Global 2000 companies moved to slash funding for emerging technologies — such as automation, artificial intelligence (AI), blockchain, and 5G — in the immediate wake of the pandemic, said KPMG recently.
However, many executives are optimistic emerging technology spending will likely increase in the next 12 months, as enterprises recognize that the pandemic creates a burning platform to accelerate digital transformation and stimulate long-term growth, according to Enterprise reboot, a new report from KPMG International and HFS Research, based on a survey of 900 technology executives.
“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,” said Cliff Justice, KPMG global lead for Intelligent Automation and US lead for Digital Capabilities.
- 59% of executives surveyed say that COVID-19 has created an impetus to accelerate their digital transformation initiatives
- About four in 10 say they will halt investment in emerging technology altogether as a result of COVID-19.
- Executives have shifted their focus to must-have technologies while 56% of those surveyed say cloud migration has become an absolute necessity due to COVID-19.
Emerging technologies that attract investment
A number of emerging technologies will likely increase over the next year, according to the survey:
- 5G (44% of respondents expect spending to increase vs 26% who expect spending to decrease);
- process automation (43% expect an increase vs 25% who expect a decrease);
- AI (39% versus 31%);
- hybrid cloud and/or multi-cloud (38% versus 28%);
- blockchain (34% versus 30%); and
- edge computing (34% versus 33%)
However, smart analytics is an exception, with 32% of respondents saying that they expect to increase investment and 35% saying that they expect a decrease, KPMG pointed out.
According to survey results, 57% of respondents say the pandemic has significantly changed their organisations’ strategic priorities.
The immediate focus is now on survival, which has become the number one objective for most emerging technology investments, KPMG said.
The first phase of KPMG research showed that many organizations 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, the firm noted.
Since the onset of the pandemic, respondents in the second phase of research are more focused on making a strong business case for existing technology investments, KPMG added.