The 2022 global technology report – A Canadian perspective

After accelerating their digital transformation plans during the pandemic, organizations are now dealing with a host of new challenges, from economic uncertainty and geopolitical turmoil, to rising costs and a global talent crisis. Against the backdrop of our evolving reality, Canadian Digital leaders have maintained focus on investing in new and emerging technologies.

In our latest KPMG Global Tech Report, which surveyed more than 2,200 technology executives and industry experts around the globe, almost all respondents reported improved performance and profitability over the past two years, largely aligned with those who invested in their digital evolution. While overall Canadian respondents appear to be more risk averse in adopting new technologies than their global counterparts, they're still making significant plans and investments.

Additional insights from KPMG's 2022 CEO Outlook found that while Canadian CEOs are preparing for rocky roads ahead, they remain optimistic in their ability to prosper over the next three years—and technology is expected to play a key role. Both surveys pointed toward six key themes where Canadian companies can prioritize their transformation efforts, particularly during a potential downturn.

Almost all global respondents say that digital transformation helped them reach key business and IT milestones sooner than expected, and they're likely to prioritize application modernization and intelligent automation over the next year. There's also widespread appetite for new technologies, including metaverse, non-fungible tokens (NFTs) and Web3 technologies.

However, one of the biggest challenges ahead—in Canada and around the world—is the lack of talent and skillsets required for implementation and adoption of disruptive technologies. In a downturn, companies that typically come out on top are those that maintain investment focus on critical business priorities.

This is a good time for Canadian companies to do their homework, build use cases for disruptive technologies and ensure they're developing the required skillsets—whether that's building capabilities in-house or by establishing a strong ecosystem of external partners. So when there's an upturn, they will continue to thrive.

57% of Canadian respondents say improving enterprise agility and modernization is a top driver if digital transformation

78% of Canadian respondents believe their organization is either extremely or very effective at using technology to advance their business strategy

43% of Canadian respondents say lack of capable talent is leading challenge in adopting new digital capabilities

Global respondents said they're laying the foundation for emerging technologies, with nearly half (46%) making plans for the future. But the majority (55%) haven't made any significant moves, choosing instead to wait and see what their competitors do, or to see which products and services their customers demand. Although there are perceived risks in emerging and disruptive technologies, 53% of Canadian respondents expect to invest in the metaverse within the next two years (versus 57% globally) and 67% expect to invest in quantum computing within the same period (versus 67% globally).

Canadian companies need to first understand why they're investing in emerging platforms such as the metaverse—they should calibrate investment aligned with target corporate and brand direction, and digital transformation strategy in a holistic sense. Technical capabilities in areas such as metaverse, Web3 and quantum computing are also in short supply, so prioritizing allocation of those skillsets internally while also developing an ecosystem of partners will become increasingly important, as will automation for low-complexity, high-volume tasks.

36% of Canadian respondents feel there is a risk averse company culture that is slowing digital transformation

40% of Canadian CIOs and technology executives say customer-centricity is the main driver for investment in enterprise technology

64% of CEOs believe driving digital transformation at a rapid pace is critical to attracting and retaining talent and customers

93% of Canadian respondents said they're advanced in their adoption of cloud technology

Customer experience is a key driver of momentum in IT investments and is synonymous with digital transformation. Canadian respondents weighted the importance of improving customer experience at least 10% higher than global counterparts. Enterprise technology is expected to play a key role, with almost two-thirds of Canadians prioritizing investments in this area over the coming year

Alongside customer experience, employee experience is becoming increasingly critical. With a global war for talent, and the ability for employees to work from anywhere, employee experience is becoming a key competitive differentiator. To attract and retain both customers and employees, companies should think about how they can improve digital capabilities and use technologies to meet and exceed the user experience. This will include re-engineering enterprise technology and breaking down silos between departments.

Leaders are confident about what they can achieve through digital transformation. 78% of Canadian respondents (compared to 66% of global respondents) believe their organization is either extremely or very effective at using technology to advance their business strategy. Nearly all Canadian respondents said digital transformation has improved profitability or performance over the past two years. Marketing, sales and customer service are benefitting most from these investments.

Enhancing brand profile, connecting to a sense of purpose and being seen as an innovator will attract customers, employees and other stakeholders—including investors—who want to be aligned with your brand. That, in turn, will have an impact on ROI and value creation over-time and help them progress forward.

Organizations that are most effective at digital transformation and see the highest ROI are likely to have met—or even exceeded—their objectives with cloud. Indeed, 93% of Canadian respondents (and 89% globally) said they are advanced in their adoption of cloud, having either completed migration or started migration of their strategic workloads. In addition, 59% of Canadian respondents say that 40% or more of their enterprise workloads are now in the cloud, while our CEO survey found that 71% of small and mid-sized businesses are investing in cloud technologies.

But misalignment between IT teams and business departments on cloud priorities continues to be a challenge—even more so than security and compliance requirements. A unified strategic vision for cloud can improve alignment and outcomes, perhaps through the appointment of a head of cloud.

While cloud is a logical evolution of IT, it shouldn't necessarily be equated with modernization. Many companies are increasingly exploring Hybrid cloud strategies as they increasingly realize that some of their workloads may need to stay on-premise. In many cases, it's possible to modernize or maintain those workloads in non-cloud environments. Hyperscale cloud providers are making substantial investments in solutions that will span clouds and allow for more seamless on-prem integration.

On average, two in three Canadian respondents (65%) say they are either extremely or very confident in their ability to manage cyber risk, including threats from organized crime groups and compromised supply chains. Despite this, 55% of Canadians said their organization is behind schedule when it comes to cybersecurity—even if plans, a vison and leadership support are in place. And our CEO survey found that only 56% of Canadian CEOs feel well prepared for a cyberattack, a decrease of 17% compared to the previous year.

There appears to be an increasing degree of overconfidence in companies'ability to manage cyber risk, both in Canada and globally which could be result in underappreciating the true risks they face. The relatively recent adoption of hybrid work and digitalization of customer channels have redrawn the cyber threat landscape. Cybersecurity is becoming more complicated in a quickly evolving Web3 world that includes the metaverse and quantum computing.

Companies will need to understand how security and privacy are evolving in those spaces. Since customer loyalty is built on trust, embedding security in digital transformation initiatives from the get-go can help to build trustworthy customer experiences—which, in turn, could unlock additional cybersecurity funding.

85% of CEOs agree that having a strong cyber strategy is critical to building trust with key stakeholders

55% of Canadian CIOs and technology executives said their organization is behind schedule when it comes to cybersecurity

56% of Canadian CIOs and technology executives feel prepared for a cyberattack, down 17% since 2021

Canadian companies are leveraging technology to face the uncertainties ahead and seeing positive returns on initiatives they accelerated over the past two years. But being agile means looking beyond technology to supporting infrastructure such as legal, regulatory, privacy, governance and risk functions, which need to keep in step with digital transformation.

Maximizing performance and resilience for an uncertain future also means understanding which technology areas to focus on internally and which may require external expertise. In many cases, it isn't practical to develop certain technological capabilities in-house, particularly with disruptive platforms like the metaverse.

Canada has quietly become a global leader in innovation, with a growing number of IT startups and fin-techs, as well as innovation communities and partnership networks. Canadian companies that embrace the partner ecosystem—which could include third-party service providers, technology companies and advisors—can leap ahead in the race to transform.

Contact KPMG to find out how we can help accelerate your digital transformation journey.