Digital transformation in uncertainty

CEOs are keeping technology risks top-of-mind in the short- and long term. Disruptive technology has emerged as the top risk and the greatest threat to organizational growth over the next 3 years.

This is closely followed by risks in operational issues/supply chain and regulations. In the face of these risks, CEOs continue to prioritize digital investment with 84 percent agreeing they have an aggressive digital investment strategy, intended to secure first-mover or fast-follower status.

Furthermore, advancing digitalization and connectivity across the business is tied with attracting and retaining talent as the top operational priority to achieve growth over the next 3 years. This focus on digital transformation may be driven by increasingly flexible working arrangements and heightened awareness of cyber security threats, exacerbated by geopolitical uncertainty.

KPMG in Qatar creates awareness of cyber-attacks that can arise from digital transformation and how to respond in an effective and efficient manner. Digital and Innovation partner Nizar Hneini says that “as digitalization takes over operations across the business sectors and as leaders seek to innovate through digital to remain relevant, the cyber-attack surface becomes larger and the available data gets enormous. CEOs need to continue making investments in harvesting their data and enhancing their organization’s cyber awareness and capabilities to keep growing and ensure the sustainability of their business.”

The anticipated recession may be pushing businesses to reconsider their strategies over the short term. Four out of five CEOs note that their businesses are pausing or reducing their

digital transformation strategies to prepare for the anticipated recession (40 percent have paused or reduced, and 40 percent plan to pause or reduce over the next 6 months). In fact, 68 percent say they need to be quicker to shift investment to digital opportunities and divest in those areas where they face digital obsolescence.

Digital transformation has become more expensive in recent years, so more than ever, investment should be prioritized in those areas that help drive growth, and potentially slowed or reconsidered on initiatives that may be considered as non-critical. In uncertain times,  it’s imperative that businesses focus most of their digital investments on impactful, measurable, and value-creating opportunities that support their  strategic goals.

CEOs continue to narrow the gap between their digital transformation objectives and investing in their workforce. CEOs were offered a binary choice: whether they were placing more capital investment in new technology (68 percent) or developing their workforce’s skills and capabilities (32 percent).

As businesses have implemented their digital tools, their attention has shifted to adoption, engagement, and change management to support their people’s working in a very different world. To drive their growth, CEOs may be looking to make their existing people more productive through transformation.

Few organizations can succeed on their own. Businesses rely on their ecosystems as building successful partnerships can help a company deliver a competitive edge. Increasingly, CEOs view partnerships as an important means to continue the pace of their digital transformation (92 percent). CEOs also say building strategic alliances with third parties is the most important strategy to help them reach their growth objectives over the next 3 years. It has become more important for businesses to partner with companies (e.g. start-ups, fintech, and more)  that can help them to apply agility and resilience to growth. To bring everything together and drive a successful transformation, CEOs need the right partners, and the ability to connect it all.

While other risks may now feature as top concerns for CEOs, the cyber environment is evolving quickly and 88 percent see information security as a strategic function and a potential competitive advantage. Geopolitical uncertainty is increasing concerns over corporate cyber attacks for many CEOs (84 percent). In fact, four out of five CEOs (80 percent) say that protecting their partner ecosystem and supply chain is just as important as building their own organization’s cyber defenses.

Growing experience of the challenges of cyber security is also giving CEOs a clearer picture of how prepared, or underprepared they may be. More CEOs recognize they’re prepared for a cyber attack, with 88 percent admitting so in 2022.

84 percent of the CEOs believe that geopolitical uncertainty is raising concerns of a cyber attack in their organizations. The rapid increase in cyber attacks, coupled with the increasing difficulty of detecting attacks on time, calls for automation and innovation in dealing with cyber incidents.

• Bring your people and technology together: Organizations have invested so much in digital transformation that they need to make sure people adopt these technologies and use them to their full potential.
• Work with partners to drive value: With CEOs increasingly interested in partnerships, identifying, integrating and managing third parties effectively can help increase speed to market, reduce costs, mitigate risks and supplement capability gaps in delivering the customer promise.
• Get closer to customers: Orchestrating compelling customer experiences requires companies to begin with the customer and work backwards, taking an outside-in perspective to reverse-engineer and shape what the experience should be; then, they should adopt an inside-out view to define how the experience should be delivered.
• View cyber security as a strategic function: Increasingly cyber is no longer seen as only an IT issue, it’s a fundamental business operation imperative. The exponential increase in cyber attacks, coupled with the difficulty of detecting an attack in a timely manner, calls for automation and innovation in dealing with cyber incidents.