Digital transformation: How tech companies need to transform themselves


While providing products and services to customers, tech companies are adopting new technologies to accelerate their own digital transformations, a new report from KPMG says.


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Global tech companies have provided products and services to organizations spanning various industries during the pandemic, and a new report looks at the key technologies they are using to propel their own businesses forward.

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Artificial intelligence is the number one technology, followed by the Internet of Things and robotic process automation (tied at second place) and cloud, drones, e-commerce platforms and video/collaboration technologies (all tied at third), according to the KPMG report, Transforming the transformers.

AI allows tech companies to work faster and smarter in analyzing everything from changing customer behaviors to optimizing supply chains, the report stated. IoT devices and sensors populate servers with new, often unstructured, data on customers and operations for AI to analyze. As business models and financial forecasts change, RPA allows companies an entry point into automation that frees employees to focus on more strategic activities while increasing efficiency and productivity.

Predictably, adoption of video collaboration, e-commerce, cloud, 5G and digital payments grew during the pandemic to meet the needs of hybrid workforces and enable remote customer interactions, the report said. Acceptance of video collaboration and digital payment technologies, in particular, have been accelerated by the pandemic, according to the KPMG report.

As businesses discovered they had to quickly adopt new technologies and reinvent how they worked, the same held true for tech companies now trying to figure out how to use them to fuel their growth and top line, the report said.

When asked how these technologies will transform their companies, leaders ranked increased market share and enhanced customer loyalty at the top. Following these, leaders plan to utilize new tech to create longer-term competitive advantages such as generating new insights, greater data security and energy efficiency.

Lack of talent is the main inhibitor

Even before the pandemic caused demand for tech products to skyrocket, the tech industry was facing a well-documented shortage of skilled workers. This lack of skilled talent was named by KPMG survey respondents as the top factor (27%) limiting digital transformation efforts at their companies.

To address the skills gap, tech companies “expect to tap into the contingent workforce to rapidly obtain the needed expertise,” the report said. They will also hire new, permanent employees with the needed skills as well as reskill existing workers.

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Besides a lack of internal expertise, other issues that are limiting digital transformation from happening at tech companies include lack of capital/funding (22%), lack of standards for new technologies (21%), restrictive regulatory policies (20%), and legacy IT infrastructure (18%), according to the report.

Data remains an imperative


Source: KPMG

Despite the mandate to use new technologies to grow the top line, there is still a tremendous opportunity to utilize the treasure trove of data being created by new digital technologies implemented during the COVID-19 pandemic, the report noted. A separate KPMG study found that only 32% of tech companies fully utilize their customer data. And 57% do not have a defined enterprise-level data strategy.

“The next frontier for tech companies on their own digital transformation journeys is the data imperative—deriving real-time insights from the massive amounts of data amassed throughout the pandemic to create new growth opportunities and enhance the customer experience,” said Mark Gibson, KPMG U.S. technology, media and telecom leader. “The data imperative holds true for companies across other industries as well. Technologies like AI and IoT are important pieces of the puzzle and should be underpinned by a holistic, enterprise-wide data strategy.”

Further, becoming data-first creates a competitive advantage, and leveraging data across all value-chain activities correlates to the potential for outsized financial returns,” the report said.

The study also revealed that tech companies said they expect a 4% or greater increase in performance effectiveness in customer service, operations, cybersecurity, talent management and other activities when they increase investment in data by 25%.

“To achieve this, data strategy and investment must be prioritized over, or at least on par with, new technology implementations,” the KPMG report said.

Measuring the success of digital initiatives

As difficult as it may be to plan and implement digitization across numerous systems and functions, tech companies still seek to measure their results. Most of the methods used are quantitative—such as return on investment and revenue growth.

One notable research finding was that the second most popular measurement in the survey was brand/reputation, which KPMG said “is a reflection of both market perception and the actual customer experience. In the tech sector, perhaps more than in any other, the perception of being innovative and cutting-edge can play an outsized role in company success.”

The KPMG report recommended that tech investments be aligned with the wider goal of customer-centricity and to put the customer first in any tech and data strategy. Other suggested actions include:

  • accelerate data access, management and analysis to develop new customer insights, develop go-to-market strategies and unlock new revenue streams,
  • focus on the workforce capabilities that will be needed for a future connected enterprise, and
  • rethink the balance between physical and virtual assets, human interaction and automation.

The 2021 KPMG Technology Industry Survey includes responses from more than 800 global leaders in the tech industry across all major sub-sectors including technology services, internet/e-commerce, hardware/electronics, software/SaaS, and semiconductors, the company said. About two-thirds (65%) of the respondents were C-level executives.

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