TMT

Over the past few decades, the TMT sector has undoubtedly experienced fast digital growth. When 2020 arrived and the pandemic sent shockwaves through the industry, it paved the way for extraordinary digital transformation, accelerating pre-pandemic trends. When an industry defies the odds and grows at this pace, it does not come without teething problems. As the industry faces a new era of cost-conscious customers, how can TMT companies continue leveraging their vast digital growth, without succumbing to a catch 22 situation, where they fail to address the issues of its aftermath? This question raises the issue of a ‘fast-growth deficit’.

The fast-growth deficit refers to the structural and operational gaps that have lingered in the aftermath of accelerated growth, particularly in the pandemic. For the TMT sector, the gap in customer experience remains the most important piece of the puzzle. The fast-growth deficit encompasses several legacies that have prevailed in the post-pandemic world, including a data deficit and technical debt, which remain obstacles to strong customer centricity. This headache has fallen particularly heavily on platform-based e-commerce firms such as food delivery apps and TV/Streaming subscription services, both of which saw especially rapid growth in the pandemic. This now feels like a distant memory; the new customer now looks very different, and sector’s pandemic legacies can no longer be ignored.

Customers are increasingly seeking value for money, particularly in the streaming space. This comes at a time when pockets are squeezed by the cost-of-living crisis. In the pandemic, 35% of people increased their number of subscriptions.1 Fast forward to now- a double-digit inflation environment, 64% are now reducing their number of subscriptions.2

Nonetheless, the economic outlook does look more positive - government intervention for household bills, alongside low unemployment, have buoyed the situation. 3 Consumers are less anxious than they were 12 months ago and there has been a recent uptick in consumer confidence.4 However, customers are still battling with high inflation, mortgage rates and rent prices.5 KPMG’s recent Consumer Pulse Survey found that 55% of consumers have reduced their non-essential spend so far this year.6 As high inflation remains, consumers will remain cautious and look to cut down on subscriptions and non-essential spend.

If the sector is to weather the storm, developing a deep understanding of customer needs and motivations must become the priority. Consumers are increasingly seeking value for money so expectations are high. Whilst the sector has strengthened its CX ratings in recent years, companies will need to do more to understand these expectations and address lifestyles post-pandemic.

One way of pioneering excellent customer experience and addressing the digitally focused fast growth deficit is, ironically, through data. However, TMT has a unique advantage as a tech-driven sector- data availability is ubiquitous. Availability, however, does not necessarily translate into opportunity. Research indicates that just 32% of TMT companies are fully utilising their customer data.7 As firms prioritised rapid growth and other more immediate business issues in the pandemic, this aspect of customer experience was often neglected. Converting large amounts of data from back to front office into tangible, monetised customer personalisation is what will distinguish success and ultimately, survival in the new economic landscape.

Another neglected issue is technical debt. During the pandemic, the TMT sector was under immense pressure to meet mounting customer demand and respond to rapid digital transformation. To react quickly, many implemented faster digital solutions to get things over the line, allowing companies to experience fast growth in a short space of time. However, its hasty implementation has given rise to an array of reworking problems and technical debt, creating an unsustainable and inflexible vehicle for innovation. If unaddressed, this rigidity will continue to prevent the powerful monetisation of data into enhanced customer experience.

As we have seen, the fast growth deficit is no simple task; ubiquitous data still struggles to translate into opportunity. With a background of technical debt, many struggle to fully optimise their data; our research shows that less than 50% of TMT companies have a defined enterprise data strategy.8 If data is not the problem, how can we tackle optimisation? To do this, the TMT sector must in fact, look beyond the data. It is here where a holistic rethink of operating models could be key. KPMG’s Powered methodology provides a blueprint to evaluate the wider front office processes and offers leading-practice solutions to transform all layers of the target operating model that link back to business performance. Going beyond the data is what will allow firms to beat the fast growth deficit and indeed, imperative, in the continued fight for customers in a bleak economic climate.