Following the outbreak of the COVID-19, global companies have slashed funding for emerging technologies, such as automation, artificial intelligence (AI), blockchain, and 5G, according to new KPMG International research.
However, the report stated that many executives are optimistic that emerging technology spending would likely increase in the next 12 months, as enterprises recognise that COVID-19 creates a burning platform to accelerate digital transformation and stimulate long-term growth.
The new report, a collaboration between KPMG International and HFS Research, Enterprise Reboot, surveyed 900 technology executives to explore the current and future state of emerging technologies and demonstrates a dramatic shift in how businesses were approaching emerging technology now versus just a few months ago before the onset of COVID-19.
“This crisis isn’t affecting all industries equally, but for many of the industries facing crisis, managing the transition to a digital business model is imperative. However, doing so is made more complicated in a time where investments are critical, but cash must be preserved,” KPMG’s global lead for Intelligent Automation and US lead for Digital Capabilities, Cliff Justice said.
Specifically, 59 per cent of executives surveyed said COVID-19 has created an impetus to accelerate their digital transformation initiatives, yet approximately four in 10 stated that they would halt investment in emerging technology altogether as a result of COVID-19.
Executives have shifted their focus to must-have technologies, and 56 percent of those surveyed say cloud migration has become an absolute necessity due to COVID-19.
However, the report showed that investments in a number of emerging technologies would likely increase over the next year, such as 5G (44 percent of respondents expect spending to increase compared to 26 percent who expect spending to decrease); process automation (43 percent expect an increase compared to 25 percent who expect a decrease); AI (39 percent versus 31 percent); hybrid cloud and/or multi-cloud (38 percent versus 28 percent); blockchain (34 percent versus 30 percent); edge computing (34 percent versus 33 percent) – with the exception of smart analytics (32 percent versus 35 percent).
“Emerging technologies and new ways of working can play a significant role in the transformation to a more digital economy. These technologies are helping companies maintain customer and stakeholder trust, keep remote workforces connected, ensure their business is resilient and prepared for disruptions, and build a strong foundation for future product and service innovation,” Justice added.
Furthermore, it disclosed that 57 per cent of respondents indicated that COVID-19 has significantly changed their organisation’s strategic priorities.
According to them, the immediate focus for now was on survival, which they stated has become the number one objective for most emerging technology investments.
“The first phase of KPMG research showed that many organisations were deterred from significant emerging technology investment because of obstacles in the organisational culture to enterprise-wide adoption, and a fear that projects will fail.
“Since the onset of COVID-19, respondents in the second phase of research are more focused on making a strong business case for existing technology investments,” it added.
Other findings include that only 13 per cent expected to “significantly increase” investments in emerging technologies amid COVID-19.
“Organisations making the highest investments see greater returns than those making the smallest; in fact, those in the highest quartile of investments were significantly more likely to say they have already realised tangible value.
“Nearly 65 per cent of respondents believe that the combined use of emerging technologies is much more beneficial than using any of the technologies in isolation. “AI-powered” and “cloud-enabled” are emerging as the foundation and are featured in more than one-third of all technology solutions.
“Now more than ever, companies need to make smart investments in emerging technologies if they are to prevail in the medium- to long-term. Companies who don’t, risk threatening their own survival,” Justice said.