Business survival emerges as the number-one reason for companies to invest in emerging technologies as executives re-evaluate strategic priorities

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 recognise 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. It 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,” Marco Vassallo, partner, digital solutions, KPMG in Malta, explained.

Specifically, 59 per cent of executives surveyed say that COVID-19 has created an impetus to accelerate their digital transformation initiatives, yet approximately four in 10 said 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 per cent of those surveyed said cloud migration has become an absolute necessity due to COVID-19.

Digital solutions and new ways of working occupy a significant role in the transformation to a more robust and digital economy

However, investments in a number of emerging technologies will likely increase over the next year, such as 5G (44 per cent of respondents expect spending to increase compared to 26 per cent who expect spending to decrease); process automation (43 per cent expect an increase compared to 25 per cent who expect a decrease); AI (39 per cent versus 31 per cent); hybrid cloud and/or multi-cloud (38 per cent versus 28 per cent); blockchain (34 per cent versus 30 per cent); edge computing (34 per cent versus 33 per cent) − with the exception of smart analytics (32 per cent versus 35 per cent).

“Digital 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, while developing a strong foundation for future product and service innovation,” Vassallo said.

The case for emerging tech

Fifty-seven per cent of respondents said COVID-19 has significantly changed their organisation’s strategic priorities. The immediate focus was now on survival, which has become the number-one objective for most emerging technology investments.

The first phase of KPMG research showed that many organisations were deterred from significant emerging technology investment because of obstacles in the organisational 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 were more focused on making a strong business case for existing technology investments.

Other key findings include:

• Only 13 per cent expected to “significantly increase” investments in emerging technologies amid COVID-19. Organisations making the highest investments see greater returns than those making the smallest; in fact, those in the highest quartile of investments were significantly more likely to say they have already realised tangible value.

• Nearly 65 per cent of respondents believed that the combined use of emerging technologies is much more beneficial than using any of the technologies in isolation. ‘AI-powered’ and ‘cloud-enabled’ are emerging as the foundation and are featured in more than one-third of all technology solutions.

“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,” Curt Gauci, director, Digital Solutions, KPMG in Malta, noted.

“Companies who don’t, risk threatening their own survival,” he concluded.

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