Digital transformation and cyber security follow in top three priority list – concerns about remote working decline

Talent – recruiting, retaining and upskilling staff – is the number one issue facing Australian companies heading into 2023, KPMG Australia’s annual survey of business leaders shows.  

In the fifth edition of ‘Keeping us up at night’, 473 senior executives detailed the key challenges facing their organisations and the nation both in the next 12 months, and over the next 3-5 years. 

Top issues

Talent has strengthened its grip on the top spot, with 77 percent of leaders nominating it as their biggest challenge in 2023 compared to 69 percent in last year’s survey. It is business executives’ number one concern, both over the short and medium term.

Optimising and extracting organisational value from digital transformation was the second major concern now facing leaders – up from fourth last year. Generally, digital was a theme which permeated the findings – upskilling staff to meet a more digitised future was a key aspect of the talent issue.

Cyber security was third biggest issue – down from second last year, although the survey was carried out just before the recent Optus and Medibank issues.

Alison Kitchen, KPMG Chairman, said: “Finding and keeping good quality staff is vital at the best of times, but with unemployment at its lowest level in over 50 years the challenge has become greater due to a smaller pool of talent. While we areadvocating for an improvement in Australia’s migration system to help address the talent supply, our respondents rightly acknowledge they need to implement actions to keep talented people, and provide a work environment that fosters learning, development and growth.”

She added: “It’s notable that this year’s findings show a return to ‘nuts and bolts’ issues, such as staffing and the state of the economy. This is different from a year ago when employees working remotely were prevalent.. Given this year will be challenging economically, it makes sense for businesses to focus on fundamentals while remaining flexible and open to new opportunities.”

It was notable that the top three issues for 2023 – talent, digital, cyber – are also seen as the most important over the next 3-5 years. Of the top five, four were the same for both the immediate and medium-term future. The one exception is that 'Identifying & growing future market segments and/or innovation opportunities for growth’ was elevated into the top five over the next few years at the expense of ‘The need for greater agility and flexibility in your organisation to meet opportunities and challenges’.

One interpretation of this swap in priority is that business leaders are expecting this year to be choppier in terms of business conditions, so keeping agile and flexible to market adjustments is likely to be more important than medium term revenue growth – which will then take priority after the expected slowdown in 2023 comes to an end.

New technologies (AI, machine learning, blockchain, quantum computing) ethics and implementation issues are also seen as gaining in relevance over the short-medium term.

Dr Brendan Rynne, KPMG Chief Economist, said: “It is notable that digital transformation and the issue of re-skilling and up-skilling staff for a digitised future are very high in the priority list not only for the 12 months ahead, but also the next 3-5 years.

“The commercial world is rapidly evolving, with the pandemic having acted as a catalyst for change and turbo-charging development of all things digital, online and cloud. Most workers are digitally literate, but only to a point. New business and social applications are being released at an increasing pace, and the need to ensure staff are at least competent with technology - or ideally digitally-enabled - is something that our business leaders are contemplating how best to achieve. There is also an acknowledgement by business leaders that this not a ‘fix once and forget’ challenge. Rather, this issue has increased in importance during the past year and will go on doing so.”

Social issues

KPMG also asked leaders for their views on the biggest social challenges facing Australian businesses in 2023. The top three answers were:

  1. Health risks, including COVID
  2. Social license to operate 
  3. Emerging and disruptive technology

Respondents have identified that the challenges thrown up by the pandemic, and in particular the difficulty in coordinating a global response, mean that negative health consequences are likely to remain an issue into next year.

Meanwhile, social license to operate continues to gain importance. Trust and confidence in business, the basis for any license, is hard to win, easy to lose and interlinked with many of the business challenges identified in the first part of the survey. Digitisation and cyber risk present an ongoing and significant challenge as businesses must carefully weigh the need for modernisation with the privacy and security concerns of customers and clients.

Emerging and disruptive technology will play a role here too, with the productivity gains expected from greater AI utilisation also bringing the risk of ‘deepfakes’ and the potential for automation-induced job losses.

For further information

Marjorie Johnston
Corporate Affairs
0407 329430