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Sneller innoveren: de rol van cloud, een datastrategie en digital capabilities

Wie sneller wil innoveren in deze dynamische, evoluerende markt wordt gevraagd continu te leren en veranderen op het gebied van klantervaring, processen en technologie. Veranderen, om in staat te zijn op nieuwe manieren waarde toe te voegen voor klanten, omzet te verhogen en processen te optimaliseren. Voor ons vindt die verandering plaats in het vinden van de balans tussen gebruik van de mogelijkheden van de cloud, een datastrategie en digital capabilities. De combinatie van deze drie zaken maakt het mogelijk een digitale transformatie te realiseren.  

 

Sneller innoveren dankzij de cloud   

 

De gemiddelde IT-manager van een MKB+ organisatie geeft vaak zo’n 80-90% van zijn IT-budget uit aan het operationeel houden van datgene dat er al is. Daardoor blijft er maar beperkt ruimte over om te investeren in innovatie. Innoveren is experimenteren en ineffectief experimenteren kost vaak veel geld. Met cloudtechnologie krijg je de mogelijkheid om experimenten uit te voeren tegen lage kosten en om de stekker uit een experiment te trekken wanneer het niet brengt wat je ervan had verwacht. De cloud is onmisbaar voor wie wil groeien en onomstotelijk onderdeel van digitale transformaties.   

 

De cloud als accelerator bij Dat. Mobility   

 

De mogelijkheden van de cloud als innovatieversneller zijn bijvoorbeeld duidelijk zichtbaar bij onze klant Dat.mobility. Deze organisatie heeft haar snelheid en wendbaarheid vergroot en is dankzij AWS cloudtechnologie in staat sneller te reageren op behoeften uit de markt. Peter Kant, innovator, strateeg en product owner bij Dat.mobility:    

“Luminis heeft ons ondersteund bij het verkennen van een transformatiestrategie richting de AWS-cloud en alles wat daarbij komt kijken: het borgen van de belangen van interne en externe stakeholders, het uitwerken van mogelijke transitiepaden, het opstellen van conceptuele (cloud)architecturen, het uitvoeren van sizing en het opstellen van business cases. Alles bij elkaar stelde dit ons in staat de juiste knopen door te hakken om beter te kunnen voorzien in de behoeften van onze klanten.”   

 

De impact van een goede datastrategie   

 

Ter aanvulling op een transitie naar de cloud is voor de meeste organisaties ook een goede datastrategie essentieel om innovaties te realiseren. Succesvol zijn nu en in de toekomst begint bij het slimmer inrichten van data. Daarom kijken wij niet naar de applicaties die worden gebruikt, maar naar de beschikbare data, want daarin zit de echte waarde. Met onze modulaire datastrategie zorgen we voor gecontroleerde beweeglijkheid, wat onze klanten in staat stelt sneller te beschikken over de juiste data.   

 

Van data tot consequentie van de Energietransitie bij Omons   

 

Een goed voorbeeld hiervan is onze klant Omons, een initiatief om de betrokkenheid van burgers bij de energietransitie te ondersteunen. In iedere gemeente gelden andere regelgeving, doelstellingen en voorwaarden, denk bijvoorbeeld aan belastingtarieven of kostprijs per kWh. Omons vroeg Luminis te helpen met het vinden van een manier om een grote hoeveelheid data, gecombineerd met complexe berekeningen, behapbaar te maken voor burgers. Het platform moest bruikbaar zijn voor mensen uit verschillende gemeentes, maar wel aanpasbaar aan de verschillen op gebied van wet- en regelgeving. Aan de hand van workshops ontwikkelden wij een cloudgebaseerde oplossing, die bijdraagt aan het verhogen van de betrokkenheid van de burgers, mogelijke kostenbesparingen identificeert en communiceert. 

 

AI maakt wetenschap realiteit bij Whispp   

 

Whispp is een cloudgebaseerde spraakoplossing gerealiseerd met kunstmatige intelligentie, die het voor stotteraars of mensen met een stemaandoening mogelijk maakt een ontspannen en (bijna) vloeiend gesprek te voeren.  De audiotechnologie past het geluid van jouw spraak op de smartphone of laptop digitaal aan. Denk aan live gesprekken, telefoneren of videobellen. Luminis is vanaf het eerste onderzoek, samen met patiëntenverenigingen, medisch specialisten en universiteiten, bij de creatie van het product betrokken geweest: van het omzetten van ideeën en hypotheses naar een waardevol spraakoplossing die nota bene schaalbaar is.  

