German companies rely on generative AI as a performance driver

• More intense competition, difficult financing conditions and a shortage of skilled labour are forcing companies to improve performance
• More than half of companies are already using generative AI to automate processes in order to improve performance
• Cost-cutting measures such as reducing investments or staff cuts are only occasionally on the agenda

In view of the difficult economic environment, many companies in Germany are looking for ways to improve their business performance. They are relying on technology in particular: more than half of them (54 per cent) have used generative AI and other technologies for greater process automation in the past three years. Around a third (35 per cent) intend to follow suit in the coming year. 59% of companies have also opened up or optimised new markets in the last three years, while 23% plan to do so in the coming year. In the coming year, companies also want to optimise their working capital (57 percent) and enter into new strategic alliances (40 percent) to improve performance.

Many companies have already cut costs in the past, meaning that cost-cutting programmes are out of the question for the majority of them: Less than ten per cent of companies are planning to cut investments, limit recruitment or reduce staff. Only a fifth want to cut other operating expenses. 39 per cent have or want to stop initiatives that are not directly relevant to earnings, for example in the area of ESG.

These are the initial findings of the "Performance Improvement Strategy 2024" study, for which KPMG surveyed 250 managers from German companies in Germany.

According to the respondents, employee skills (57 per cent) and the availability of data (47 per cent) have the greatest influence on increasing business performance in the short term. In the medium and long term, however, they estimate their influence to be increasingly weaker. In contrast, most companies focus on risk management (43 per cent), market conditions (38 per cent) and their own strategic orientation (38 per cent) in the medium term. In the long term, around half of those surveyed rate technological equipment and location factors such as infrastructure and financial resources as the most promising measures for improving performance.

When asked why performance improvements in the company are necessary, 68 per cent of interviewees cite more intense competition or the entry of new competitors first. This is followed by more difficult financing conditions (49 per cent) and a shortage of skilled workers (43 per cent). By contrast, additional costs from regulation and ESG, rising personnel costs or trade policy instruments such as embargoes or customs duties have less of an impact on performance.

Clemens Reisbeck

Deputy Head Corporate Communications
KPMG AG Wirtschaftsprüfungsgesellschaft

T +49 89 9282 1722
creisbeck@kpmg.com