, organisations have to be very careful about how they spend, you know, cash flows, not necessarily as flowing as well as it would have done 12 months ago. But what we're seeing is the SMEs that we had interviewed, the vast majority, in fact, as you're talking sort of 75/80%+, digital adoption will be critical for an enterprise led recovery, and ultimately, job creation.

But the issue with that, as mentioned is that only a small proportion actually have the bandwidth currently to invest in technology across their key businesses to improve their processes. So our view there is really, these businesses would benefit from being able to implement technologies to help with their processes to potentially change their business models. And that's really where we think the government could be helping us a bit more. From my perspective, I can't really stop hounding and pounding the message around digital adoption being critical from enterprise led recovery. Technology is, in my mind, the only way we're going to get out of this situation in terms of rejuvenating the economy. It's really a once in a lifetime opportunity to change and update technologies, for the changing climate, the changing environment, you know, the shift in normality has been so vast, carrying on and doing stuff in the same way in the same manner. And using the same technologies, as we have in the past is not necessarily going to see organisations through COVID and into the future. So from my perspective, you know, I will hammer this in as much as I can. It's really about digital adoption in all of its forms. There may be a hindrance on funding for this, and bandwidth in terms of cash flows. But I truly believe without making the right technology changes and updates to your current systems and processes... that's the biggest risk to the longevity of businesses.

Emma Pownall: 
Brian Cape of SIPS has been planning ahead too.

Brian Cape:
As we got into kind of month three, month four, and we could see that the furlough scheme was starting to come to a close. We needed to have another look at the financial drivers and do a terrific amount of scenario planning certainly from a financial point of view based on operational delivery and customer take up. But we managed to protect 98% of the jobs, no compulsory redundancies, it was all through either volunteers, early retirement, the cessation of other non extension of fixed term contracts, or adjustments in ours. So we've adjusted the size of our workforce. But actually, we created efficiencies that we knew we had to create anyway. And it was on my medium term plan.

So efficiencies, particularly using IT as a driver, the efficiencies that would have come in in 36 months, actually, we said, let's just stop doing this now. Let's then develop the IT to plug the gap so that we can be efficient, but we can develop smarter ways of interacting with our customers, getting them to self serve more rather than pick up the phone for example, and being more scalable and more replicable. And then a few other things that we are doing differently as well, we had a terrific amount of competition, certainly on the catering of things, massive amount of predatory competition in the marketplace where several big providers were aggressively undercutting our caterism, local authority caterers, to win the business and to win territory. But it's a very pilot isolate cheap approach, where quality wasn't necessarily there. Schools were using them out of necessity, rather than a genuine desire. But several of these organisations now won't be in a position because for their model to continue to be aggressive in my view. So we need to be less responsive to price driven demands, and more focused on how we can provide the best possible service to our customers. Get each of our customers to take more of our products. So we increase our penetration. And again, some of that would be driven through it. So a lot of this stuff are things that I would have, in the fullness of time, looked to implement. But kind of my first three year plan has just been completely concertinaed into six months.

Emma Pownall: 
Uform's Simon Oliphant is also accelerating his strategic plan, rather than completely throwing it out the window. Even in the depths of the pandemic, he had plans for growth.

Simon Oliphant:
So we've brought on board, as I said, a sales director who started in the middle of this crisis, but the sector that we operate in has been very resilient. And actually, we're about 35%, up on last August to this August. And what we're doing is accelerating our strategic plans. With that in mind, we're looking at robotics, we're looking at smart factory efficiencies, more lean, we're investing heavily in our painting capacity at the moment, we got a capital investment over the Christmas shut down of half a million pounds actually in our facility here. I think this has jelled the senior management team on the management team. Together, they've been through this process of crisis management, and it's brought them closer together actually accelerated their understanding of the business, which is great. We've also looked at the market and it's made us more aware of our product offering and where our gaps are within our product offering.