 

The missing link: Digital capabilities  

 

Een digitale transformatie is naast een technologische ook een organisatorische verandering. In aanvulling op het implementeren van de benodigde technologie is ook in-house kennis en expertise nodig om in de toekomst te blijven innoveren. Denk hierbij aan vraagstukken op gebied van security, het beter toegankelijk maken van data en het implementeren van een Agile manier van werken zodat waarde-creatie effectiever en sneller gerealiseerd kan worden.    

Om te blijven innoveren op productniveau en klanten te voorzien in wat ze nodig hebben is het belangrijk te blijven werken aan de kennis en expertise van eigen mensen. Dit doen wij bijvoorbeeld door middel van gamification van kennis met Cloud: the Game en de Cloud Proficiency App, maar bijvoorbeeld ook met ons Accelerate traject, waarin we samen met verschillende partners de techleiders van de toekomst opleiden.   

 

Groeimogelijkheden voor iedere organisatie 

 

Groeimogelijkheden ontdekken, benutten en helpen realiseren. Dat is ons speelveld. We blinken uit in creativiteit, visie op gebied van cloud en data en de uitvoering van digital transformation trajecten. We voegen strategisch denk- en uitvoeringsvermogen toe aan organisaties en helpen tegelijkertijd in kennisontwikkeling.  Zo realiseren we versnelling van innovatie en groei voor organisaties die klaar willen zijn voor de toekomst.  

 

Over Luminis   

 

Al 20 jaar staat Luminis voor innovatie, creatieve ideeën en dingen net even anders doen. Dat maakt ons de innovatiepartner voor bedrijven die willen innoveren. Wij zijn een team nieuwsgierige geesten en diverse persoonlijkheden, trots om onze klanten van dienst te zijn in het slimmer inrichten van data en gebruikmaken van alle mogelijkheden die de Cloud biedt. We helpen graag met het ontdekken en realiseren van jullie potentieel.    
  

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5 Reasons Sales Leaders Should Still Care About Virtual Meetings

Many of us reluctantly downloaded video conferencing software on our computers two years ago thinking, “Well, this won’t last long. I’ll meet my colleagues and clients again soon.” Fast forward to today, virtual meetings have completely transformed the way we work and the way we sell. The era of hybrid work is here, giving us the freedom and flexibility to work from anywhere, anytime. Although it’s now socially acceptable to meet your clients face-to-face again, here are five reasons why you should continue to meet them virtually.  

 

Saves time, money, and sanity

Let’s face it, commuting is time-consuming and expensive. It’s sad to know that the average salesperson loses five days a year traveling to and from client meetings. Virtual meetings give you those five days back to travel for a much-needed holiday. They erase the hassle, stress, and cost of commuting – leaving more time to focus on the job and prepare a winning sales pitch. You also don’t have to bother planning the logistics of a face-to-face meeting. Not only do virtual meetings save you money, but your company as well. A study by Global Workplace Analytics states that remote work saves businesses an estimated $11,000 per employee annually, in addition to lower turnover rate and real estate costs.   

 

Virtual meetings are more productive and efficient

We all are familiar with the pain of sitting in a poorly organized meeting, and 89% of professionals have named it one of the biggest workplace frustrations. As salespeople, it’s also exasperating to attend meetings only to find out that the right decision makers are not present. Virtual meetings mitigate these challenges as there is more time to plan, prepare, and send invites to the right people. According to a study by Forbes Insights, 87% of survey respondents believe that video conferencing strengthens customer relationships and improves the sales process.  

 

People are more likely to attend  

Who doesn’t love the feeling of relief when meetings end on time? We know that virtual meetings rarely run longer than the time allocated. This means attendees are less likely to cancel and are more willing to block their schedule for you. Therefore, it’s no surprise that 85% of sales prospects are more eager to join a 30-minute virtual meeting rather than an in-person meeting! Also, this study shows that attendees are less stressed in virtual meetings. Maybe because they’re wearing their favorite pajama bottoms or have a pet sleeping next to them. Having clients in a relaxed environment and in a good mood means only good news when you want them to hear about your product.    

