KPMG study: Investments in digital transformation pay off

06 March 2024 4 min. read

Investments in digital transformation are paying off, both in terms of productivity and in profitability. That is according to a new study from KPMG, based on the views of over 2,000 executives from 16 countries.

The report found that when successful, digital transformation investments are providing returns that have exceeded expectations and are driving tangible gains.

Over 80% of executives told KPMG that they enjoyed an increase in performance as a result of their digital transformation efforts over the past 24 months, with most hitting a performance uplift of at least 10%, up from last year’s uplift average of around 2.5%.

KPMG study: Investments in digital transformation pay off

Source: KPMG

Most well-known technologies around – including cybersecurity, low code, data analytics, artificial intelligence, virtual reality and cloud – where found to have a positive contribution to performance. When it comes to driving profitability, artificial intelligence and cloud stand out as the key drivers.

“Despite the headwinds of global economic uncertainty, digital transformation leaders committed to their innovation priorities continue to realize value at pace,” said Robert Ptaszynski, Partner and Head of Digital & Innovation at KPMG in Saudi Arabia. “By aligning investment in technology with their strategic ambitions, these businesses are upholding momentum,” he added.

Get it right – for better returns

KPMG’s research also found that the way digital transformation is strategized, designed and implemented differs widely across organizations. Those that master the process enjoy significantly higher returns. Digital leaders – which make up around 15% of the businesses surveyed – are transforming at a faster pace and with better results than their peers.

KPMG study: Investments in digital transformation pay off

Source: KPMG

For example, 80% of digital leaders are recording improvements in employee productivity from digital transformation, compared with only 63% of those that were not identified as digital leaders. And 75% of digital leaders have been able to raise employee satisfaction, compared with 61% of non-digital leaders. Similar differences are visible in areas such as innovation, cost cutting, and business development.

“The track record of digital leaders is paying off, as buy-in from senior leaders for deploying emerging tools and technologies has almost quadrupled,” said Ptaszynski.

Catch-up with the leaders

For leaders at ‘average’ or even ‘lagging’ companies, KPMG’s report provides a number of routes for playing catch-up.

It starts with the right strategy. “Digital transformation must be done with intent. Technology leaders must work closely with business partners to align their technology efforts to strategic ambitions. It is the business outcome that is all-important,” said Ptaszynski.

Obviously, having the right technological foundation is essential. As organizations embark on their digital transformation programs, the journey will inevitably require them to get over technical hurdles. “But it is not typically these technical factors that businesses worry about most.”

The tech department’s lack of coordination threatens transformation progress

Source: KPMG

In fact, the executives surveyed said that culture, leadership, collaboration and communication are more likely bottlenecks to sabotaging successful transformation. Having the right governance and change management in place is deemed a critical success factor for making change happen – and stick.

“Agility is another crucial factor,” Ptaszynski continued. “Not every technology experiment pays off, but nimble businesses can adjust at speed, responding to internal drivers and the changing environment around them to optimize outcomes. The most successful deployments can be expanded, while less-rewarding experiments are placed to one side.”