CEOs held back by boards wanting quick digital turnarounds
Digital transformations tend to have a long return on investment, but most CEOs are failing to convince their boards that these things take time
Some 72% of UK bosses say their boards have unrealistic expectations on rates of return for digital projects, compared with 51% globally, KPMG’s global survey of CEOs has found.
Less than two-thirds of global CEOs said they were required to deliver a quick return on investment, but 86% of the 150 UK CEOs who took part in the survey said their boards set lead times to achieve significant progress that could be “overwhelming”.
An average of 71% of global CEOs surveyed said they were prepared to lead their organisation in radically transforming its operating model, and in the UK, 67% of CEOs said they were prepared to lead digital transformation initiatives.
Seven out of 10 UK CEOs said they expected to see significant returns from digital transformation within one to three years, but only 21% expected to see the benefits within 12 months. This is a longer timeframe than for some of their global peers, 29% of whom expected returns within a year.
UK bosses said they wanted their boards to take a long-term view of tech investments, with 64% advising that the company would only begin to see a return on investment (ROI) in artificial intelligence (AI) three to five years after the initial outlay. Similarly, more than half of the CEOs (52%) agreed on the same ROI timescale for process automation technologies, such as robotics.
KPMG global head of advisory Mark Goodburn said: “More and more CEOs I speak to are telling me: ‘I am personally leading our digital charge’. That says to me: ‘I’m creative, adaptive and agile and prepared to transform my business to be successful in the digital world’.”
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But Lisa Heneghan, partner and digital transformation lead at KPMG UK, warned that it can take a very long time. “The reality is that digital transformation isn’t a simple change that can be implemented overnight and deliver results straight away,” she said. “It requires embracement of innovative breakthrough technologies, investment in digital skills, and retraining the existing workforce.
“This change is needed and for some it is a major turning point, especially for those that have ingrained processes, to make the change, otherwise there is a real possibility of being left behind by technology-first businesses.”