 

Meet more people, get more leads

According to HubSpot’s 2021 Sales Enablement Report, 63% of sales leaders believe that virtual meetings are as effective or more effective than face-to-face meetings, and it’s easy to understand why. For instance, a salesperson working remotely can close deals with several international clients without having to claim a single cent of travel expenses from their company. In addition, studies show that B2B decision makers are keener on making purchases remotely, and only around 20% of them hope to go back to in-person sales (we’re shocked by this statistic too). Virtual meeting platforms have made the world borderless, providing opportunities to connect with international customers seamlessly. With virtual meetings, your next customer may just be a few clicks away.  

 

Watch your meeting recordings

Once you get past the discomfort of hearing your own voice on video, you will find that meeting recordings are incredibly useful in several ways. For starters, they’re a good way to keep track of the progress of a particular client. Sharing those recordings with clients who may show them to other stakeholders puts your product out there without you having to present your sales pitch again. In addition, there’s a lot of valuable information in those recordings to add to your CRM platform. How many times have you wished to turn back time during face-to-face meetings to see which points you could have presented better? With virtual meetings, you can watch the recording as many times as you want, identifying areas of improvement and perfecting them, giving you the confidence to rock your next sales pitch.  

 

Considering their benefits, it’s crazy to think that virtual meetings were a rarity two years ago. Now, it’s hard to imagine doing business without them. We may never return to the pre-pandemic days of working, and maybe it’s for the better.

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Thomas Zinniker: As a CIO, I Don’t Drive the Business, I Enable It

Lately, we have heard a lot about the evolution of the CIO role from IT leader to business leader, agent of change, and driver of new technologies. However, Thomas Zinniker, CIO at BKW, sees himself as an enabler of business. In this exclusive interview, Zinniker tells us about IT’s role as an organizational enabler, his thought process behind implementing the right technologies, emerging IT trends, and more.

 

Companies are under constant pressure to digitally transform their products and processes. As a CIO, how do you determine which digital tools and technologies bring value to your organization?

First of all, I would like to clarify something: BKW is not a tech company. The BKW Group is an international energy and infrastructure company that offers integrated solutions in the fields of energy, buildings, and infrastructure.

We distinguish ourselves in the market through services; technology is merely an important enabler.  First and foremost, we develop new services that meet our customers’ needs and define new ways of doing business with them. Then we consider which technology fits best.

Typically, we don’t go for the latest leading-edge technology, because that does not really help our customers. We focus more on proven technology. For which technologies are sufficient skills available? How reliable is the technology? Has it matured over time? That way, we cannot only count on it for the next 6 to 12 months but for years to come. Once we have developed a new business service, we will not have to keep replacing it.

Overall, we focus on technology which helps us to become more agile to allow fast integration of new channels and products. As a CIO, I would rather count on proven and reliable technology supporting our innovative business services. While experimenting with new products or customer interactions, we need to be on the safe side in terms of stability, reliability, and security. 

 

What are the key elements needed to build a successful IT strategy to drive business growth?

As a CIO, you need to understand what your business is doing, what drives your business, and which external factors are influencing it. Adapting to it means adapting modern ways to develop business services in a more agile way. An IT or business strategy doesn’t last for five to 10 years. The change cycles are much shorter. Therefore, being flexible and having the ability for quick changes is the most important skill. I’m not building an IT strategy based on the actual business strategy. I base my IT strategy on how the business strategy evolves because I do not know what will happen in five years.

That has been the biggest challenge for us in the past, and I think we were quite successful in mastering it. We were able to easily adapt to new business processes. For example, five or six years ago we introduced Office 365 and mobile working. There was constant pressure and questioning, “Why are you bringing in new tools? We will never need that.” When we had to send the workforce home due to the pandemic, everyone was amazed at how easily and trouble-free we could keep going. From an IT perspective, the beginning of the pandemic was a very relaxing time for me because we were prepared. That’s exactly what I’m continuously doing. I always look two or three years ahead of the business and try to anticipate what might come.

 

How has the CIO role evolved in the last two years? What are the common misconceptions about CIOs you hope to debunk?

