Most businesses, and business leaders, are conditioned to think in cycles. During boom times, when the underlying economy is strong and secular growth acts as a tailwind, fortune favours aggressive investment. On the other hand, when a recession hits or looms, conventional wisdom says that firms should cut their cloth accordingly.

Given the potential severity of a global economic recession in the wake of COVID-19, the choice for companies would seem clear. However, this is no normal cycle and we cannot rely on traditional playbooks.

Instead, organisations need to recognise that there is not one overwhelming priority but two. The key is not to choose offense or defence, but to play both in parallel.

The first priority is an obvious one. The economic tide is going out, and companies need to reduce their costs.

Even before the pandemic struck, C-suite confidence was running low. According to a recent survey of Global CEOs by PwC, only 25% had high confidence in revenue growth for 2020 – the lowest proportion in the study’s 11-year history.

As finance departments weigh the medium-term business impacts of COVID-19, the need for efficiencies is greater than at any time since the last financial crisis. In some areas, the emphasis has already shifted from revenue growth to preservation, especially in sectors involving physical retail.

While all this appears to undermine the case for investment, today’s exceptional circumstances demand otherwise. In just a few months, customer and employee behaviours have changed beyond all recognition.

People are working, shopping, and digitally engaging more than ever, catalysing the growth of e-commerce, digital advertising and mobile. Across the world, the demand for seamless digital experiences is more pressing than ever.

Competitive advantage will increasingly rely on the ability to cater to the needs of virtual customers and/or employees. The pace of digital transformation needs to accelerate worldwide, and that requires investment.

Given neither investment nor efficiencies can be avoided, companies must find ways of achieving cost-out and revenue-in together. One must feed the other. The right digital investments should not only act as foundations for revenue growth but also as levers for cost-reducing efficiencies.

Truly effective digital transformation journeys should always be cross-functional and silo-busting in nature. Different departments must be encouraged to think beyond their traditional borders, interact with adjacent functions, and intimately understand how their work can both boost revenue and reduce cost.

For example, this would necessitate security professionals thinking about solution technicalities as well as how improved fraud detection can save money, or how data-driven insights can remove friction from, say, the marketing department.

Leaders must focus their organisations on investments that reduce costs while also boosting profit and revenue. It is no longer enough to achieve only one or the other.

An obvious intersection of these two priorities is the security of our digital assets.

As online activity increases and digital footprints expand, so too does our overall attack surface. Even before the pandemic broke, data from Experian showed that incidences of mobile account takeovers had doubled in the last four years.

That problem is now compounded by soaring data breaches, leaks, new attack patterns and phishing scams related to COVID-19.

Clearly, improving detection is an important way to reduce the direct and indirect cost of fraud, which can easily run into millions of dollars lost. Done right, it can also stimulate revenue. According to Shape Security data analysis, around 10-15% of online consumers will fail when they attempt account logins.

Improved user legitimisation alone can reduce this figure and prevent significant customer losses. Even if just 5-7% of lost users are returned, it can make a meaningful difference. This is what the cross-functional approach is all about.

In this instance, an organisation’s measure to prevent fraud has also become a customer retention tool. It is at these intersections that the greatest return-on-investment becomes possible.

Nowadays, a traditional cyclical approach to investment is unlikely to cut it on the digital transformation front. Instead, decision-makers need to ask more of themselves, their people, and their investments. Most importantly, they need to connect priorities, teams, and budgets to achieve the greatest impact.

Authors:

Larry Venter, VP Customer Success and Solution Engineering at Shape Security (a part of F5)

Partha Sarathy, Global Fraud Architect at Shape Security (a part of F5)