Last year I completed my MBA and one of my final subjects was Economics. As someone that has not studied the subject beforehand, it was illuminating to learn about the fundamentals of Economics, in particular macro-economics.
For the uninitiated, macro-economics focuses on the economic environment that affects how all businesses operate, perform, strategize and make decisions. These are typically external factors that the company itself does not control but is certainly affected by. The factors that make up the macro-environment are:
- Natural and Physical
- Political and Legal
- Social and Cultural.
Studying Economics during COVID-19 provided ample opportunities to acquire a deeper appreciation for these macro-economic factors and how they would (and could) affect businesses. As we saw last year, the macro-environment is dynamic and this demands that businesses need to constantly track change to ensure it is positioned to successfully operate and where possible, take advantage of the macro-environment.
I was questioned by a colleague recently about the macro-economic factors that will pose a challenge for players in the Asset Management industry. My initial thoughts were all of them! Upon deeper reflection and with a word limit to consider, I believe that we can refine these factors further. I have targeted three key factors:
MACRO factor 1: Economic
The most considered factor here is Supply and Demand. Global supply chains have been affected by COVID-19 with delays or unavailability of parts and goods. For example, new car orders are on 3+ month wait lists and used car dealerships are running out of stock as the public looks to purchase more cars with their current aversion to public transport. From an Asset Management perspective, this poses businesses a challenge of maintaining a cost-effective Inventory, particular for parts that are manufactured outside of Australia. How can you make sure that you have what your customers need and want without having too much excess? Using an Enterprise Asset Management (EAM) system such as Maximo can help with this. Tracking your Inventory and linkage to financial systems can help provide the insights you need to best manage this situation.
It will be interesting to see how the federal and state governments approach tax. On one hand, both entities have run huge amounts of debt as they tried to support their economies last year. On the other hand, they want to ensure that the economy remains stimulated by providing financial support to business to keep them running and ultimately thriving. I see continued stimulus packages being required for business, albeit in less concentrated forms as the vaccination program rolls out over the next 12 months. Businesses will need to be prepared for either situation.
MACRO factor 2: Technological
The last year has shown how important technology has been to remain connected; both professionally and personally. Whilst online conference calls, webinars and the like have been useful, I am seeing “Zoom fatigue” exist and to me, it highlights the human need for social connection, in person. With vaccination programs being rolled out and with low COVID-19 cases in the Australian community, we should see more business, clients and vendors meet with each other in person and continue to foster their respective relationships.
I see Automation continuing to grow and even fast-track as businesses look to optimize their operations and reduce costs. Reduced head counts and/or the limited availability of staff being onsite will further this growth. The automation of basic, repetitive tasks will continue and will lead into further process automation. From an Asset Management perspective, I see process automation being a key area of attention and opportunity for businesses, particularly in the context of Health and Safety with COVID-19.
The flip side of further technological growth is that security becomes more of a concern and businesses need to remain vigilant about their system use. Continued business investment is required in this area; both in terms of technology solutions as well as staff awareness training programs.
MACRO factor 3: Natural and Physical
The global community has shown that when pressed with a challenge such as COVID-19, we can find ways to be innovative, creative and focused on achieving positive outcomes. Whatever your views on climate change, the data presented shows that the world’s water and land temperatures are rising. Governments are setting carbon emission targets and working with private industry to achieve these targets. For example, in Australia, we are seeing the reduction of coal generated power and more focus on renewable resources. Governments are keen to be demonstrating their social and environmental credentials to an ever-expectant general public. From an Asset Management perspective, the ability to manage critical infrastructure is crucial as it is a key service for the community. It has high Health and Safety factors and needs to be managed in a compliant way. Replacing a solar panel, repairing a wind turbine are the new “jobs” in an EAM system and I’m seeing this transition take already place.
In this blog, I’ve attempted to provide a few macro-environmental factors that I see being the focus for businesses this year. The most important item for a business is its ability to pivot and not be exposed by changes in macro-environmental factors and if anything, being positioned to take advantage of them. 2020 was the deep breath that we all took and some may say the correction we needed. 2021 is the year where we regain our mojo and work to progress our respective businesses further in an efficient, collaborative and socially minded manner.
When it comes to your Asset Management strategy, have a think about what you would like to explore further. Now is a great opportunity to explore and try new things as your business looks to rebound and grow from last year.
If you’re interested in learning more about BPD Zenith’s Enterprise Asset Management solutions, feel free to contact us.