The roadmap to digital transformation is changing as fast as the technologies that underpin it and the world they influence. Organizations today are operating in tense conditions, grappling with rising costs, economic uncertainty, geopolitical turmoil, and a global talent crisis, but according to a new survey by KPMG, executives are advanced in their digital transformation journeys and plan to invest heavily in the next few years.
The survey of 1000 executives found that 70% expect to have a significant presence in virtually every major emerging technology in the next two years, that many say they have not achieved ROI on cloud, and that talent remains a major issue.
Businesses are already making plans to embrace the technologies of the future
Organizations are poised to invest heavily in emerging technology and digital transformation, despite tense operating conditions. Survey respondents expressed a bold vision for what they could do across a broad expanse of new technologies: crypto, the metaverse, Web3, NFTs, quantum computing, VR/AR, 5G, and edge computing, with more saying crypto is their highest priority of these rapidly emerging technologies in the next year.
Amplifying customer centricity is the primary goal for investing in enterprise technology according to 46% of survey respondents.
Fifty-eight percent of respondents plan to invest in the metaverse and 62 percent plan to invest in Web 3, while 37 percent plan to invest in both technologies. At the same time, most respondents (65 percent) admit they are waiting for competitors to invest in and/or adopt the technologies before investing themselves. Customer demand also stands as a key trigger for metaverse investments for 31 percent of companies.
“A revolution of emerging technology is set to unfold over the next several years. Proficiency in new and emerging technologies will be paramount to defending market share by enhancing customer experience and business resilience,” said Barry Brunsman, Principal, CIO Advisory, KPMG. “Successful businesses of 2022 and beyond will be digital to the core.”
Indeed, 2024 looks poised to be an inflection point for new technology acceptance. And after five years, it will be the rare company that has not invested in every one of these tools that—while are still in the early days—look poised to reshape the business world.
And according to the survey, 46 percent say that the primary goal for investing in enterprise technology is also to amplify customer centricity.
Companies report high digital confidence and returns
The survey found that respondents are upbeat about what their business will achieve through transformation. Specifically, 66 percent of respondents say their organizations are very or extremely effective in using digital to advance the enterprise.
Meanwhile, nearly every single respondent reports a positive impact on profitability or performance from digital transformation over the past 24 months and a notable number are making serious gains. More than one in five respondents (21 percent) say their efforts have achieved profitability or performance increases of 11 percent or higher.
“Digital transformation is less of a differentiator than it was. Nearly all organizations achieved some form of return from digital transformation in the last two years. It’s important to make sure that the success achieved so far doesn’t breed perfectionism that stifles innovation,” Brunsman said.
“Digital investment and transformation strategies must always continue to adapt to new conditions and opportunities, or digital leadership won’t last long.”
Enterprises are investing heavily in cloud, but two thirds are not realizing significant return
Businesses of every size and sector are accelerating their move to the cloud to enhance the speed, agility, security, and value of their IT investments.
Three in four respondents (75 percent) say their organizations are currently migrating strategic workloads to the cloud, and another 13 percent have completed migration and are now looking to optimize. Nearly one third (30 percent) of organizations have migrated more than 60 percent of their enterprise workloads to the cloud.
However, despite positive cloud momentum, 67 percent of companies in the survey have yet to realize significant ROI from cloud investments and are now focused on optimization and modernization.
“Most respondents are well into their cloud journey but there is still much to do. Satisfaction with cloud transformation to-date is largely positive, but value realization has taken the form of cost reduction and efficiency gains and these don’t result from a pure technology shift. Rather, organizations need to focus on their ‘ways of working’ as they reach critical scale in their cloud journey,” said Marcus Murph, Principal, Advisory, Digital Enablement, KPMG.
Murph added that tomorrow’s businesses will operate primarily on cloud infrastructure.
“As more companies transform with cloud at their core, the next competitive challenge will be accelerating migration, scaling up platforms, and maximizing value of cloud,” he said.
Talent a key challenge
Talent and culture are top sticking points across all areas of transformation, the survey found.
When respondents were asked about the challenges their organizations face in adopting new digital technologies, the top three responses all related to talent disparities.
Specifically, 44% say lack of capable talent is the biggest challenge they face in the adoption of new digital technologies, and 30 percent say the high cost of adding necessary talent is a top challenge of technology adoption. Additionally, thirty-five percent say insufficient talent or skills is the biggest challenge their organization is facing or has faced on their cloud journey.
“Creative approaches are needed for companies to access the skills they need to deliver on digital transformation goals. Clearly, companies can’t expect external talent to simply walk through the door. With that in mind, businesses should recalibrate their approach to hiring, training, and ‘buying’ specialist talent from the ecosystem,” said Kimberly Sorensen, Principal, Advisory at KPMG.
“We think reskilling traditional IT professionals is due to play a more prominent role in companies’ talent strategies.”
KPMG’s experts say that the research analysis shows how seizing opportunities of the digital world will demand dramatic shifts in how enterprises achieve resilience, interact with customers, and operate internally. To retain customers and market share, companies must continuously improve digital capabilities and think differently about how to use technologies to better deliver to target audience expectations.
“The future will be won by businesses that find new ways to push the envelope with digital,” Brunsman said.