By Mike Alva
Blockchain, the Internet of Things (IoT), and automation are all examples of technologies that have made great strides and received much attention in recent years. But where is the technology sector actually investing their dollars? Technology industry business leaders shared their views on their investments today and in the next three years in KPMG’s annual Global Technology Industry Innovation survey.
Given about 20 different choices, tech leaders selected the same top 10 where they are investing today and over the next three years, though the order varied slightly. It’s also the same top 10 they identified as having the greatest potential to impact business transformation.
IoT topped all three lists and artificial intelligence ranked no less than third. Robotic process automation and robotics (including autonomous vehicles) placed in the top 5 in each list. Blockchain generally rounded out the top 5. Augmented reality, virtual reality, social networking and collaboration technologies, biotech and on-demand platforms round out the top 10.
Clearly, tech companies are “walking the walk” and investing in technologies they believe to be transformative. See the complete list here.
Aggressive ROI Expectations
So how quickly are they expecting to see returns on their investments? Forty-four percent expect significant ROI inside of six months, and a total of 71 percent within the first year. The expectation does vary by company size, as 80% of large enterprises (with the resources to scale faster) expect significant ROI within the first 12 months. In mid-market tech companies, 69 percent have this expectation. And in startups, it’s 64 percent.
“With ‘disrupt or be disrupted’ as the mantra and only having one speed to market --- faster, it’s not surprising to see aggressive expectations for significant return on their investment,” said Tim Zanni, KPMG Global and U.S. Technology Sector Leader. “However, the traditional approach to funding new technology doesn’t support the necessary market speed. A new model, known as dynamic investing, enables continual and flexible funding, and encourages experimentation and failing fast.”
Big company advantage; smaller company opportunity
The survey results indicate that many companies, even large enterprises, are only moderately investing in innovation.
However, some tech giants, flush with cash, are investing heavily in innovation ($500M+ annually) at sums that cannot be matched by most mid-market tech companies and startups.
The larger companies have the resources to place many bets and take more risks. They expect that some investments will not pay off, but they can gain valuable insights about technology or the market that may still prove valuable down the road.
Smaller companies have less money available to invest and thus much less room for error. Though smaller companies are inherently more agile and able to pivot faster, a misplaced bet or missed product cycle can have disastrous effects. Yet by employing the principles of dynamic investing,they may be able to level the playing field with their larger competitors.
To learn more about the findings in KPMG’s technology industry innovation report or to arrange an interview with Tim Zanni, please contact Mike Alva, mobile (925) 878-5488, firstname.lastname@example.org, Twitter -- @michaelalva.