The 4Q16 survey showed a measured but growing optimism regarding global economic conditions in 2017. Compared with last year, fewer respondents cited a weak economy or inadequate IT infrastructure as negative trends.
For the past three years, the top two negative trends — talent scarcity and economic uncertainty — have remained the same. Compared with 2015, respondents in 2016 were slightly less concerned about talent issues, but the topic was still ranked number one, especially with multinational organizations. In 2015, respondents were still alarmed by the prospects of a double-dip recession, accompanied by reduced customer demand. By 2016, a weak global or regional economy was still ranked second, but the survey suggested a growing confidence in the economy and overall prospects for growth.
The areas that showed the greatest change from 2015 to 2016 included trade protectionism, Brexit, the possible breakup or realignment of the European Union, and what might be called the de-globalization of the world’s economy. Trade protectionism concerns were strongest in North America, driven by uncertainty about Donald Trump and a possible renegotiation or rejection of international trade agreements such as NAFTA.
Terrorism was considered less of a threat, and respondents placed “repressive rules and regulatory regimes” much lower on their list of negative trends, suggesting that they expected governments such as the US would be adopting a more business-friendly stance in 2017.
Innovative technology retained its ranking as the trend with the biggest positive impact. Organizations continue to realize the benefits of process automation to reduce costs, improve customer service, and address talent shortages. Process automation is also being integrated with cognitive intelligence capabilities to provide end-to-end solutions.
This technology is used by many organizations to support growth opportunities in emerging markets, a positive trend that has moved from the fifth to the second rank in the past year. Process automation is being used to support service facilities like call centers and to provide services directly to the local populations.
North American organizations are especially bullish on the possibility of tapping into global talent pools, and respondents overall were decidedly more optimistic this year about new, business-friendly government policies and regulations.
Compared to last year, cost reduction and IT investments maintained their top ranking for respondents. In many areas, IT was cited as a way to lower costs by enabling the shift of back-office operations to off-shore locations or into lower cost markets. At the same time, respondents were fully aware of the threat of de-globalization driven by nationalism, protectionism, and shifting political alliances. A business model that included a call center in Southeast Asia, for example, might have to be reconsidered in the light of newly elected leaders in developed economies.
The need to optimize global service delivery models and excel at GBS moved up from number five to number two in importance. KPMG has found that adoption of GBS as the preferred service delivery model is a high priority for most large companies today. The model includes a collective set of resources, capabilities, and systems to deliver integrated support services such as IT, finance and accounting, human resources and procurement across an organization. Implementation can be a challenging process, but the high ranking of GBS as an initiative suggests continued support and development of this service model.
Just as respondents spoke candidly about the challenges of poor management, they emphasized the importance of smart management in the successful implementation of initiatives. Process automation, including robotic process automation, saw a sharp increase in importance over 2015, suggesting that automated services continue to expand in the size and number of implementations.
Trends in investments for data and analytics remained stable. Respondents still place the greatest emphasis on analytic tools for business intelligence, business process management and enterprise performance management. Talent with data and analytic skills along with foundational infrastructure capabilities were in a virtual tie for second place.
Third party analytical services and the acquisition of firms providing data and analytics tolls/services trailed this list, suggesting that most organizations prefer to keep their data and analytics capabilities in-house.
Based on data from the Global Insights Pulse Survey, current events, and information gathered from the field, KPMG professionals recommend that organizations consider the following actions in 2017:
For further insights please see the following documents:
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Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.