By Melanie Batley
As COVID-19 surged, Global 2000 companies moved to slash funding for emerging technologies, such as automation, artificial intelligence, blockchain and 5G, according to new KPMG research. However, executives are optimistic that some 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 report, a collaboration between KPMG International and HFS Research, Enterprise Reboot, explores 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.
“This crisis isn’t affecting all industries equally, but for many of the industries facing crisis, managing the transition to a digital business model is imperative. However, doing so is made more complicated in a time where investments are critical, but cash must be preserved,” said Cliff Justice, U.S. lead for Digital Capabilities, KPMG in the U.S.
Companies now recognize that rapid digital transformation is imperative to survive in the new reality, but also face budgetary constraints. Specifically, 61 percent of U.S. respondents in the most recent survey say the pandemic has created an impetus to accelerate their digital transformation initiatives, yet approximately five in 10 U.S. respondents say their company will halt investment in emerging technology until COVID-19 passes.
Our research indicates that over the next year U.S. leaders are likely to increase investments in 5G (39 percent of respondents expect spending to increase compared to 28 percent who think it will decrease) and process automation (39 percent expect an increase compared to 29 percent who expect a decrease).
“Emerging technologies and new ways of working will play a significant role in the transformation to a more digital economy. These technologies are helping companies maintain customer and stakeholder trust, keep remote workforces connected, ensure their business is resilient and prepared for disruptions, and build a strong foundation for future product and service innovation,” Justice said.
Fifty-eight percent of U.S. respondents say COVID-19 has significantly changed their organization’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 organizations were deterred from significant emerging tech investment because of obstacles in the organizational culture to enterprise-wide adoption, and a fear that projects will fail. Since the onset of COVID-19, respondents in the second phase are more focused on making a strong business case for existing technology investments.
Other key findings include:
“Now more than ever, companies need to make smart investments in emerging technologies if they are to prevail in the medium to long term," Justice said. "Companies who don’t risk threatening their own survival.”
Melanie Batley is a member of KPMG's Corporate Communications team. Please contact her for additional information or to arrange an interview.