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CEOs need to embed tech across their organisation

CEOs face a daunting challenge to reinvent their organisations for the digital age. They have workforces that need a fundamental reboot of skills – just like their leadership teams. They need to embed tech across the organisation, build enterprises in which the whole business is connected and safeguard their reputation from cyber threats and other risks. 

Creating a tech-enabled workforce

Despite employers complaining of skills shortages across a number of sectors as UK unemployment dips to a four decade low, it’s estimated by the OECD that 14% of jobs could disappear in the next 15-20 years as companies automate. This year’s survey suggests CEOs are still testing the waters and holding off decisive moves that would change the balance between tech and people.

Forty three percent expect to grow headcount by 6% or more in the next three years (versus 36% among global CEOs), though for 55% of UK CEOs hiring at that rate is contingent on hitting growth targets.

However, is it possible to glimpse a different story when we look at the way CEOs are striking a balance between investing in people and tech? Only a third of UK CEOs told us they were prioritising capital investments to help develop people’s skills and capabilities versus two thirds prioritising more capital investment in new technology. It was a similar picture globally.

Chart: UK CEOs plan to spend more on tech than training

Which of the following investments are you prioritising to improve your organisation's resilience?

Key

More capital investment in developing our workforce’s skills and capabilities

More capital investment in buying new technology

It’s a balance, but at the end of the day it's always people first. There is technology you can buy, but people you can't.

Claudio Gienal
CEO
AXA UK & Ireland

Technology: Digital can’t be an add on

Twenty years’ ago, organisations were racing to develop a ‘dotcom strategy’, yet in most cases the hype failed to match reality. Does developing a distinct digital strategy in 2019 carry the same risk?

“Organisations shouldn’t have a separate digital strategy,” says Lisa Heneghan, Partner and Chief Digital Officer at KPMG in the UK. “It should be an integral part of everything you do. Whether it’s your customer strategy, people strategy or production strategy, they all have to intrinsically recognise that the world is now digital.”

CEOs seem to understand the distinction and are getting far closer to the digital transformation of their organisations. Our study reveals that four in five CEOs (81%) are personally leading on technology strategy (just below 84% of CEOs globally).

Our results show growing confidence among UK CEOs around the use of technology and more optimistic around the speed at which they will see a return on technology investments. “That's really important,” adds Lisa Heneghan. “You can't maintain momentum of digital transformation unless you start to show some real value within the business.”

On artificial intelligence, we found that UK and global organisations were still in their infancy when it came to using AI to automate. However, the increase in uptake has been so significant in the UK that more CEOs here than globally say they have used AI to automate some processes. A further 24% of UK CEOs said their organisations were still at a pilot stage on AI, while 59% had implemented AI to a limited extent.

“CEOs and shareholders are at last starting to realise the promises of digital,” says Nicholas Griffin, Global Head of KPMG's Global Strategy Group. “It is fundamentally changing the proposition in terms of functionality, service, personalisation and community building. Customer relationships have a much higher risk of disintermediation and disruption. Automated decision making is kicking in while productivity and scaling benefits are rising in tandem.”

Chart: Adoption of AI in UK firms leaps almost six-fold

% of CEOs who said “we have already implemented AI to automate some of our processes”

United
Kingdom
Global
Key
2019
2018

It’s a challenge to make sure everybody in our business embraces new technologies. I’m not talking about bleeding-edge fintech. I'm talking about technologies including the cloud and data analytics that can make a fundamental difference to the efficiency and effectiveness of our organisation.

Tim Harris
Deputy Group Chief Executive and Group Finance Director
Royal London

Connected enterprise

There’s barely a major organisation out there that doesn’t have a stated desire to ‘put the customer at the centre of everything we do’. But how many achieve it? For large, complex businesses delivering value to customers while delivering a meaningful return can be challenging.

The key to creating a stronger customer and brand experience, agreed 73% of UK CEOs, is to make sure the middle office (areas like Logistics and Production) and the back office (HR, Finance and IT) are properly connected with the front.

The ‘connectivity conundrum’ is a pressure today’s CEOs believe has grown in recent years. Eighty eight percent said they had a greater responsibility to connect front, middle and back in a way their predecessors did not (globally the figure was 79%).

But is it working? Almost half the UK CEOs surveyed (45%) say the investments they have made in personalising the customer experience have not delivered the growth benefits they were hoping for (while 47% said it had).

And as the enterprise becomes part of a wider connected ecosystem and the ability to integrate digital innovation helps unlock long-term growth, so the threat from cyber-attacks increases. Cyber-attacks cost the global economy an estimated $450 billion a year. What’s promising is that significantly more UK CEOs this year than last say they feel well prepared for an attack.

 

Chart: More UK CEOs are feeling well prepared for a cyber attack

How well prepared is your organisation for a future cyber attack?

2018
2019
Key
Under Prepared
Neutral
Prepared


Chart: … but it’s increasingly a question of ‘when' not 'if‘ in CEOs’ minds

Proportion who agree that “becoming the victim of a cyber attack is now a case of ‘when’ not ‘if’”

2018
2019
Key
Disagree
Neutral
Agree