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Businesses that stay off the grid lag behind. How to safely befriend the online world


Digitization was a must for many businesses trying to survive multiple lockdowns. Those who don’t use digital tools lose customers and revenues. However, moving your business online can become a tough cybersecurity challenge. But is there any other choice?

During the first lockdown, “will everything just go back to normal” was the pressing question for many. However, as the COVID-19 is far from over, and the hybrid work model is here to stay, we know it won’t. During the almost two years since the pandemic took off, we got used to different online experiences - from simple grocery shopping to somewhat more bizarre things such as online team buildings.

We have befriended the online world, and what does it mean for businesses? Well, only that they have to befriend it too. A report by Deloitte shows that companies with higher digital engagement are more likely to have a growing customer base, more access to consumers in the US and internationally, a better financial performance, more employment growth, and more innovative practices.

Since the start of the pandemic, this digital engagement has become a must for businesses, especially those most affected by lockdowns like retail. Digital tools refer to services, platforms, and marketplaces that companies use for marketing and communicating with customers, managing internal processes and logistics, and executing sales and payments (e.g., email, websites, social media, cloud-based software, etc.).

It’s too soon to tell how many businesses will have saved themselves by, for example, starting to trade online during the pandemic. Financial relief for companies and individuals through the coronavirus relief bill has temporarily offset losses.

In fact, according to the S&P Global Market Intelligence data, since January, there have been 334 corporate bankruptcy filings, which marks the lowest number of bankruptcy filings since 2010. But 2022 will bring an uptick, and small companies will be at more considerable risk due to their limited access to capital markets.

Once the brick and mortar shops were temporarily closed, business owners turned to big marketplaces, such as Amazon or Target, to come to their aid. Some companies are still reluctant to do so as moving online poses a technological challenge and, well, can be a cybersecurity headache, too.

I guess we weren't essential enough

Ten-year acceleration

In general, people are reluctant to change. With COVID-19, the digital transformation was rapid, and naturally, it introduced some friction and stress. According to the Deloitte report from 2019, 23% of small and medium-sized businesses (SMBs) were at the most basic stage of their digital journey, which means that they were using only email and maybe had a basic website, used traditional marketing tools mostly offline, had no cloud-based service and almost no data analytics, and sales were predominantly carried out in stores.

Numbers might differ now, especially with the rapid digital transformation induced by the pandemic, but business owners still struggle to incorporate enterprise software into their date-to-date operations successfully.

"Many of us were used to going to either a grocery store or department store, a mall, etc. In many countries around the globe, that just plain stopped. We were either forced not to go because the government said, hey, we will close these institutions, or we were too scared because we thought we would catch COVID-19. There was this massive acceleration, at least a ten-year acceleration of how e-commerce in terms of the digital retail expansion took place. And you see it in numbers - Amazon just took off. It is throwing a lot of traditional retailers into bankruptcy here in the United States," Steve Scala, the Executive VP of electronic data interchange (EDI) provider DiCentral, told CyberNews.

Consumers are now used to shopping online whenever they want, and they like it as it only takes minutes to buy something instead of sometimes excruciating drive to the mall.

Trying to claw into an opportunity to survive these dark times, business owners were forced to embrace this digital transformation either by opening their e-commerce shop or joining digital marketplaces like Amazon. And once you have become a flywheel of some e-commerce giant, there's no way you can stay off the grid.

"It's not feasible for that marketplace to have a labor-intensive paper footprint behind them," Scala said. Everything - from inventory data to the actual order and the tracking number has to be digital and updated constantly.

If you are a small manufacturer, you can't realistically be a part of a marketplace unless you are prepared to step up to that level of digital communications and collaboration,

Scala elaborated.

And it doesn't matter how big the marketplace that you joined is. Even if you made only ten custom birdhouses and are trying to sell them through Etsy - they still follow the same logic and everything has to be electronic.

But there's a silver lining. "If you are a small manufacturer and don't know where to go, a lot of the time, you can go to the marketplace and say, hey, look, we want to be a participant, and they will offer you different options of how you can have a secure electronic footprint. And most of it is just web-based," Scala said.