No CIO role is the same. A few years ago, I was told that as a CIO, I have to drive the business, I have to change the business. Today I know, I’m an enabler for the business and that is completely different from being a driver. We started our cloud-first strategy in 2015, not because we wanted to be more tech or reduce costs. Our goal was to become more flexible. Many companies do not see IT as an enabler. Even though digitalization is on top of an executive’s agenda, the role of the CIO has not changed. If you want to be an enabler today, you would have had to start five years ago. Some things simply cannot be implemented in three months.

 

BKW strives to develop solutions to reduce CO2 emissions in the energy sector. From a CIO’s perspective, how do digitalization and technology lead to a sustainable future?

I think technology is absolutely key for a sustainable future, especially in automating and controlling energy consumption in a smart way. For example, centralized heating systems or air conditioning units that maintain certain temperatures regardless of occupancy are wasting energy, the smart way is to act on the effective need.

Technology is needed to make our infrastructure fit for the challenges that arise with the production and consumption of sustainable energy. In a smart building or environment, technology can do much more. Technology or digitalization is not a challenge, it’s actually the answer.

 

What are the top 3 emerging trends IT leaders should be aware of?

Trends are always coming and going. As an enabler, you don’t need to be on top of the trends. You can look at them and say, “Well, let’s see whether this trend will be still there in two or three years.”

Nevertheless, artificial intelligence is definitely an important trend at BKW because it is one of the key elements of a smart energy business. When it comes to AI the big question is: how do we adapt our skills and processes in order to have the right data at the right place? What roles and responsibilities can leverage the potential arising from AI? Thanks to public cloud, the technology is already there and improving every month. 

As BKW is an operator of critical infrastructure, the whole area of cybersecurity is an uphill battle. We have to continuously strengthen, monitor, and implement.  We are always up to date with the latest trends in cybersecurity and improve our infrastructure and platforms step by step. Although this is not an IT trend, I have to mention the disruption of the supply chain. We need to have different supply chain strategies in the future to ensure that we get the right technology in place, especially the hardware we need in critical infrastructure.

If you needed a spare part three years ago, it was delivered in two weeks. Today, you have to keep enough spare parts on hand for the next two or three years. Right now, we are in the process of restocking thousands of units for a big project. We ordered them last May – they are still not here.

 

What project or achievement are you most proud of in your time with BKW?

When I started at BKW six and a half years ago, we had around 3,500 employees. Now we have more than 11,000. The diversity of the company has also grown dramatically. In the beginning, it was a pure energy and utilities company. Today, we also offer infrastructure services, engineering services, building technology, and smart building services. 

 I am very proud to be working with my team to transform BKW’s IT organization in line with our decentralized approach.  As an energy provider, we had a completely centralized approach. Today, as an infrastructure company, our motto is: as decentralized as possible and as centralized as necessary. This means a complete paradigm shift, turning around our organization and its services.

Cost reduction is an important thing. Three years ago, every megawatt of electricity produced was a loss. Therefore, we had to dramatically reduce costs. With the help of IT, we reduced the cost by around 30% in the infrastructure area. However, increased flexibility and reliability made it much more secure. The public cloud project played a big part in this, helping us a lot to reduce costs and manage the transformation process.

 

*The answers have been edited for length and clarity.

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What’s Your Cybersecurity Budget?

The damage cyberattacks cause organizations is on the rise, costing them millions. Although cybersecurity spending is projected to increase dramatically, CISOs must structure their cybersecurity budgets based on their organization’s needs, vulnerabilities, and swiftly evolving trends such as the shift towards remote/hybrid work and a growing reliance on cloud services. Read on to discover the key current factors driving cybersecurity budget prioritizations. 

 

The rising cost of cybersecurity breaches 

 

 A report by the Identity Theft Research Centre noted that data breaches in 2021 exceeded that in 2020 with an estimated 281.5 million people affected. The cost of this is monumental, especially for businesses. The average cost of cybercrime amounts to $1.79 million per minute for businesses, highlighting the impact that cybersecurity has on an organization’s operations.  

It is no surprise then that cybersecurity budgets are on the rise each year in line with this evolution. Approximately 44% of IT professionals cited improving cybersecurity as a justification for increased IT investments according to the ESG research report on its Technology Spending Intentions Survey in 2022. 