So typically, an a cycle that we're just about to go into, which is obviously a recession, people are more conscious of cost control. So if they're going to put in a kitchen there, maybe their budget is slightly reduced. So we're conscious that the markets resilient at the moment, however we need to position ourselves for where we believe it's going to go in the next 12 to 18 months. We all talk about being dynamic, don't we. But really, this has taught us what it means to be dynamic and resilient as well. So the team and what we do, we need to be conscious, we need to be fluid, we need to be quick and reactive to the changing market conditions that may occur.

Really, it's about protecting the headroom within the business, making sure that you can afford to pay your bills, review your budgets. Review your forecast, understand the pinch points in your business. take steps to protect the cash in your business, whether that be your overheads, paying landlords, for instance, do you negotiate with them negotiate with your supply chain? In our case, we were very lucky because we've got really good relationships with our suppliers. And with good communication and being open with them we were able to negotiate payment terms with our suppliers over this period of uncertainty. In our case, we were also quite lucky because the bank was very supportive of ourselves. So the business is in quite good shape. And that's as a result of the negotiations right across the board.

Emma Pownall: 
So it sounds like you focused and invested heavily prior to the crisis in the relationships with investors, your supply chain, your banks...

Simon Oliphant:
Absolutely, that was critical, probably something that we take for granted, because it is a natural thing. And it's part of our culture, to communicate. I mean, we talk about relationships. We talk about partnerships. But it is clear that we have developed those partnerships with our key suppliers, our customers as well, who were very understanding and we communicated heavily with all parties involved, whether that be customers, investors, or suppliers. And because of who we are, and the relationship that we've had over a long period of time, because we're not the type of company that this age for, you know, a couple of percent here or there that we'll move or change suppy chain perhaps, you know, look at price positioning with customers, we're here for a longer term.

Emma Pownall: 
In these uncertain times businesses seem to value the sense of partnership and long term commitment more than ever. And management that faces its customers and employees with honesty and integrity is something that Simon and Brian have both prioritised. Here's Brian on his corporate culture:

Brian Cape:
One of the things that I talked a lot about the very start was enablement. And the fact that we needed to move the culture so that every member of staff, every colleague, felt enabled and empowered to do the job, without necessarily having to continually ask for permission or go through processes. Obviously, not withstanding good financial diligence, and all of the type of corporate controls that you need in an organisation. But that trust still needed to be developed. Again, I saw this as being a five year job to shift that culture into a truly enabled culture. And actually, again, what has happened because of COVID-19, we've been forced, all of the leadership in the organisation has been forced to trust people more, has been forced to move away from, in some cases, an input based organisation to actually start to genuinely look at outcomes now... to not managing by presenteeism.

So what I've quickly found, is that the trust that may have taken a while, has come a lot quicker, because the colleagues have felt looked after - they felt supported. And they felt like we care. And that is, again, from a cultural point of view, doing the right thing and caring about people is incredibly important to me. And it's incredibly important to the organisation that I'm leading. The more I communicate with people, the better they feel about what's going on in the organisation. I took a view very, very early on, that I'm gonna over communicate to you people might get to me, but I'm going to tell them everything that's going on. And I'm going to be open and honest, this is about the long haul, this is about keeping the organisation sustainable. So in having conversations with them about what's going on, what the plans are, how we are going to grow the business, what we're doing with regards to the IT in the business, and continually focusing on the mutual status of teh business aswell. And I'm really confident that the people that we've got and the journey that we've been on, as long as we keep the communications open, the productivity is there, and they can see that we are moving. And we aren't burying our head in the sand and just ignoring problems. But we're tackling them head on.

I'm pretty confident that that type of behaviour will see us through. And I could never have possibly have got through this last nine months, scratching my head thinking that I've got to be the font of all knowledge. This is about a team. This is about having everyone around you and making sure that everyone has their say in a safe environment and their opinions, their ideas are respected. But actually, do you know what, if none of us have the answers, that's fine as well. Don't stress it because this is something absolutely brand new. If somebody doesn't have an answer, try and find someone that does have the answer. But if no one has the answers, you know what, make it up as you go along, but do the right thing. I think that's what a lot of people have been doing for the last six months. We've all been absolutely winging it. And we've learned a lot about ourselves. So don't worry about having all of the answers. Trust your team, shift to outcomes. Absolutely. You know, the days of presenteeism in a professional environment I think are over now. If you're hung up on inputs in this type of environment, you're probably in the wrong role. This needs to be about outputs, this needs to be about outcomes. This needs to be about what you are delivering for your customer.

