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 KPMG International research. However, many executives are optimistic emerging technology spending will likely increase in the next 12 months, as enterprises recognise COVID-19 creates a burning platform to accelerate digital transformation and stimulate long-term growth.

Enterprise reboot, the report from KPMG International and HFS Research, surveyed 900 technology executives to explore the current and future state of emerging technologies and demonstrates a dramatic shift in how businesses are 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," said Cliff Justice, KPMG global lead for Intelligent Automation and US lead for Digital Capabilities. "However, doing so is made more complicated in a time where investments are critical, but cash must be preserved.”

Specifically, 59% of executives surveyed say that COVID-19 has created an impetus to accelerate their digital transformation initiatives, yet approximately 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, and 56% of those surveyed say cloud migration has become an absolute necessity due to COVID-19.

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 compared to 26% who expect spending to decrease); process automation (43% expect an increase compared to 25% who expect a decrease); AI (39% versus 31%); hybrid cloud and/or multi-cloud (38% versus 28%); blockchain (34% versus 30%); edge computing (34% versus 33%) - with the exception of smart analytics (32% versus 35%).

“Emerging technologies and new ways of working can play a significant role in the transformation to a more digital economy," Justice said. "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.”

The case for emerging tech

Some 57% of respondents say COVID-19 has significantly changed their organisation’s strategic priorities. The immediate focus is now on survival, which 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. 

Other findings from the research include:

• Only 13% 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% 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," Justice said. "Companies who don’t, risk threatening their own survival.”

Survey methodology

Between March-June 2020, KPMG International and HFS Research conducted two global, cross-industry quantitative surveys. Comprised of 900 total technology executives, the surveys sought to uncover investment and adoption of emerging technology. All respondents held executive-level positions at Global 2000 enterprises with US$1B+ annual revenue, operating across nine business sectors and nine countries, including the US, Germany, UK, Netherlands, Japan, Australia, India, France, and Canada. Survey data was supplemented by qualitative interviews with enterprise leaders who oversee the investment and adoption of these emerging technologies in their organisation.