 
 

In fact, cybersecurity spending is growing at a faster rate than overall IT spending, with 44% of security leaders expecting their budgets to increase in the next 12 months according to CSO’s 2021 Security Priorities Studies. This is in line with the findings reported in PwC’s 2022 Global Digital Trust Insights report stating that 69% of organizations predict a rise in their cyber spending for the year.  

Additionally, tech research firm Gartner projected that spending on information security and risk management will top $172 billion in 2022, a $17 billion increase from 2021 and $35 billion more than in 2020.  

In 2021, Microsoft announced a $20 billion cybersecurity budget over the next five years while Google CEO Sundar Pichai announced that the company is investing $10 billion in that same period. 

 

Cybersecurity spending priorities 

 

Though the projections for cybersecurity spending increase each year, it is still limited. As CISOs grapple with increased risk, they are also searching for ways to spend their funds most efficiently.  

One way to do that is to understand the threat landscape and needs of the organization. In the last three years, Gartner predicted the top five areas to show security spending growth are application security, cloud security, data security, identity access management, and infrastructure protection.  

Current developments will also affect budget priorities. In the two days following the start of the Russia-Ukraine war, suspected Russian-sourced cyberattacks were observed by US-based cybersecurity agencies, an increase of over 800%.  

In March, the hacker group Anonymous warned that it would attack major corporations that have not pulled out of Russia since the war began. It was later reported that the group had hacked Nestle and leaked over 10GB of important data including client information, emails, and passwords. Other organizations that were targeted include Burger King, Subway, and cloud computing firm Citrix. 

The US Department of Homeland Security, FBI, and others have issued warnings for organizations to be prepared for further threats. 

 

Cloud Security is a key focus 

 

The global pivot to remote work catalyzed by the COVID-19 pandemic has redefined many organizational structures and led to a growing reliance on cloud services and digital tools, leaving them vulnerable to different types of cyberattacks.  

An IDC survey by Ermetic found that 79% of companies experienced at least one cloud data breach in the last 18 months. This is alarming given that 92% of an organization’s IT environment is cloud-based, making cloud security a key concern for CISOs and other C-level professionals.  

Unsurprisingly, CISOs are prioritizing cloud security, which would drive budget priorities. According to ESG, 62% of the IT personnel surveyed said they are planning to increase spending on cloud application security while 56% said they are investing in cloud infrastructure security.  

 
 

We have also found, as shown in our latest Cybersecurity Investments trend report, that 60% of CISOs and their C-level counterparts are focusing on cloud security, specifically third-party management and resilience or Zero-Trust Architecture. Many of the organizations interviewed also noted that they are looking to expand their cloud solutions and adopt a hybrid cloud, thus enabling them to secure their processing data on-site.  

 

Employee Awareness can reduce security risks 

 

Another area of focus for CISOs is employee awareness, with 58% of organizations citing it as a key focus of their cybersecurity strategies. A Ponemon Institute study showed that 68% of organizations have experienced at least one endpoint attack, compromising their IT infrastructure and data.  

Similarly, IBM found that a staggering 95% of cybersecurity breaches were caused by human error.  

As Mika Susi, former Executive Director of the Finnish Information Security Cluster said: “Many times, humans are said to be the weak link in cybersecurity. Recently, we have also seen many attacks using an organization´s supply chain and partners as weak spots to get access to their network.” 

Eliminating that factor would mean that 19 out of 20 cybersecurity breaches may not have occurred at all. Though it would be impossible to solve human error completely, it is crucial to implement strong policies and training programs to equip employees with the right knowledge and tools to avoid potential cyber threats, which would decrease security-related risks by as much as 70%.  

One of the challenges with improving employee awareness is that there hasn’t been enough of a focus on building a culture within organizations to identify risks.  

“As I see it, organizations often put too much emphasis on having a formal three-part structure of control and reassurance, and far too little emphasis on building an actual culture that identifies and steers risk as part of its DNA. Of course, building a strong culture of security and implicitly, a risk culture – means including all employees, from the CEO to the bottom-rung shift worker, from the service partner to the short-term consultant. Including all the human risks and employees is key to making an actual risk-based culture,” says Magnus Solberg, VP & Head of Security Governance at Storebrand. 

Implementing a bottom-up approach to training employees to think in and act in a risk-based manner is one way to mitigate the human factor, says Mr. Solberg. He also suggests arming employees with tools to perform more structured and documented assessments, both mental tools as well as stronger policies, guidelines, and software.

