Among the investment thematics emerging in the wake of COVID-19, the shift to remote working solutions is one of the most prevalent.

Enforced lockdowns have left many companies scrambling to maintain their business operations without the use of a central office. (As a case in point, online retailers struggled to meet demand for laptops amid the initial rush back in March).

Many investors are now wondering how to position if the crisis results in a permanent change of working conditions. This week, Stockhead spoke to a number of companies and investors in the space to learn more about the broader trends underway.

For starters we got the investor view from Harley Grosser, founder of Sydney-based investment fund Capital H Management.

From a sectoral perspective, Grosser said that while some revised working arrangements would remain permanent, it wouldn’t completely upend traditional work practices.

“I think there’ll be an increase in work-from-home solutions and companies at least being prepared to allow that practice, but I don’t think it will give rise to a mass shift,” he told Stockhead.

“It’ll most likely be industry specific too, and also people specific. Certain industries you need that office space to be productive, and some people are loving working from home while others prefer a more social setting, so I think the trend will fall somewhere in the middle.”

But however that trend plays out, in some ways it’s of secondary significance to the more immediate economic realisation; companies will need to have the capacity to adjust.

“Companies may not move all their staff to new arrangements, but what they will have to do is build in the flexibility to deal with a crisis like this,” Grosser said.

“Because the rush could be quite fast, and we may see that again when the economy starts emerging from lockdowns, with the possibility of a second wave. Companies know they need to have everything prepared.”



To get an idea of how companies in the space are appraising the shift in dynamics, Stockhead also spoke with Karl Redenbach — CEO at ASX-listed software platform LiveTiles (ASX:LVT).

As a software-as-a-service (SaaS) platform with products that help improve workplace efficiencies, the company has fairly direct leverage to the rapid change in work patterns.

“In our opinion it’s accelerated the process of digitisation, and forced people to update their systems because they’ve really had no choice,” Redenbach said.

He cited the example of a recent deal with a large government organisation in New Zealand, which was completed in a period of three days — a process that would ordinarly take up to a year.

“The main reason is that they didn’t have the tools and they weren’t prepared. So I think we’ll see more organisations allowing people to work from home and people choosing that option going forward.”

On that front, Redenbach said customer churn had been low throughout the crisis. And over the medium term, the business hopes to benefit from a revision of client priorities.

“I think over the next six-to-nine months we’ll end up with bigger budgets, a reallocation of resources,” Redenbach said.

“Work-from-home (WFH) tools were deemed as nice-haves, now they’re viewed as a must-have. So going from A to B is critical for our business because we’ll see bigger budgets deployed to WFH and business continuity.”


Focus on flexibility

Along with the product side, the WFH shift will need to be met by commensurate infrastructure capacity. A number of ASX small caps operate in that sub-sector — names such as Uniti Group (ASX:UWL), Superloop (ASX:SLC), Spirit Telecom (ASX:ST1) and 5G Networks (ASX:5GN).

In a similar way to LiveTiles, 5GN chief marketing officer Glenn Flower said the company had noticed a change in decision-making by clients amid the COVID-19 scramble.

“We’re seeing starting to refresh IT footprint and change strategy in accord with a new line of thinking; ‘OK, this event happened so fast and look at the impact. We’ve got to be prepared for the next wave, whatever that looks like’,” Flower told Stockhead.

“Improved security, and changing the virtual footprint across the entire business — we’re really seeing that shift start to resonate across our customer base.”

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5GN has been building an end-to-end data solution for commercial clients, focusing on growth by acquisition with vertical integration of its own data centres.

“We had clients who lost revenue because they just couldn’t cope with demand as a result of that shift — they didn’ t have ability to quickly pivot and support ecommerce or WFH solutions,” he said.

Over the next six months, Flower said 5GN was focused on the launch of an expanded cloud capability that would allow clients to access a larger pool of real-time data. And as Grosser discussed in his sector overview, the focus is on flexibility.

“The next six months will be critical. Through our software and autoscaling it means businesses can grow and contract as they need to without having to do the manual intervention,” Flower said.

“I think what we’re doing is tied to the changing nature of business models and what the future might hold. Companies are realising they’ve got to future proof their business as opposed to doing what we’ve always done.”


Wake-up call

For Grant Petty, CEO at film equipment manufacturer Blackmagic Design, one of the main surprises in the fallout from COVID-19 has been the relative lack of nimbleness from Australia’s business community.

Petty has grown the company into a leading private enterprise with net assets of over $100m. He told Stockhead the business was on track to book revenues in excess of $500m for the 2020 financial year.

“What’s stood out to me is how few companies are trying to adapt,” he said. “Boards say all the right things, but ultimately the government’s expected to provide the free money until all the problems go away. So it’s kind of shocked me how many people go running for a handout.”

Blackmagic Design recently announced the launch of ATEM Mini, a hardware product that facilitates multi camera productions for live streaming.

And Petty said its use-case was tied to a by-product of the pandemic; in effect, a change in the way the media distills information.

“For broadcasters to survive they need to be more locally connected,” Petty said.

“And all of a sudden (with COVID-19), they’ve had to try and find experts. Instead of a pretty boy out of journalism school, they’ve had to bring in a scientist on a live video call using streaming.

“I think scientists have been rediscovered. Now there’s a way we can reach out to really smart people and they can play a role as the hub of information transmission to the community.”