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COVID-19 forces a historic surge in corporate tech investment

Companies spent the equivalent of around US$15bn extra a week on technology to enable safe and secure home working during COVID-19, according to the 2020 Harvey Nash/KPMG CIO Survey. This was one of the biggest surges in technology investment in history - with IT annual budgets maxed out in just three months, as the global crisis hit and lockdowns began to be enforced.

The survey also found that, despite this huge surge of spending, and security and privacy being the top investment during COVID-19, four in 10 IT leaders report that their company has experienced more cyber attacks. Over three-quarters of these attacks were from phishing (83%), and almost two-thirds from malware (62%) suggesting that the massive move to home working has increased exposure from employees.

Back in May, CTMfile published a detailed article from Kyriba that advised treasurers on how to spot fraud during the pandemic and the steps that corporates can take to mitigate the risk of fraud while treasury teams work remotely. As the pandemic continues, it is worth spending a few minutes to remind yourself of these top tips.

The Harvey Nash/KPMG survey found that organisations have struggled to find skilled cyber security professionals to support this dramatic shift to homeworking, and report that cyber security (35%) is now the most ‘in demand’ technology skill in the world. This is the first time a security related skill has topped the list of global technology skills shortages for over a decade.

Although technology spend has risen dramatically during the pandemic, the survey found that technology budgets will be under more strain over the year ahead. Prior to COVID-19, over half (51%) of IT leaders expected a budget rise in the next 12 months, but during the pandemic this number declined to 43%. This still represents a net increase in budgets and remains almost twice as high as IT spend in 2009 - in the wake of the 2008 global financial crisis.

While digital companies flourish, skills shortages remain

The survey also found that digital Leaders were more likely than non-digital leaders to make additional technology investments as a result of COVID-19 - with 50% more organisations that are ‘very’ or ‘extremely effective’ at using digital technologies spending an additional 21-50% . These investments focused on large-scale implementations of distributed cloud (42%) and SaaS (34%). The crisis has served to emphasise a growing divide between organisations driving their strategy through technology, and those that aren’t.

Cloud investment is on the up. After investment in security and privacy (47%), investment in infrastructure and the cloud was the third most important technology investment during COVID-19, with the number of IT leaders actively considering Distributed Cloud nearly doubling in just 12 months (from 11% to 21%).

Prior to COVID-19, 2020 skills shortages remained close to an all-time high. Subsequently, shortages in tech talent have remained high, only marginally dropping compared to the 2008 global financial crisis. In addition to cyber security skills (35%), the next three most scarce technology skills are organisational change management (27%), enterprise architecture (23%) and technical architecture and advanced analytics both at 22%.

“This unexpected and unplanned surge in technology investment has also been accompanied by massive changes in how organisations operate - with more organisational change in the last six months than we have seen in the last ten years," said Bev White, CEO of Harvey Nash Group. "Success will largely be about how organisations deal with their culture and engage with their people. In a world where location has dissolved, where the office now includes the kitchen table, and where over 80% of IT leaders are concerned about the mental health of their teams, organisations will need to reformulate their employee offer to attract and retain the talent they need to support them through the pandemic, and beyond.”

“IT in the new reality will be shaped by economic recovery patterns unique to each sector, location, and company," commented Steve Bates, principal at KPMG in the US and global leader of KPMG International’s CIO Center of Excellence. "While every CIO is responding to these forces differently, one thing remains consistent; the urgency to act swiftly and decisively. Technology has never been more important to organisations’ ability to survive and thrive.”

The business issues the board wants addressed

Workforce enablement 

In previous years, this has tended to be a mid-ranking priority for technology leaders, but it has jumped to the top three after the onset of COVID-19 (from eighth place before the pandemic) driven by the mass move to remote working. Operational efficiency and customer engagement keep their top positions, but the purpose of these have changed in the light of COVID-19.

Digital transformation 

For almost half (47%) of IT leaders COVID-19 has permanently accelerated digital transformation and adoption of emerging technology (AI, ML, blockchain and automation).

Emerging technologies 

Small scale implementations of artificial intelligence (AI) and machine learning (ML) have jumped up from 21% before COVID-19 to 24% now, a significant jump in a period of only a few months.

Marketplace Software as a Service (SaaS) 

This is the big winner compared to 2019. Large-scale implementations more than tripled from 7% in 2019 to 23% this year. One in six organisations put one in place in the last 12 months.

Remote working and the new deal for employees

Remote working is here to stay

The Harvey Nash/KPMG survey found that 86% of IT leaders moved a significant part of their workforce to remote working, and 43% expect more than half of their employees to work from home after the pandemic.

Collaboration and culture 

As a result of remote working, 70% of IT leaders report increased collaboration between the business and technology teams and over half (52%) said that it has created a culture of inclusivity in the technology team.

The new deal for employees 

Work location and remote working has risen to become one of the five most important factors for engaging and retaining key technology talent during, and after, COVID-19. Leaders will therefore need to rethink how they attract and engage their employees in a world where physical location is no longer a prime asset.

In its 22nd year, the 2020 Harvey Nash/KPMG CIO Survey polled over 4,200 CIOs and technology leaders took place in two phases - one prior to COVID-19 (commencing on 17 December 2019) and one during the pandemic (5 June - 10 August 2020), across 83 countries.

Mining from home? How ERP culture helped Russian firm

SAP has revealed on its website how Severstal, a Russian steel and mining firm, was able to adapt to remote working with the pandemic forced it to close a number of offices around the world.

According to CIO Sergey Dunaev, Severstal overcame logistical challenges fairly quickly. “We provided 7,000 employees with computers, laptops - all the technology that provided them with a way to work,” he said.

Thanks to something Dunaev calls an “ERP culture,” Severstal employees easily adapted to the new normal. “The years of work with enterprise resource planning (ERP) systems and non-ERP solutions taught our people to collaborate remotely,” said Dunaev. The software fostered a virtual environment in which colleagues could analyse multiple dimensions of a problem – as well as dependencies and consequences. This cooperative, but digital, way of working made it easier for employees to work remotely.

Severstal has used SAP ERP for the past nine years and employs 15 other SAP solutions that cover approximately 95% of its overall business processes. Working with SAP to undergo a digital transformation has enabled the company to more seamlessly handle disruptions. Clearly companies that have been proactive in thinking digitally before the pandemic have been in a better position to respond the the challenges caused by COVID-19 than those that had to react from a standing start.

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This item appears in the following sections:
Connectivity
Fraud Prevention
Minimizing Fraud Procedures
Minimizing Payment Fraud
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Treasury Technology
COVID-19
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