81 percent of Irish CEOs have seen the digital transformation of their business accelerate
60 percent of Irish CEOs also say that progress has put them years ahead of where they would have expected in the digitisation of operations
Four in five Irish CEOs claim that the pandemic has accelerated their progress in the creation of a seamless customer experience
CEOs in both in the Republic and Northern Ireland are more confident in their own businesses’ growth prospects over the coming 3 years than they are about the wider economy and this is consistent with their global peers
One of the most critical levers they can control here, and a major growth driver, is digital acceleration. With commerce increasingly taking place online because of factors such as physical distancing, companies are having to rethink what customers want and how to deliver.
We found that 75 percent of CEOs worldwide (80 percent in the Republic of Ireland and 88 percent in Northern Ireland) say the pandemic has accelerated the creation of a seamless digital customer experience and 64 percent of CEOs globally (68 percent in the Republic and 88 percent in Northern Ireland) say it has also accelerated the creation of new digital business models and revenue streams.
For Paul Toner, Head of Consulting at KPMG in Ireland, there is nothing like a crisis to accelerate change. “It’s been a case of needs must and survival and people and organisations have been pushed to adapt. There is no doubt that there has been some resistance to change in the past, but all of these inhibitions have been swept aside. Past investments in digitisation may have been done on a ‘build it and they will come’ basis which didn’t always happen, but they are paying off now.”
At Thomson Reuters, digital transformation was already central to its growth strategy and operating model. But, as President and CEO Steve Hasker explains, shifts in customer attitudes and behaviors has accelerated its digital business model strategy. “With our customers, we’ve seen a major change in the acceptance of cloud-based, real-time, digitally delivered business information services,” he says. “Any resistance in our clients’ mindsets to moving to the cloud or the next generation of digital solutions has largely, if not entirely, evaporated. I think we’ve seen 3 to 4 years of progress in just 3 to 4 months, in terms of acceptance of what the new world needs to look like.”
KPMG's Paul Toner believes the ability to run organisations demonstrated during the pandemic has been remarkable. “If you asked CEOs in January if they would be able to do that most would have said no. The C-suite has adapted rapidly to new ways of working and it’s not over yet. It’s been a phenomenal learning experience which has seen the C-suite developing insights into new digital models.”
Paul Toner also believes that new digital models are not just about CIOs and CTOs. “They are about how things are done digitally throughout organisations including HR engaging with employees, sales teams dealing with customers, CFOs figuring out how distributed teams can put reliable information together, every aspect of the organisation is affected. It even comes down to the daily commute, many people will no longer have to travel from A to B to go to work anymore.”
Indeed, the very future of work has also been part of the pandemic conversation and 73 percent of CEOs globally (84 percent in the Republic of Ireland and 80 percent in Northern Ireland) believe that remote working has widened their available talent pool.
Mark A. Goodburn, Global Head of Advisory, KPMG International, points out that as well as driving customer-focused growth, digital technologies are a critical element of resilience – allowing, for example, greater operational flexibility in the face of disruption. “We can see that organisations are increasing their investment in digital transformation to future proof their businesses,” he says. “CEOs continue to scrutinise how to digitalise operations and how technological advancements can serve as accelerators in customer experience and employee engagement.”
The challenge for organisations is to focus efforts and investment on the areas that are capable of generating the most long-term value, while avoiding those areas that might just prove to be a short-term reaction to the pandemic. When we asked CEOs worldwide to name the greatest challenge they have faced in accelerating digital transformation, the biggest issue was ‘lack of insight into future operational scenarios’. Companies need to understand whether a COVID-related change – such as shifting customer behaviours – is evidence of a permanent trend that is emerging rather than just a temporary effect of the pandemic.
The impact of the pandemic on retail has been one of the most striking effects of the pandemic. Where we are now has surpassed even the predictions being made back in the late 1990s.
Reflecting on the acceleration of digitisation, KPMG's Paul Toner says “It’s phenomenal for example that 80 percent of CEOs in the Republic of Ireland say the pandemic has accelerated seamless digital customer experiences. And consumer behaviour is also changing. It was argued that people wouldn’t buy high value items online that they wanted to touch and feel first. That’s no longer the case and many people are increasingly happy to buy big ticket products like jewellery and cars online.”
The problem facing many organisations is that they have kept the show on the road through past investments in IT infrastructure and connectivity. According to Paul Toner, what’s worrying them now is how to develop the digital tools to allow customers do business with them as efficiently as possible. “The good news is that there are lots of people and organisations out there who can help and no need to have solutions located on the premises. They can be run in the cloud - organisations don’t have to build them themselves as they can be acquired on a software as a service model.” This is almost a return to the utility computing of the past whereby organisations don’t have to own everything - they can rent it.
However, in both the Republic and Northern Ireland, there has been a significant amount of reticence among traditional businesses to outsourcing what they see as critically important pieces of technology to cloud based service providers. Paul Toner says; “These providers are not only able to offer the technology solutions but also a roadmap for the way ahead. Companies used to have fleets of trucks on the road, they now partner with logistics provers. It’s the same with new digital models - there are solutions providers to partner with. It’s a question of getting the right advice and doing proper due diligence before choosing a solution and the partner to provide it.”
The fact that organisations acknowledge the challenges presented by digitisation is a recognition that the debate has moved on dramatically in the space of less than a year. Digital is no longer nice to have, it’s essential to have in a world that has moved on.
With digital acceleration shaping the future of industries, organisations will need a deep understanding of how customer behavior is shifting and how to meet these emerging demands.
Data-driven insight – and scenario modelling – will be critical to understand what major shifts are likely to emerge. Pre-pandemic, the major challenge to many organisations’ digital transformation was the burden and complexity of legacy IT and a continued struggle to manage their data effectively. These challenges have not gone away and organisations’ will need to focus on IT transformation, drawing on cloud technologies and agile techniques. This is the time for organisations to reflect on their talent base and build a robust foundation of digital skills.
COVID-19 is challenging leaders like never before. To find out more about how KPMG perspectives and fresh thinking can help you focus on what’s next for your business or organisation, please get in touch. We’d be delighted to hear from you.