Emma Pownall: 
The one thing we haven't discussed yet is the role of government in igniting a recovery. Business leaders generally agree that the government's initial reaction to the pandemic, including establishing a furlough scheme in a matter of weeks has been impressive. But as the dust settles, what does UK PLC want to see from the government in terms of ongoing strategy and assistance?

Hesham El Komy:
Over 40% of the companies interviewed have said that a technology grant from the government would allow them to increase hiring. And we can break that down really, so buying the technology is only one part of it, the vendor is, you know, generating revenue, the buyer is updating their systems. And at the same time, the likelihood is they're going to require extra staff, extra resources.

Brian Cape:
I'd like to see the government plan more about the future economy, and where we're going to be in 5 years, 10 years, 15 years, 20 years, rather than just potentially prop-up what could be considered zombie services such as sandwich shops and stuff, I think the government needs to be a lot more innovative in its thought and needs to listen to business leaders more to see where the opportunities are, and help those businesses prepare for the opportunities. So I'd like to see grants delivered to organisations that will help them become better, faster, cheaper, more scalable, through the use of IT future proofing. And actually, not only would that create more professional roles in a service that we can use globally, particularly in a post Brexit world, and it's question marks over trade, etc. We're investing in future skills. But actually, what it also can potentially do is raise the bar. So people do have more professional aspirations. And we are thinking more about how we can create more fulfilling work, potentially with less input required. So you know that there's opportunities even for people to work shorter hours and have a much better work life balance.

Simon Oliphant:
Well, I think the government to be fair, has managed the situation quite well. They've given business quite a lot of support through this, I'd be keen to understand how we pay this back this support and the packages that are put together, how it's gonna affect us in the medium to longer term, because I'm unclear about that. I would like to see more clarity and more openness with regard to Brexit, clearly because of the uncertainty because we as business leaders need to prepare for whatever changes need to come along.

So we need to understand what that looks like. I think the government needs to support manufacturing more, because typically, we've got a large proportion of our economy that is either service or banking related. We need to grow and encourage businesses to invest in manufacturing, lean manufacturing, smart factories, and become a wee bit more self sufficient internally, as opposed to having supply chains spread across Europe, which is what we tend to rely on as an economy.

Brian Cape:
But I'd also like to see when we're talking about investment, and government support, I would like to see more investment in education, and more investment in children as well. There's a worry at the minute that we've potentially lost a generation, not only from an educational point of view, but from a mental health and wellness point of view. Because actually, if we don't look after the whole society, then business itself, you know, whatever type of business you're running, isn't ever going to be as successful as it is. If you've got a well functioning, healthy, mentally aware, populace.

Emma Pownall: 
Do you feel prepared for the road ahead?

Brian Cape:
Yeah, we genuinely don't know what's around the corner here. You could plan for 1001 different scenarios. And actually, the scenario that happens is 1002. So let's not kill ourselves over the minutia. Let's just reasonably project... well, what is the best case scenario? What is the worst case scenario? What does the middle ground look like? And try and form a plan for each of the those. Just think about it just be alive to it so that if it happens, we're able to react but at the same time in developing the IT, developing the scale, in developing systems that are replicable in being able to we know we can keep people safe. Now we know we can manage services remotely, so we are pretty well equipped there. But ultimately, there are some big opportunities as well.

