Working from home is becoming the 'new normal' and an indispensable part of the new world of work. Digital infrastructure is becoming a 'must have' for maintaining the global economy.

The trend away from the office towards more decentralized working has been reinforced and accelerated by the coronavirus crisis. The forced experience of companies working from home during the lockdown has certainly helped to overcome some reservations. On the other hand, employees have learned to appreciate certain benefits of occasional home office and expect their employer to be more flexible in this respect in the future.

Boost for digitization

Thomas Rappold: "There are excellent future opportunities for infrastructure and software providers."

© Thomas Rappold

Office space is already giving way to investments in new technologies, as the decentralized form of work requires digital infrastructure in the form of cloud technology, network infrastructure, document management and cyber security. The exchange with colleagues(reading tip!) and superiors necessarily takes place via digital means of communication. Video conferences are replacing on-site meetings, events are being held via livestream and one-to-one meetings are taking place via Skype. There is no doubt that the pandemic has given digitalization a major boost.

As with many digitalization efforts, Germany has also struggled in the past when it comes to working from home and remote working. However, Covid-19 has acted as a gigantic digitalization accelerator in recent weeks and months. A recent survey by 'ZEIT für Unternehmer' magazine found that 89% of companies now believe "that working from home can be implemented on a larger scale without any disadvantages".

Flexibilization of the world of work

A recent study by the internet development company Gitlab, which is valued at 3 billion dollars pre-market and is one of the largest pure remote work companies with over 1500 employees, shows that the advantages of working from home are manifold and that the flexibilization of the working world is now more imperative than ever in order to reconcile private and professional interests in equal measure.

According to the study, Anglo-Saxon countries such as the USA, the UK, Canada and Australia are leading the way with a home office share of around 30% of the working population. More than 80% of those surveyed see remote working as the future and would recommend it to friends.

The main advantages cited by study participants were flexible scheduling, reduced travel to work, less stress and, above all, more time for the family (children, care of the elderly). Even previous skeptics - such as Volkswagen board member Ralf Bandstätter - were proven wrong. In an interview with WELT, he emphasized: "Overnight, digital communication has become part of everyday life. Only a short time ago, we would never have thought that decentralized, digitally networked work would work so well."

For employers to attract young and demanding applicants from Generation Y and Z, who have grown up as digital natives, flexible working structures and state-of-the-art communication tools are part of the natural repertoire of a new working world.

Economic pressure to act

The Solactive Home Office Technology Index (ISIN: DE000VP796R4, WKN: VP796R ) shows the performance of 25 companies from the most important digital infrastructure sectors in connection with home offices.

© Solactive

Many sectors of the economy are under financial pressure during the coronavirus crisis. Deficits in companies' business models have been ruthlessly exposed and some cost blocks that were previously considered necessary are becoming obsolete. Banks have closed their branches during the coronavirus crisis and, at the same time, the population has taken advantage of digital services for banking transactions as well as for the conclusion and purchase of financial products. As a result, branch banks such as Deutsche Bank and Commerzbank are planning significant cuts to their branch network. But that's not all: Deutsche Bank wants to reduce office space by working from home. According to Wirtschaftswoche, the top management is working on a new 'hybrid model', i.e. a division of working hours between office and home office. Deutsche Bank's aim is to permanently reduce its office space in order to save on rent.
After all, the bank spent 1.7 billion euros on rent last year. In New York alone, office space is to be reduced by a third as early as next year. The fund subsidiary DWS has already moved into cheaper office space in London.

The financial services providers NordLB, BayernLB and DekaBank are also expecting a reduction of 25 to 30 % in office space. Industrial companies are likely to follow the banks' trend: The transformation to Industry 4.0 and digital business models with new value chains accompanied by high cost pressure and faster development cycles are compelling arguments for more flexible and digital working models.

Investment focus on digital infrastructure

The savings on the corporate side in terms of rent and office real estate will help companies to increase their profitability, but above all to finance the necessary investments in the digital infrastructure for home office services and remote work. Current surveys among IT managers (CIOs) in companies show that Covid-19 will lead to major shifts in future IT investments. IT managers see investment priorities in the segments of employee communication and collaboration software, mobile devices such as smartphones, tablets, laptops and connectivity, broadband services, security software and cloud hosting services.

Beneficiaries of the home office trend

Specifically, the following segments and exemplary companies are involved:

- Collaboration and application software that promotes digital collaboration between employees. Examples include Teams from Microsoft, Jira and Confluence from Atlassian and Teamviewer.

- Cloud technology with cloud-based offerings. Examples include cloud-based offerings from Dell EMC and VMware.

- Network infrastructure, for example routers, switches, network software, network security products from Arista and Juniper.

- Document management such as cloud storage, file synchronization, management of company content, e.g. Box, Dropbox, Citrix.

- Cyber security: Examples include Internet and data transfer security from NortonLifeLock and Okta.

- Other beneficiaries of this trend are video conferencing providers such as Zoom Video and cloud companies such as Alphabet and Nutanix.

It goes without saying that the intensive use of digital platforms and services gives cyber security a special role. The more interactions shift to digital channels, the better they need to be protected against attacks. New means of communication are also required to replace traditional email.

Collaborative tools such as video conferencing and project management in a virtual environment are likely to come.

We are only at the beginning of the development and design of mobile and flexible forms of work. Covid-19 has shown that a large proportion of employees can carry out their work from their home office with excellent productivity rates within a short period of time. This creates excellent future opportunities for infrastructure and software providers.

About the author: Thomas Rappold writes for Computer&AUTOMATION and is a financial/stock market expert, author (Silicon Valley Investing) and founder of numerous Internet start-ups.