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 recognize COVID-19 creates a burning platform to accelerate digital transformation and stimulate long-term growth.
The new report, a collaboration between KPMG International and HFS Research, Enterprise Reboot, 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.
Not all industries are experiencing the same impact as a result of the crisis brought about by the pandemic. However, this crisis has shed light on the need for industries to reconsider their business model, and to realise the importance of digitisation in their daily operational activities, that should be reflected within their business model.
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.
However, investments in a number of emerging technologies will likely increase over the next year, such as 5G (44 percent of respondents expect spending to increase compared to 26 percent who expect spending to decrease); process automation (43 percent expect an increase compared to 25 percent who expect a decrease); AI (39 percent versus 31 percent); hybrid cloud and/or multi-cloud (38 percent versus 28 percent); blockchain (34 percent versus 30 percent); edge computing (34 percent versus 33 percent) - with the exception of smart analytics (32 percent versus 35 percent).
“Digitals solutions and new ways of working occupy a significant role in the transformation to a more robust and digital economy. These solutions are helping entities maintain customer and stakeholder trust, engage remote workforces, ensure their business is resilient and prepared for any disruptions, whilst developing a strong foundation for future product and service innovation,” Vassallo said.
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:
Now more than ever, businesses need to shift their mindset to transition to a business model which puts digital at the core of their operations. Smart investments in digital solutions are essential if companies are to prevail in the medium-to long-term. Companies who don’t, risk threatening their own survival.
In March-June 2020, KPMG International and HFS Research conducted two global, cross-industry quantitative surveys. Comprised of 900 total technology executives, the surveys sought to uncover investment and adoption of emerging technology. All respondents held executive-level positions at Global 2000 enterprises with $1B+ annual revenue, operating across nine business sectors and nine countries, including the U.S., Germany, U.K, Netherlands, Japan, Australia, India, France, and Canada. Survey data was supplemented by qualitative interviews with enterprise leaders who oversee the investment and adoption of these emerging technologies in their organization.