 

Cybersecurity resilience and readiness 

 

At the same time, cybersecurity leaders are actively searching for new strategies to quickly detect and respond to cyber breaches.  

In 2021, there was a major surge in cyberattacks compared to previous years. According to SonicWall’s Cyber Threat Report, there was a 105% increase in ransomware attacks that year from the previous year. Narrowing down, government institutions saw a 1,885% increase and the healthcare industry saw a 755% increase in such attacks. According to Sophos’ State of Ransomware 2021 report, retail, education, and business & services sectors were hit with the most ransomware attacks.  

 
 

In July 2021, Swedish supermarket chain Coop was forced to shut down over 400 stores due to a major ransomware attack on its point-of-sale systems. This was part of the same ransomware attack which affected over 200 businesses, mainly in the US. More recently, several oil storage and transport companies across Europe were hit with ransomware attacks. Specifically, Oiltanking in Germany, SEA-Invest in Belgium, and Evos in the Netherlands were all forced to operate at limited capacity due to the attack. 

Sophos’ report also revealed that, on average, it costs an organization a total of S$1.85 million to recover from a ransomware attack, up 143% from the previous year. The findings also showed that only 8% of organizations that fell victim to a ransomware attack were able to recover all their data after paying a ransom. Approximately 29% only managed to recover no more than half their data.  

Beyond that, a recent survey found that 66% of respondents suffered a significant loss of revenue following a ransomware attack while 53% reported that their brand images were negatively affected. Alarmingly, 29% said ransomware attacks led to employee layoffs.  

The cost of a ransomware attack or recovering from other forms of cyberattacks could set organizations back a major chunk of their budgets if they are not prepared in advance. In fact, the increased cost of ransomware attacks has also driven up premiums on cyber insurance policies, adding to the need for organizations to be financially prepared.  

CISOs are constantly looking for ways to strengthen their organization’s ability to resist and recover from a multitude of threats, which in turn informs their cybersecurity investment priorities. What other factors should organizations consider when setting their cybersecurity budgets?  

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The Russia-Ukraine War: How Will It Impact Future Business Decisions?

What issues do business leaders need to be aware of in the unstable economic climate the Russia-Ukraine war has created? Economists Heleen Mees and Olga Pindyuk answer burning questions on supply chain disruptions, the role of China in the war, trade with Ukraine, and more, in the session, The Cost of War: How are Businesses Paying the Price?  

 
Heleen Mees is an economist, opinion writer, and author. She has done extensive research on China’s economic rise and its global implications. Olga Pindyuk is an economist and country expert for Ukraine at the Vienna Institute for International Economic Studies.
 

The Russian Oil Dilemma 

The energy landscape in the EU has become volatile as more countries announce oil embargos against Russia. Poland became the first country in the EU to commit to decreasing its dependence on Russian oil and gas by the end of the year. Lithuania followed suit and has stopped importing gas from Russia since April 1.  

In response, Russia has doubled down with President Vladimir Putin signing a decree demanding payments for gas to be made only in rubles. This has received backlash from Russia’s biggest customers, Germany and France, as previous transactions were made in dollars or euros, and are considering their backup plans if Russia decides to cut the cord completely. 

What is the likelihood of Russia cutting off its gas supplies to the EU? 

According to Pindyuk, it would not be a rational move as the Russian economy is still badly impacted by Western sanctions. However, she warns that it is not totally impossible as Russia has cut off gas supplies to the EU before in 2009. “It lasted a few weeks and was quite painful for Eastern European countries, as they have the highest consumption of Russian gas,” she says. 

A number of countries in the EU still have a high demand for Russian gas, and although there are plans to explore alternative energy sources, it will take a long time. If Russia ever decides to pull the plug on its gas supplies, Pindyuk says it will be a detrimental move. “In the long run, this would be counterproductive for the Russian economy because it would accelerate the European move towards diversification from Russian fuel. It’s not so easy for the Russians to develop all the necessary infrastructure to supply gas to alternative locations,” she says.  

