Business facing challenges

Company problems

The rising costs of running business are today one of the major reasons of why firms are in serious financial trouble and, consequently, the increasing scale of their bankruptcy. Soon number of companies affected by such problems may reach several thousands (PMR Restructuring predicts that the number of insolvencies will soon reach between 2,000 and 4,000).

The Coface report shows that the number of insolvencies in Poland increased by 131 per cent, representing 1,841 cases. Many industries are affected, including agriculture and transport, but the largest number of cases is in the service sector, with 29 per cent of all cases.

Abrupt increases in energy and fuel prices, rising inflation and prices for resources used by the company – these are the key factors that lead to the insolvency of companies. However, not only. Also, low level of digitalization can be a factor in companies’ competitiveness in the market, which directly affects their finances. For many companies, the rapid development of new technologies is a significant challenge, leaving them unable to keep up in key areas for business growth, such as production or logistics. Moreover, rapidly rising labour costs, especially among IT workers, are already causing financial difficulties for companies and problems in retaining specialists for the long term, and this is likely to hit small and medium-sized companies, which often do not have a large financial base, the hardest.

What are the possibilities?

Before a company decides to restructure, it may help to reduce office space or co-working instead of an office, use electronic documents, try to reduce fuel, electricity and monthly charges, choose a different way of handling accounts, a cheaper company bank account, more favourable insurance, reduce business trips and, if they are necessary, choose cheaper accommodation and a taxi corporation. Companies might also try to be more energy efficient – by using e-invoicing, reducing the use of office supplies or cards and using more economical office equipment. It is a good idea toinsure devices so that you do not pay extra for breakdowns.

Nowadays, entrepreneurs are increasingly recognizing that savings can also be generated by outsourcing services. Outsourcing some operational areas to an external partner avoids the costs of employing specialists and saves on purchasing hardware, licenses or staff training. Companies reach for less obvious solutions – for example, choosing cloud computing as one of the remedies to regain long-term profitability.

Among the ways to save money is the outsourcing of IT services, including any cloud solutions. In our experience, companies are keen to turn to cloud computing in the face of restructuring. The struggling companies note the significant savings of such solution. Maintaining own IT infrastructure is expensive, requires knowledge and specialists, and their availability is increasingly difficult. It has to be said that the number of IT specialists is growing impressively. In Poland, it will have risen to 555,000 by 2020, but this is still not enough to meet the challenges of a business driven by pandemic-accelerated digitalization. The demand for IT staff makes it difficult to retain genuine talent in-house for the long term. What’s more, digital threats are becoming more frequent and more specific, and therefore difficult to detect. As a result, companies that care about data security and business continuity cannot neglect that aspect in their IT investment plans either. A final analysis of the component costs of purchasing and maintaining own infrastructure often shows that outsourcing not only allows companies to survive in tougher times, but also improves their profitability and cash flow.

Cloud optimisation

Since restructuring or centralization proceedings are designed to protect against insolvency, it is obvious that managers will need sources of savings and the right conditions to increase the value of the company. Many people who are responsible for IT management in organisations believe that the cloud environment provides the ideal conditions for this. What might this be due to?

A company struggling with the challenges of restructuring, which can gain cost optimization, system stability or protection from cyber threats thanks to the cloud, can focus on day-to-day operations and does not have to worry about IT business continuity. An enterprise with a scalable and flexible IT environment gains the space to explore new business opportunities. At this point, digital solutions are no longer simply a facilitator of work, but the necessary condition for the continuity of production or service delivery.

Modern companies need to keep up with trends in order to grow, optimise costs and build competitive advantages. It is through them that it is possible to efficiently manage key processes such as production or general work organization, which are consequently responsible for the business continuity, shortening supply chain, market positioning or innovation speed. Pandemic shows the value of supporting business through technologies. Companies that rely on traditional IT infrastructure have found it difficult to respond to changes caused by COVID-19. Therefore one of the IT task is to develop solutions that allow the company to maintain business continuity and flexibility in relation to changing external conditions.