Business survival emerges as the number one reason to invest in emerging technologies as executives reevaluate strategic priorities.
In the immediate wake of COVID-19, Global 2000 companies moved to slash funding for emerging technologies, such as automation, artificial intelligence (AI), blockchain, and 5G, according to new KPMG International research. However, many executives are optimistic emerging technology spending will likely increase in the next 12 months, as enterprises recognize COVID-19 creates a burning platform to accelerate digital transformation and stimulate long-term growth.
The new report, a collaboration between KPMG International and HFS Research, Enterprise Reboot, surveyed 900 technology executives* to explore the current and future state of emerging technologies and demonstrates a dramatic shift in how businesses are approaching emerging technology now versus just a few months ago before the onset of COVID-19.
“Not all industries are experiencing the same impact as a result of the crisis brought about by the pandemic. However, this crisis has shed light on the need for industries to reconsider their business model, and to realise the importance of digitisation in their daily operational activities, that should be reflected within their business model” explained Marco Vassallo, Partner, Digital Solutions, KPMG in Malta.
KPMG, a Maltese civil partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.
Specifically, 59 percent of executives surveyed say that COVID-19 has created an impetus to accelerate their digital transformation initiatives, yet approximately four in 10 say they will halt investment in emerging technology altogether as a result of COVID-19. Executives have shifted their focus to must-have technologies, and 56 percent of those surveyed say cloud migration has become an absolute necessity due to COVID-19.
However, investments in a number of emerging technologies will likely increase over the next year, such as 5G (44 percent of respondents expect spending to increase compared to 26 percent who expect spending to decrease); process automation (43 percent expect an increase compared to 25 percent who expect a decrease); AI (39 percent versus 31 percent); hybrid cloud and/or multi-cloud (38 percent versus 28 percent); blockchain (34 percent versus 30 percent); edge computing (34 percent versus 33 percent) – with the exception of smart analytics (32 percent versus 35 percent).
“Digitals solutions and new ways of working occupy a significant role in the transformation to a more robust and digital economy. These solutions are helping entities maintain customer and stakeholder trust, engage remote workforces, ensure their business is resilient and prepared for any disruptions, whilst developing a strong foundation for future product and service innovation,” Vassallo said.
The case for emerging tech
Fifty-seven percent of respondents say COVID-19 has significantly changed theirorganisation’s strategic priorities. The immediate focus is now on survival, which has become the number one objective for most emerging technology investments. The first phase of KPMG research showed that many organisations were deterred from significant emerging technology investment because of obstacles in the organisational culture to enterprise-wide adoption, and a fear that projects will fail. Since the onset of COVID-19, respondents in the second phase of research are more focused on making a strong business case for existing technology investments.
Other key findings include:
• Only 13 percent expected to “significantly increase” investments in emerging technologies amid COVID-19.
• Organisations making the highest investments see greater returns than those making the smallest; in fact, those in the highest quartile of investments were significantly more likely to say they have already realised tangible value.
• Nearly 65 percent of respondents believe that the combined use of emerging technologies is much more beneficial than using any of the technologies in isolation. “AI-powered” and “cloud-enabled” are emerging as the foundation and are featured in more than one-third of all technology solutions.
“Now more than ever, businesses need to shift their mindset to transition to a business model which puts digital at the core of their operations. Smart investments in digital solutions are essential if companies are to prevail in the medium-to long-term. Companies who don’t, risk threatening their own survival,” concluded Curt Gauci, Director,Digital Solutions, KPMG in Malta.