Once you join one marketplace, it will be easier to join the second and the third because you've already made the digital investment. And that investment doesn't necessarily mean big bucks. It can take less than $500 to get started and less than $50 per month after that. And sometimes, the marketplace will offer you their EDI software and keep a more considerable margin from your product in return.

If you've been on that basic level of the digital journey, this evolution will, of course, introduce new challenges. Cybersecurity is one of them. Being online makes you susceptible to fraud and scams, let alone ransomware. The truth is, a paper trail doesn't make your business bulletproof, either.

Paper is just as susceptible to fraud as digital transactions

Many companies around the world still are used to doing business using paper.

"The smaller you go, the more paper you are going to see," Scala said. Large organizations digitized their operations because, otherwise, they would have a mountain of paper. Western Europe, North America, and many countries with high labor rates have also gone through digital transformation.

"But if you go to India, Vietnam, many geographies where the labor rates are low, even in China, you don't see the amount of digitization that you would see in the hemispheres where labor rates are high," Scala said. In some places, human labor is still very cheap, and so these countries fight the fact that they need a computer and the whole IT infrastructure and perform many of the tasks manually.

"Go to Japan, and they are just starting that journey now. We've got three of the largest banks that we are working with in Japan, and they are just starting their journey with regard to digitizing corporate to bank payment instructions. Today, you ask, how is it done? It is done the old-fashioned way. You have a checkbook, and you write a check. And if you look at the average number of people in corporations, there's still a tremendous amount of check writing," Scala explained.

Check

And the single most significant area of fraud with banking is the check. "It's people that either work for the company and steal the checks, then use them for their purposes, or people that get ahold of the check, and wash the ink off the check, and rewrite a new number and a new name, and the only way to prevent that is by a direct digital link between the corporate and the bank."

Of course, digital communication has to be reliable. Otherwise, you will still be open to fraud. But there are ways and protocols to secure your daily operations, and you don't have to figure them out yourself, just embrace the standard practices of the industry you are working in.

You are not alone

"I get it. The internet itself may not be secure," Scala smiled. "You have to put these encryption tools on top of that. You don't want to send this stuff in the clear. It would be crazy to do that, and you would be exposing yourself to all sorts of risks."

When you enter a supply chain by, for example, being the manufacturer of goods that you want to sell through well-established digital marketplaces, you are not alone in the cybersecurity battle. Every industry has some established practices and protocols and will force them on you.

The retail industry, for example, has largely adopted the AS2 protocol. It is a business-to-business messaging protocol used to transmit EDI documents between organizations. Major retailers, such as Amazon and Walmart, also use this protocol.

"Essentially what it does, it goes above and beyond just certifying that the data and the session are encrypted. It provides an MDN function, which stands for message disposition notification. It is a handshake because it says, 'look, I'm going to send you a thousand bytes of data.' The receiver has to acknowledge that a thousand bytes, the exact amount was received. That is extremely secure," Scala explained.

He said he had never read anything about the AS2 protocol ever being hacked, and he recommends it to the banks, retailers, and manufacturers he is working with. Naturally, SMBs have to adopt the same protocol that the retailers they wish to collaborate with use.

Of course, cybersecurity goes way beyond just securely sharing EDI documents. There are many risks to be aware of, for example, business email compromise that cost businesses over €26 billion last year, phishing attacks that are on the rise, and probably the biggest headache of them all - ransomware.

But cyber hygiene goes a long way, so make sure you develop good habits from the very beginning of your digital journey. Here are some articles that will help you get started:

Think your company is too small to get hacked? Think again

Not using 2FA? You’re asking to be hacked

Perimeter 81 VPN review

Best VPNs for businesses in 2021

Best password managers in 2021

Retail became a top target for ransomware and data-theft

Security tips from the world's most tenacious white hat hacker Kevin Mitnick

Report: these businesses are a perfect ransomware target

Microsoft: simple cyber hygiene can prevent trillions in cyber risk

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