Mees echoes Pindyuk’s sentiment but says there is still plenty of uncertainty regarding a total oil ban on Russian gas. “The Europeans have difficulty agreeing on a total gas and oil boycott from Russia. But I think [businesses] should really take into account the possibility of President Putin cutting gas supplies, and how irrational it would be from a Russian perspective,” she adds.  

 

China’s Role in the War

China has not made any big moves to support the Russian economy due to fears of secondary sanctions. In fact, several Chinese financial institutions have already discontinued deals with Russian-backed firms and restricted financing for purchases of Russian commodities. However, China is still one of Russia’s biggest allies and has not openly condemned the invasion of Ukraine. Mees talks about the possibility of China being the last resort for Russia when it comes to gas supplies, but this transition will be difficult. “China will be happy to buy Russian oil, they already trying to do transactions in Yuan. Russia will have a problem because it will take time to have the pipelines to deliver gas to China,” she explains.  

Mees also believes that China will prioritize having good trade relations with the West. She says there is much at stake for Xi Jinping politically this year as he plans to hold his position as leader of China for life. “I’m not so sure that once he has been [elected] to lead for life that trade relations with China will stay the way they are. I suggest business leaders prepare for that,” she adds.  

 
For more on the initial economic impact of the war in the EU, check out our previous article, Impact of the Russia-Ukraine War on the Global Economy: What We Know So Far. Click here to read.
 

An Update on Ukraine’s Exports and Imports  

Ukraine supplies a substantial amount of wheat, corn, and vegetable oil to the EU. With imports coming to a halt, food prices in the EU have soared as there is difficulty procuring raw ingredients. European farmers are also feeling the pinch as prices of fertilizers have increased by 142% compared to last year.  

According to Pindyuk, Ukraine is doing what it can to salvage its economic situation. Prior to the war, more than half of its exports were exported through the Black Sea ports. Access to those ports is now completely blocked. “Ukraine is trying to find new logistics routes to transport its exports,” Pindyuk says. Not only is Ukraine’s infrastructure for exports important, but its ability to harvest crops as well. “Ukraine [recently] announced that it’s ready to do some agricultural work in regions which were affected by shelling, but it’s too early to say how successful this would be,” she adds. 

 

More Supply Chain Disruptions Expected 

Almost 300,000 companies in the U.S. and Europe have suppliers in Ukraine and Russia. The global supply chain has taken a turn for the worse, especially in the food production and metal industries. Geopolitical instability due to the war and existing disruptions from the pandemic are spreading supply chains thin. Companies have no choice but to rethink their supply chain strategies, find alternative suppliers, and consider reshoring operations.   

“Companies [must] reassess the importance of political risks in their decision making. In terms of their investment decisions about supply chains and locations, these political risks will feature more prominently. There will be an increased urge to assure the resilience of their supply chains as sanctions won’t be lifted anytime soon,” Pindyuk says.  

“It seems there is a new Iron Curtain being raised in Europe. The position that Xi Jinping so far has taken should give all businesses a reason to reconsider their own activities around the globe, especially in China. There may be some reshoring but I don’t think it will [happen] quickly. I think we will see businesses resorting to Europe, America, and maybe South America. If Ukraine joins the EU, it would be a wonderful place to reshore part of your activities,” Mees adds. 

 

Emergency Financing Needed for Ukraine 

Ukraine has shifted to a war economy and needs emergency financing as long as the war lasts. “The majority of the population still resides in the country, and the macro-financial situation at the moment is remarkably resilient. This will not last long because about half of the enterprises have stopped operating. Salaries are not being paid; credits are not being repaid. Now, practically all the banks have introduced credit repayment holidays, but the quality of their assets is deteriorating rapidly,” Pindyuk says.  

When the war ends, Ukraine could benefit from extra military aid and a Marshall fund to get the country up and running again. Mees says it is important that a recovery fund be put in place in the EU similar to the one set up during the pandemic, “which will be financed by issuing euro bonds for all the member states.”   

“In Ukraine, the GDP per capita is far below other countries that joined the EU. There’s momentum for Ukraine to eventually join the EU. If that happens, Ukraine will become an attractive place for investments,” Mees adds.  

 

Despite ongoing peace talks between Russia and Ukraine, the war shows no signs of ceasing. Furthermore, Russia is expected to be hit with tougher sanctions in light of recent atrocities. Only time will tell the economic toll these additional sanctions will have on businesses and consumers worldwide.