Year 2020 is a year that has caught organisations and the entire world unprepared. Uncertainty is predicted to reign for some more time despite the delivery of vaccines in some countries.
However, the current recession hasn’t led to the halt of certain activities such as M&A that rebounded in Q3 and digital transformation that the finance function might even expedite. Let’s recapture what happened in these spaces in the year.
Accelerated digital transformation
The pandemic has driven CFOs to accelerate digital investment timelines from the pace of a multi-year marathon to a 12-month sprint while 82% of respondents indicated that advanced data analytics technologies and tools were a top priority, according to a Gartner survey of 173 CFOs conducted in October.
Another survey of 5,250 employees at companies in China, France, Germany, the UK, and the US by Boston Consulting Group indicated that 89% of managers and 84% of employees believe digital helped their companies get through the pandemic-induced economic slowdown.
In addition, more than 70% of both managers and employees endorse increased budgets for technologies that support client relationships, including applications for managing information requests and providing after-sale services.
Globally, 78% of managers and 57% of employees say their organizations are engaged in digital transformation, and the vast majority are willing to be part of the process.
The OECD estimated that the global GDP would rise by about 4.2% in 2021 and by a further 3.7% in 2022
M&A rebound in APAC and mega deals
Despite the deal volume drop of 8% year-on-year in Asia Pacific in the first nine months of 2020, the region saw high value deals reach US$392 billion in Q320, the highest third quarter on record — driven by domestic combinations and technology deals, according to an EY report.
Asia Pacific’s decline was also much less acute than that in the Americas (20% lower y-o-y) and EMEIA (Europe, Middle East, India, Africa; 15% lower y-o-y), according to EY.
In particular, mega deals — deals more than US$10 billion — in China and Japan increased deal value in 3Q20, with a Chinese oil and gas consolidation representing the largest deal globally to date in 2020.
Sectors that have experienced growth in deal activity in the first nine months of 2020 (y-o-y) include telecommunications (19%), life sciences (9%) and power and utilities (9%).
Technology was one of the first sectors to rebound in Asia Pacific, with deal volume returning to 2019 levels, while continuing to drive M&A as part of the transformation agenda across industries, EY said.
The average RPA prices through 2020 are expected to drop 10% to 15%, with annual 5% to 10% decreases expected in 2021 and 2022, said Gartner
Next year: moderately upbeat growth predictions
The recent availability of vaccines from Pfizer–BioNTech, NIH–Moderna, and China’s, Sinovac Biotec and Sinopharm — despite the general public’s worries about their effectiveness and possible side-effects — has injected a certain level of optimism into the global market.
The Organization for Economic Co-operation and Development (OECD) predicted that the global GDP to return to pre-pandemic levels by end-2021 after witnessing a downward spiral of 4.2% this year.
The OECD estimated that the global GDP would rise by about 4.2% in 2021 and by a further 3.7% in 2022, attributing the growth to vaccine rollouts as well as accommodative fiscal and monetary policies.
The recovery will be led by China, forecast to grow by 8% next year and accounting for more than one-third of world economic growth, the organisation said.
Larry Hu, chief China economist at Macquarie, said in a note that China’s GDP would grow 5.5% in Q4 2020 and 15% in Q1 2021.
He put the estimate of full-year growth in China at 2% in 2020 and 8.5% in 2021.
While IMF hasn’t released any predictions for China’s economic growth in 2021, the fund expects the country to be the only major world economy to grow this year, at 1.9%.
Technology was one of the first sectors to rebound in Asia Pacific, with M&A deal volume returning to 2019 levels, said EY
2021: Cheaper RPA, wider adoption by finance function
Whether or not the global economy would take a path as predicted, the trend of non-IT functions implementing RPA is likely to thrive.
Nearly half of all new RPA clients will come from business buyers outside the IT organisation by 2024, according to Gartner.
“Leading RPA software vendors have successfully targeted CFOs and COOs, instead of IT alone,” said Fabrizio Biscotti, research vice president at Gartner. “They like the quick deployment of low-code/no-code automation.”
In 2020, worldwide RPA software revenue is projected to reach US$1.58 billion, up from 11.9% from 2019, Gartner noted.
The research firm predicts that 90% of large organisations globally will have adopted RPA in some form by 2022 as they look to digitally empower critical business processes through resilience and scalability, while recalibrating human labor and manual effort.
The good news for adopters is that the average RPA prices through 2020 are expected to decrease 10% to 15%, with annual 5% to 10% decreases expected in 2021 and 2022, according to Gartner.
The pandemic has driven CFOs to accelerate digital investment timelines from the pace of a multi-year marathon to a 12-month sprint, said Gartner
Unprepared for the downturn? Be prepared for the rebound
While the pandemic represents an unprecedented shock to the world economy, at least some of the organisations that are still in place are doing what are required of them to stay afloat, including investing in new technologies and acquiring companies.
The crisis might not be over any time soon but it could be the best time to prepare and re-position oneself for the gradual rebound post-pandemic.