Facing ongoing economic and geopolitical uncertainty many CEOs are taking a cautious approach, prioritizing investing in areas of digital transformation that will drive growth and help their organizations succeed.
The effects of inflation and rising interest rates are not going unnoticed. In our recent KPMG 2022 CEO Outlook, 14 percent of CEOs said these economic factors are among their most pressing concerns — beaten only by pandemic fatigue (15 percent).
So, what does this mean for digital investment and transformation?
Preparing for a recession, many CEOs have started tapping the brakes on their digital transformation strategies:
- 40 percent of CEOs say they have paused or reduced their strategies
- 37 percent of CEOs say they plan to pause or reduce their strategies in the next six months
As digital transformation costs grow, the level of accountability CEOs have around tech investment is going to increase. As a result, they will be focused more intensely on value for money.
Advancing tech top priority, top risk
When surveyed for the 2022 CEO Outlook, CEOs globally named emerging technology as the top risk and threat to organizational growth over the next 3 years. Additionally, 25 percent agree that advancing digitization business-wide is a top priority between now and 2025.
This indicates that CEOs know where they need to take their organizations, but are still figuring out how best to get there and how to do so while getting the most value.
- 72 percent of CEOs say they have an aggressive digital investment strategy, to help them secure first-mover or fast-follower status
- 70 percent of CEOs agree they need to be quicker to shift to investing in digital opportunities
The confidence-pessimism gap
Despite short-term uncertainty, more CEOs are confident about global economic growth in the next 3 years compared to 2021 (71 percent versus 60 percent). An even more significant number (85 percent) are optimistic about their organization’s long-term growth.
But there’s an increased (and growing) gap between CEO confidence and CFO pessimism. This will likely shape where businesses are going, as the level of uncertainty and turbulence — at least in the short-term — is only increasing.
Uncertainty appears to be status quo for the foreseeable future. As CEOs refocus their digital strategies, there are several measures that will likely be key to ensuring short- and long-term success:
- 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.
- Work with partners to drive value: With CEOs increasingly interested in partnerships, effectively identifying, integrating and managing third parties can help increase speed to market, reduce costs, mitigate risks and supplement capability gaps in delivering on the customer promise.
- Continue to develop your workforce’s capabilities: 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.