Firms move to slash emerging tech funding, KPMG finds

In the immediate wake of Covid-19, Global 2000 companies moved to slash funding for emerging technologies, such as automation, artificial intelligence (AI), blockchain, and 5G, according to new KPMG International research.

Enterprise reboot, a new report from KPMG International and HFS Research, surveyed 900 technology executives to explore the current and future state of emerging technologies and found a “dramatic shift” in how businesses are approaching emerging technology now versus just a few months ago before the onset of Covid-19.

Specifically, 59% of executives surveyed say that Covid-19 has created an “impetus” to accelerate digital transformation initiatives, yet approximately four in 10 say they will halt investment in emerging technology altogether as a result of Covid-19.

Executives were also found to have shifted their focus to “must-have technologies”, and 56% of those surveyed say cloud migration has become an “absolute necessity” due to Covid-19.

Some 57% of respondents said Covid-19 has “significantly changed” their organisation’s strategic priorities, with the immediate focus now on “survival’, which has become the number one objective for most emerging technology investments.

The first phase of KPMG research also showed that many organisations were deterred from significant emerging technology investment because of obstacles in the organizational culture to enterprise-wide adoption, and a fear that projects will fail.

Cliff Justice, KPMG global lead for Intelligent Automation and US lead for Digital Capabilities, said: “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.

“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.”

However, investments in a number of emerging technologies will likely increase over the next year, such as 5G (44% of respondents expect spending to increase); process automation (43% expect an increase; AI (39% ); hybrid cloud and/or multi-cloud (38%) and blockchain (34%).

Justice concluded: “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.”