So when this thing passes, so when we start to move into a more safer environment, I can see a lot of opportunity for an organisation like SIPS. And because we've operated ethically and transparently all the way through, our reputation is there for us to ride on. Whilst at the same time, the reputation of some of our competitors is failing. Some of their services are failing, and actually financially, some of them may well fail as well. And as I say, you know, we've now got IT systems. Gov support is a perfect example where we've got an IT system that we can perform a secretary of services, and we can perform governor advice services to anyone anywhere in the country, potentially anywhere in the world. But let's just keep it to the UK for now. So whereas historically, we probably wouldn't have operated outside of the West Midlands, now we can operate at scale, but we can grow our business without having to necessarily grow a lot of our back office overheads. But I like to say that we're opportunity ready.

Hesham El Komy:
I would say that technology is the central point to all businesses nowadays. We just got to look at the amount of data that we will hold. There's a lot of normal data, a lot of unstructured data. But for organisations, having reliable data, being able to use that data, you know, in a true insightful way, gives them the ability to be agile. And the reality is, it's a non negotiable fact, that a better understanding, better visibility, utilising reliable data, and having the right insights into your business is going to help you make the right decisions. In such uncertain times, none of us know what's coming around the corner, we don't have a crystal ball.

But what technology enables organisations to do is adapt, be agile, and nimble ultimately, which is key to their survival. I'd like to give you an example of one of the very well known restaurant chains here in the UK. The Chief Financial Officer called me a couple of months ago. And he was concerned that they needed to adapt their business as quickly as possible, and wanted to see how we could help them in that. So we've worked very closely together, we adapted how they were using the software, and advised them on other areas of technology that they would need to look at. And as a result, that company has now gone from essentially closing all of its restaurants to offering a delivery service as well as a, you know, almost a restaurant service away from the restaurant. So that business is carried on going that bringing staff back off furlough as a result. It's a large company, but they've had to act like a small company in the sense of being agile, nimble. And it was really down to the visibility of their data, how they use that data, and then put that into action.

Emma Pownall: 
Sage's Hesham El Komy rounding us off there.

Emma Pownall: 
I'd also like to thank our other guests, Brian Cape CEO of SIPS and Simon Oliphant, Managing Director of Uform, for their candid and expert advice. I hope they've given you some reason to be optimistic, and also ideas on how to visualise ways forward for your business. Thanks for listening. We'll be back very soon with more guests at the cutting edge of British business strategy on the business futures podcast. Until then, stay safe and well.

My guests were Simon Oliphant, Managing Director of Uform, Brian Cape, Managing Director of SIPS Education and Hesham El Komy, Director of Channel Sales at Sage.

See you next time on Business Futures.

This podcast was produced by ModComms, a full-service marketing agency offering innovative approaches to client challenges. www.modcommslimited.com

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My guests:

Brian Cape, CEO of SIPS Education

Simon Oliphant, Managing Director of Uform

Simon Oliphant has worked in several different industries within manufacturing and distribution; From large corporates to family businesses. As a graduate in business studies and computer science with postgraduate in management, he's held positions in Supply Chain, Operations and General Management. Simon's been MD of Uform since 2016 and Group MD from 2019. Building scalability into organisations and defining a culture which translates into real value for customers, shareholders and employees alike. Nothing gives Simon more pleasure than seeing ongoing investment translate into tangible benefits. His perfect retreat: Walking the beach with the family, taking a dip in the freezing north Atlantic sea off Portrush East Strand or a game of frustrating golf. All of which made better by a good curry accompanied by a glass of wine.

Hesham El Komy, Director of Channel Sales at Sage

Hesham has 20 years’ experience in the technology sector, he has held various senior positions in marketing, sales and the channel spanning EMEA and APAC geographies. Over his time in the sector Hesham has worked for technology giants such as Epicor, Red Hat, Infor and currently is responsible for the UKI Partners and Alliances function at SAGE. During his most recent tenures Hesham has started and scaled out territories and developed and implemented new channel programmes.

Business Futures host:

Emma Pownall, Marketing Director at Datel

My team and I provide our customers with a range of events, guides and tools that bridge the gap between business leaders and technology.  From large conferences connecting customers with each other and the software world, to sharing customer stories that explain what is possible with the right business solutions, I'm focused on sharing how people and technology can support business success.