Research: Digital Transformation is Now Proof, Not Just a Promise

According to KPMG, businesses are successful with digital transformation but most are hesitant to adopt emerging technologies

Companies need skilled data analysts and software engineers, as the shortage of professionals is one of the main obstacles to the use of digital technologies. This is among the findings of the KPMG Global Tech Report 2022. The researchers surveyed more than 2,200 senior executives and industry experts about their IT strategies, and the report also reveals whether it is worthwhile for companies to invest in digitalization and whether there are any barriers to further development. We also find out how companies are approaching data storage in the cloud, what other cybersecurity issues are raised by the use of new technologies, and what digitally mature companies are doing differently from their competitors.

Despite the unprecedented market ups and downs, technology leaders around the world are confident that the technology will deliver. In KPMG's Global Tech Report 2022, nearly all technology leaders reported that over the past two years

digital advances have helped drive performance and profitability.

Despite the dynamic growth and openness to emerging technologies, the survey of more than 2,200 senior technology executives and industry experts also shows that there are still barriers to further progress, such as skills gaps in technology areas and growing cybersecurity challenges.  

Overall, however, companies continue to approach emerging technologies with enthusiasm, commitment and confidence, says the KPMG research report.

Digital transformation delivers the expected results, with customer experience as the key driver

Over the past years, senior managers have experienced the success of the digital switchover and remain optimistic about future opportunities. Almost all respondents mentioned that their organization's digital transformation had improved effectiveness and performance over the past two years:

nearly 60% of respondents report an increase of more than 5% as a result.

Research in the KPMG Global Tech Report 2022 shows, among other things, that

improving the customer experience is a key driver of digital transformation.

Putting the needs of customers first involves developing and delivering efficient procedures, goods, and services. Companies are making enterprise technology a key part of their strategic plans to enhance the customer experience. Because customer relationships require collaboration between multiple areas, if front-, middle- and back-office areas are not aligned, it leads to over-complicated and slow processes.

62% of respondents said that there is still work to be done to break down silos. By redesigning their technology and breaking down barriers between departments, companies can help improve the customer experience. Companies that are committed to creating seamless collaboration and breaking down barriers between organizations stand out from the rest.

Companies are also planning to use emerging technologies such as metaverse, but most have not yet made concrete investments

Respondents have recognized the potential of emerging technologies and are working to lay the foundations.

46% of respondents plan to invest in new technologies in the future, but most have made little or no progress.

Even digitally advanced companies have admitted that they are waiting for either competitors or customer demand before investing in the development of products or services based on technologies like the metaverse. Compared to other industries, the financial services market is the one with the highest demand for investment in metaverse technologies in the coming year. The energy and chemical industries show the least interest in the concept.

The adoption of cloud technologies is no longer a hallmark of digitally leading companies, but an evolutionary step in IT

The KPMG survey shows that the move to the cloud is well underway. Widespread confidence is indicated by the fact that 88 percent of respondents say their company is well advanced in its adoption of the technology.

80% of respondents are so far satisfied with the results of moving to the cloud. The main advantage of such solutions, according to 35 percent of respondents, is that they are cheaper than running systems in-house and maintaining their own IT infrastructure. 33 percent of respondents see efficiency gains as the biggest benefit.

Key challenges of digital transformation: inflexible organizational culture, lack of skilled professionals

According to KPMG's research, the biggest challenge companies face when implementing digital technologies is the lack of skilled workers. This is most evident in the healthcare (52 percent) and manufacturing (48 percent) sectors.

Companies increasingly need employees with both business acumen and digital skills.

According to most respondents, finding candidates who both understand business processes and have the deep technical knowledge needed to implement new digital solutions is a major challenge.  The limited budget available for training and recruitment exacerbates this situation, and experience shows that this has an impact on the whole organization. This makes it more difficult to implement new systems, to move to cloud-based solutions and hampers information security initiatives.

Digital innovation is also threatened by an organizational culture resistant to change.

Risk-averse corporate attitudes are one of the biggest challenges to digital transformation, with 24% of respondents saying they are holding back digital initiatives.

"These two areas are a good example of how, despite the available know-how, successful pilot projects and abundant resources, the digitization of an area can still fall behind simply because of shortcomings on the human side," points out Zsanett Tillinkó, Director of Technology and Project Advisory at KPMG.

The lack of skilled labor is also having an impact on cybersecurity

Increasing threats put cybersecurity teams under constant pressure, while a shortage of skilled personnel often hampers security efforts. According to companies, a lack of key skills is the main obstacle to achieving their cybersecurity goals. 58% of respondents admit their company is behind schedule - a reflection of the ever-increasing responsibilities of cybersecurity teams.

The digitization of customer contact channels is the second biggest cybersecurity challenge facing companies today, after the introduction of hybrid working. Without adequate protection, new vulnerabilities can appear in the system, potentially putting customer relationships at risk. According to KMPG's Cybersecurity Research 2022 (Mission: Trust. How to unlock the true value of the CISO), data security concerns are the most likely to undermine customer trust in the company and its data management. In order to ensure that the introduction of technological innovations increases customer trust and loyalty to the firm, projects need to incorporate cybersecurity requirements into new systems at the design stage.

Despite these challenges, the survey shows that respondents are confident in their own cybersecurity capabilities. More than 50 per cent are very confident that their company is prepared for cyber security threats.

Seven key signs of digital maturity

The majority of technology leaders now believe that digital transformation initiatives to increase their competitiveness are paying off, according to KPMG research.  In the past two years, either their profitability or 2 other metrics have increased as a result of digital transformation.

As a result, confidence in the effectiveness of digital transformation has reached record highs, and the transformation itself has become a fundamental requirement.

The research lists seven key drivers of digital maturity. These are:

  • Breaking down silos and creating communication between territories is inevitable
  • To address skills shortages, companies need to be proactive in finding solutions, broadening their search base, and becoming open to candidates from a variety of backgrounds and experiences  
  • Close collaboration between the different business areas and IT involved in cloud adoption is needed to deliver consistent, cost-effective cloud solutions across the enterprise
  • Cybersecurity professionals need to be involved from the start in technology decisions and in building IT security awareness within the company
  • When introducing new technologies, focus on those that are most likely to increase customer satisfaction
  • The ability to switch between platform providers for customer satisfaction
  • Dare to experiment and embrace a degree of uncertainty

Digital transformation makes companies crisis-proof

Companies that have been successful in their digital transformation can face the current challenges and uncertainties with greater assurance. Thanks to their successes and improved performance, customer-centric technology strategies are now practically a "survival tool" for businesses.

KPMG plans to examine the digital maturity behaviors observed in the Global Tech Report 2022 survey in more detail in a new study at a later date.

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