As organisations’ strategic priorities change, business survival emerges as the number one reason to invest in emerging technologies.
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 recognise COVID-19 creates a burning platform to accelerate digital transformation and stimulate long-term growth.
Enterprise reboot, a new report from KPMG International and HFS Research, 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.
Cliff Justice, KPMG’s global lead for intelligent automation and US lead for digital capabilities, said: “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.”
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.
Justice added: “Emerging technologies and new ways of working can 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.”
The case for emerging tech
Fifty-seven percent of 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 technology 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 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.
Organizations 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 realized 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.
Justice concluded: “Now more than ever, companies need to make smart investments in emerging technologies if they are to prevail in the medium- to long-term. Companies who don’t, risk threatening their own survival.”