The technologies driving business transformation in 2021
As the business world moves further into 2021, investment decisions for this year and going forward will be even more critical as the world begins to rebound from the pandemic. Companies are assessing the permanent changes they need to make to their business models and workforces as the economic recovery hopefully gets underway.
As reported in the KPMG Technology Industry CEO Outlook, 61% of technology CEOs are prioritizing investment in new products and services. Many are deploying new technologies as they continue to transform digitally; enhance environmental, social, and governance (ESG) practices; and upgrade their supply chains. Below are some of the key technologies companies are leveraging across the three categories.
COVID-19 has reinforced the importance of driving enterprise transformation across the front and back offices, enabled by technology. Tech CEOs are betting on digital transformation to make their companies more resilient, agile, and customer-focused, with 89% reporting that their digital transformation initiatives have accelerated by months or even years since the onset of COVID-19. Specific technologies on which they plan to prioritize increased spending include cloud, automation, and 5G.
Cloud computing is at the heart of emerging technology discussions, with 56% of executives agreeing that cloud migration has become a necessity. Instead of piecemeal migrations of small data sets, many companies are now intent on moving an entire function’s data to the cloud, at scale, leveraging the hybrid cloud model. Companies leverage the hybrid cloud approach to reduce risk of service disruption, extend the corporate network and functional workloads, take advantage of the best available services and features, and improve overall flexibility and interoperability. Many benefits of the cloud became evident in the virtual working environment many transitioned to in 2020.
Automation is another key building block of digital transformation, and one that has shifted toward leveraging more advanced, strategic, and transformational capabilities, such as analytics and artificial intelligence. Through automation, businesses can improve operation efficiency and effectiveness while building a strong foundation for new or enhanced products and services that engage customers and drive revenue growth.
5G was an exciting prospect as we entered 2020, but amid the pandemic, the need for organizations to be digital has never been greater, and connectivity plays a vital role. It has the capability to support billions of connected devices transmitting huge volumes of data. Deploying 5G technology in conjunction with edge computing can help companies across many industries solve business challenges, reshape value chains, enhance revenue models, and optimize operations.
Each of these technologies is essential for the future survival of businesses and will aid in decision-making as companies transform.
Responsible ESG practices are now a priority for every industry and are proving to support both financial performance and resilience. Environmental policies have been a particular focus in recent years. The KPMG Survey of Sustainability Reporting 2020 reveals that across all industries, 96% of the 250 largest companies worldwide now report on sustainability. Seventy-six percent disclose their carbon reduction targets. Additionally, many companies are working toward becoming carbon neutral or better, including KPMG.
Organizations are investing in decarbonization strategies such as distributed on-site renewable energy generation, as well as direct integration with renewable producers to offset scope 2 emissions by purchasing renewable energy certificates. Other strategies include utilizing carbon-capture technologies, continuing efforts to improve data center efficiency, and entering into virtual power purchase agreements.
Businesses can enable carbon-management strategies through the convergence of Internet of Things (IoT), blockchain, and A.I. IoT sensors provide real-time environmental data sets that are captured through blockchain infrastructure to create immutable data records. Machine learning and A.I. are deployed on the data infrastructure to enable automated control and optimize performance across the system. This capability can create a new standard for the transparency and fidelity of data for climate disclosure reporting.
Supply chain resiliency
In early 2020, we saw supply chains suddenly disrupted by the pandemic. From weakened demand for some companies to skyrocketing demand for others, along with uncertainty in obtaining raw materials, shortages, logistical bottlenecks, and insufficient workforce capacity, these disruptions provided a litmus test for organizations’ supply chain strategies. According to the KPMG CEO Outlook report, 57% of technology company CEOs are rethinking their global supply chain approach.
Artificial intelligence coupled with analytics can create not only a predictive, but also a prescriptive, supply chain risk solution. By analyzing past events and hypothesizing about future threats, organizations can identify supplies that are at risk and recognize when internal risk controls appear insufficient. The opportunity seems significant as 77% of technology executives say their supply chain does not currently use a predictive risk solution.
Supply chain digitalization is necessary to enhance real-time visibility into product status and location. Blockchain technology can create an immutable data trail that improves confidence and trust in the quantity and quality of goods that are produced, shipped, and delivered, as well as the carbon emissions associated with those goods.
While many companies were addressing these issues ahead of the pandemic, 89% of tech CEOs report that the pandemic accelerated their plans to transform. Technology is key to this transformation, and 5G, automation, blockchain, and the cloud are just a few of the latest technologies that companies are adopting. We look forward to seeing the unique ways companies will continue to transform in 2021 and what technology combinations they will use to get there.
Alex Holt is global head of technology, media, and telecommunications for KPMG International. Mark Gibson is national sector leader of technology, media, and telecommunications for KPMG in the U.S.
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