KPMG U.S. CEO Outlook: It’s ‘Go Time’ to Reduce Supply Chain Costs and Drive AI Integration and Upskilling

Walsh: “Virtually every meeting with a CEO begins with discussing supply chain strategy, cost takeout, and operational efficiency. With more cautious customers, organizations that are using AI to take smarter, more creative actions are reducing the pressure to pass on costs to customers. This is a clear example of how being a first mover on AI is helping organizations navigate uncertainty effectively.” 

• CEOs report supply chain resilience (34%) is the top pressure driving short-term decisions, followed by cyber security risks (29%) and global economic uncertainty (25%). AI integration into business processes (23%) and regulatory pressures (23%) rounded out the top five.
• 85% said their organization will continue to adjust sourcing strategies to minimize tariff impacts such as shifting to more domestic production and sourcing more materials domestically.
• As a result of these interrelated challenges, 79% of CEOs say they have already adapted their growth strategy, while 22% plan to do so but haven’t yet.
• 33% of U.S. CEOs indicate they have a high M&A appetite and will likely undertake acquisitions that have a significant impact to their overall organization over the next three years, while 56% plan to make acquisitions that will have a moderate impact to their organizations.

Walsh: “AI optimism, and specifically investment in American innovation, is sustaining economic confidence. AI agents are game changers and CEOs are going on offense to speed up implementation, choosing to mitigate risks on a parallel track. They are focused on innovating their business models, introducing new revenue streams and creating AI-enhanced products.” 

• U.S. CEOs are confident in the growth prospects for their country (86%), their company (84%) and the global economy (74%) over the next three years.
• CEOs report that over the next three years the ability to upskill talent (81%) and integrate AI into business processes (79%) while mitigating inflationary pressures (77%) and the cost of technology (75%) will impact their organization’s prosperity. These areas exceed supply chain (46%) and protectionism (44%).
• Nearly half (49%) of CEOs believe AI agents will have a significant impact and drive major improvements in efficiency or growth, while 11% believe it will have a transformational impact and fundamentally change their operating model and how they manage their workforce.
• 74% of U.S. CEOs say AI is a top investment priority despite ongoing economic uncertainty.
• CEOs are accelerating their expectations for return on AI investments. 
  • 21% expect returns in just six months to one year compared to just 1% in 2024.
  • 69% of CEOs expect to see returns from their investments in AI in one to three years compared to just 21% in 2024.
  • And only 9% said three to five years compared to 68% in 2024. 
• CEOs cited increased efficiency and productivity (through automating routine operations) and enhanced decision-making and data analysis capabilities as the top benefits of AI implementation.
• The top challenge to implementing AI within their organizations reported by CEOs is data readiness followed by ethical challenges and lack of regulation.

Walsh: “CEOs are wrestling with the impact of AI agents on their workforce. They know their organization’s shape, size, and capabilities will change. But there remains considerable uncertainty about the destination. What’s abundantly clear is that AI agents will be embedded team members across organizations, underscoring the urgency to upskill employees and design systems to govern, manage and develop agents.”

• When asked how their organization’s structural shape will shift in the next three years, CEOs said an hourglass (69%), vertical rectangle (16%), triangle (13%) or inverted pyramid (2%).
• In response to AI, CEOs said the top change to their long-term workforce strategy is focusing on retaining and re-training high-potential talent (73%) followed by redesigning roles and career paths to reflect AI collaboration (65%) and hiring new talent with AI and tech capabilities (64%).
• 50% of CEOs agree managers in the business will be primarily responsible for managing the performance of AI agents rather than HR and IT departments.

Walsh: “AI is certainly the technology trend driving the C-suite agenda, but quantum computing has now shifted from a research focus to a business opportunity. Quantum computing also poses a significant cyber threat to current encryption standards, requiring organizations to start adjusting their approach now.”

• When asked to identify the top trends that could negatively impact their organization’s prosperity over the next three years, U.S. CEOs most highly ranked cybercrime and cyber insecurity (82%). As noted above, cyber security risks were the 2^nd most cited pressure driving short-term decisions.
• CEOs reported that their organizations have increased investment in cybersecurity and digital risks resilience (46%) and AI integration into operations and workflow (37%) to mitigate pressing business risks over the next three years.
• When it comes to cyber risk specifically, CEOs are extremely concerned about fraud detection and prevention (65%) and identity theft and data privacy (52%), but note these areas are a top leadership priority and plans are in place to mitigate these risks. 

Walsh: “The business landscape is shifting under our feet and requires new skillsets and adaptability. Resilience and the ability to build trust are crucial. I personally feel a need to move with pace and purpose to advance KPMG’s position as a leader in our profession and industry.”

• 61% of CEOs say their role and what’s expected of them has evolved significantly – with new expectations and greater complexity.
• 85% of CEOs feel under more pressure to ensure the long-term prosperity of their business.
• Stronger ability to lead transformation and culture change with increased transparency in communications, greater agility and faster decision-making under pressure, and AI and broader digital and technological literacy were identified as leadership capabilities becoming most essential for CEOs in a rapidly changing and unpredictable environment.