Technology CEOs invest in digital transformation and ESG even as a new top risk emerges

As we shared in the 2020 KPMG Technology Industry CEO Outlook, COVID-19 accelerated strategies relating to digital transformation, environmental, social and corporate governance (ESG), and supply chain resiliency. Now, with a new pulse survey from 50 global technology CEOs, it’s clear that these topics have become increasingly important.

Digital transformation

Technology companies were already on the path of digital transformation, but CEOs report the pandemic has continued to accelerate these areas:

Digitization of operations and the creation of a next-generation operating model (88 percent)

Creation of new digital business models and revenue streams (86 percent)

Creation of a seamless digital customer experience (94 percent)

Creation of a new workforce model with human workers augmented by automation and artificial intelligence (78 percent)

While most of these percentages are similar across all industries, technology CEOs are much further ahead in creating a new workforce model, as only 55 percent of the 500 global CEOs surveyed suggested the pandemic has accelerated progress in this area.

New top risk emerges

Sixty-six percent of technology CEOs now believe that cybersecurity risk poses the greatest threat to their organization over the next three years. In comparison, while it was still the greatest risk among the 500 global CEOs surveyed, only 18 percent suggested cybersecurity was the greatest risk. This is by far the biggest concern for technology CEOs, and especially salient because of recent breaches in the news. Correspondingly, CEOs plan to invest more in data security than in any other technology, such as artificial intelligence, automation or cloud computing. While cybersecurity is the current focus, technology CEOs must still contend with other threats, such as talent, supply chain and climate change risk.

ESG practices

Technology companies are at the forefront of innovation, and they are quickly becoming the model for ESG topics. We saw this shine through in the 2021 KPMG U.S. CEO Outlook pulse survey with 88 percent of CEOs wanting to lock in sustainability and climate change gains during the COVID-19 pandemic, compared to 64 percent of CEOs in the 2020 pulse survey. Along with climate change, technology CEOs are also addressing social issues, with those surveyed saying they are shifting focus toward the social component of ESG.

Organizational impacts of the pandemic

As we look to the future, we know the pandemic has changed many things. Technology CEOs are reporting the following longer-term impacts:

62 percent will continue to build on their use of digital collaboration and communication tools.
62 percent will partner with third parties to deliver services to customers, compared to 22 percent of total CEOs surveyed.
50 percent report customer engagement and queries will be done predominantly via chatbots, social media, telephone calls or websites.

Additionally, 58 percent will have most employees working remotely 2-3 days per week. Yet only 22 percent of technology CEOs expect to downsize their organization’s physical footprint. This might seem odd, but there are a couple things that might be in play here:

The current footprint will allow for workers coming into the office to be socially distant.
The existing footprint will allow for future growth to refill the space, as 98 percent of CEOs report they are confident in their growth prospects over the next three years.

In contrast, only 30 percent of CEOs across all sectors suggest most employees will be working remotely between 2-3 days per week, and only 17 percent plan to downsize the organization’s physical footprint.

In thinking about the findings from the current pulse survey, the focus on cyber and other new technologies, digital transformation and ESG practices will help technology companies increase stakeholder value.