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Organizations have spent a lot of time, money and effort building strong technology stacks to support their digital workplaces. As a result, the technology market continues to grow, with one report suggesting that by 2026, it could reach $72.2 billion in size.
Amid this growth, however, lies volatility. Even the most promising startups often fail. Other vendors may choose to move their business in a different direction, change key features or sell off certain functionalities. Forrester also predicts consolidation in numerous digital workplace categories (visual collaboration, AIOps, etc.) to continue into 2024.
All of this could potentially spell trouble for employers … if they’re not prepared to deal with contingencies as they arise.
Worst-Case Scenarios
The COVID-19 pandemic was a wake-up call to many workplace leaders that things can and will go wrong, explained Andrew Hewitt, senior analyst at Forrester. Employers learned just how important having a “Plan B” was when their offices shut down and they had to work extra hard to adjust.
“We're starting to see that trickle down to CIO investments in the digital workplace today,” Hewitt said.
Stowe Boyd, founder of research and advisory agency Work Futures and an expert on workplace technology, pointed to mergers and acquisitions as one event that could instigate upheaval for client companies.
“In a merger, two companies merging together might have two different systems,” Boyd said. “They might have to decide which one they’re better off with, and at that point, [the client] is forced to make a decision.”
He added that while well-established products from large legacy vendors are less likely to be sold off, it does happen. In 2018, IBM officially exited the collaboration technology market after selling off a handful of assets in the face of fierce competition.
“In the old days, they’d say you’d never get fired for picking IBM, but they ultimately walked away from what appeared to be a well-entrenched line of business,” Boyd explained.
Related Article: What M&As in the Employee Communications Apps Market Mean for Communication Pros
Building Resiliency Into Your Digital Workplace
For Hewitt, addressing these challenges is about building business resiliency.
“If you’re on a particular cloud provider and that cloud provider goes out, well, I'm not gonna be productive for that particular day,” he said. “Multi-cloud [strategies] have come up as a way to be resilient against some of those challenges.”
Likewise, at the software level, many businesses are realizing the risks of investing completely in a single vendor for a piece of software.
“You want to be able to have that flexibility. If that software goes awry or the company goes out of business, you can quickly transition and keep the business going for employees and customers,” Hewitt said.
So, how can businesses do that? According to Hewitt, it still makes sense to have one vendor for basic tools that work best when integrated, such as email, calendars and instant messaging.
“What I often find with organizations, though, is that they’ll invest in specific technologies and have two options. Video conferencing is a common one,” he said, adding that companies often have different tools they use internally versus externally as well. Ultimately, there are specific capabilities where it makes sense to double up.
Hewitt also noted that vendors these days are less possessive of clients and are willing to explore integrations with the awareness that they’re “not the center of the universe.”
“What I'm seeing from the ecosystem is more of a willingness to partner and meet that customer where they're at,” he said. “They know that resiliency is an important part of your overall strategy.”
Related Article: Success Today Requires Agility
Danger Signs to Watch For
Both Boyd and Hewitt pointed to steps that companies can take to identify a vendor that might not be reliable in the long-term before they enter into a relationship with them.
Boyd pointed to his experience evaluating vendors over time and watching certain ones simply cease to exist.
“You have to evaluate whether the company is viable, and the first order of approximation is the company’s size. How big is it? How much money is it making?” Boyd said, noting that it can be difficult to assess.
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Hewitt also stressed the importance of digging into a vendor’s financial status.
“Are they profitable, or are they taking on a lot of debt and having to pay off investors every single year?” he said. “That is less money going into research and development. You want to partner with a company that is going to be innovating and bringing you new capabilities all the time.”
On the other hand, Hewitt said, companies can also look at factors such as customer satisfaction scores and client retention rates, the latter of which should be somewhere in the 90% range.
In addition, a company’s culture can be a telling sign. “If you have a company that people don't want to work for, it's less likely that they're gonna provide you a good customer experience when they're working with you,” Hewitt said.
