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Businesses invest in technology to position for economic recovery

Karl Flinders

Businesses say they have not cut costs enough and intend to turn their attentions to making business processes more efficient, outsourcing more activities.

Research carried out by KPMG revealed that 90% of businesses do not think they have cut costs enough.

Because jobs have been cut to the bone, many organisations are investing in technology and services to ensure they are ready when the economy improves and demand increases.

The KPMG Global Pulse research found that, despite businesses' low confidence, many are investing in new technology or expanding operations in emerging markets. 

The KPMG found most focusing on business analytics, cloud and social media, in the hope technology can drive recovery beyond 2013.

“Business leaders are as nervous now as they were for much of the past 12 months,” said KPMG partner Lee Ayling. 

What businesses think is causing the tough market

  • 60% suggest that ‘political or government gridlock’ is creating the uncertainty;
  • 44% also claim ‘weak customer demand’ is hindering cash-flow;
  • 28% believe that poor leadership skills in the Boardroom will hinder progress;
  • 78% focus on dysfunctional or fragmented organisational structures.

Positive expectations

  • 63% say technologies such as cloud and social media will mature;
  • 55% believe emerging market opportunities will be key to growth prospects over the next few quarters. 

Source: KPMG global Pulse

“Yet, even with fears over finances, there is an underlying concern that organisations no longer have adequate processes or skills in place to handle a potential upturn in demand.  The result is that many are turning to technology and investing in reporting and analytics software to help make better business decisions faster.”

The shortage of in-house staff also increased business and IT services during the final quarter of 2012. KPMG found 78% of service providers cited pipeline growth during this period, compared with 40% from the previous survey. A total of 59% of service providers anticipate customer demand for business and IT services to increase between now and June 2013.

KPMG revealed that 70% of requests for third-party support involve IT projects, compared with just 9% for support for customer services. KPMG said this suggests cost-cutting is more important to some of them than securing a loyal customer base.

“Most people accepted, long ago, that the next few months would be tough,” said Ayling. 

“Some of the fears for business have been exacerbated by ongoing difficult economic conditions across the globe, but other problems are more closely rooted to home.  

"How can organisations expect to ride out the economic storm with fragmented structures or approaches to businesses that are still inefficient? 

"The simple answer is that they can’t – and if they fail to change we are likely to see deals contracting for some time to come.”

 


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