CFOs: The New Knowledge Leader in the C-Suite

Don Mailliard
Service Line Leader – Corporate Services
North American Leader, Financial Management

From the growth agenda to ERP systems and management reporting tools, CFOs are sitting on a goldmine of knowledge and are in a unique position to look beyond the finance function and drive real business value. With the right strategy they can translate data into value, transform the finance organization to lead strategic decisions, manage costs across the enterprise, and create a smarter, more agile business.

Watch the video below to learn more.

Related Insight:

  •  To be truly successful, today’s CFO must have a highly effective finance organization that enables finance to lead the enterprise. To learn more about finance transformation visit www.kpmg.com/us/finance.
  • In our whitepaper The Value-Driven CFO, we describe how the right management and analytics can translate the CFO’s gold mine of information into performance insight and meaningful value.
  • Explore how finance executives are responding and adapting to the current marketplace volatility and how they have the opportunity to generate greater enterprise-wide value despite the disruption in the Webcast The Agile CFO’s Blueprint for Growth Amidst Constant Change.

Harnessing Disruption for Growth:
Succeeding in Constant Change [SlideShare]

Alton Adams
Principal and US Lead
Customer Strategy and Growth

KPMG surveyed 650 C-Suite executives at leading global organizations and released the findings in our Harnessing Disruption for Global Growth C-Suite Study. While disruption and its effects are acknowledged by virtually all organizations, we set out to see how high-growth companies harness the challenges of disruption and redirect them to fuel growth.

The game changers? Talent and tech. Companies that actively prioritize and leverage these two functions are able to drive greater growth than their peers and achieve competitive differentiation.

To learn more, read our SlideShare below.

About the author:

Alton is the National Lead for the Customer Strategy and Growth Group within KPMG’s US Management Consulting Practice. He has more than 20 years of experience helping clients accelerate organic growth through the use of data, analytics, technology, and leading practices.

Related Insight:

Building Blocks for Robotics Process Automation Success:
An Interview with KPMG’s David Kirk

Stan Lepeak
Director, Research and Thought Leadership
KPMG Global Management Consulting
Dave Kirk
Managing Director
Shared Services and Outsourcing Advisory

STAN: Dave, obviously, robotic process automation (RPA) is a big topic in the market today, whether from the perspective of process automation versus outsourcing or from the broader standpoint of the impact it will have on white-collar labor. Cutting through the hype around this topic, give us your perspective on the reality of process automation today and, for a client organization, how high should it be on its priority list?

DAVE: One of the questions clients increasingly ask me is, “Is this hype or reality?” so it’s important to differentiate between hype and reality and what is new versus old because many forms of process automation are not new and are clearly not hype. The basic building blocks of many RPA tools, however, are capabilities such as screen scraping, workflow, and rules engines that have been in the market for many years. There are plenty of companies that have successfully implemented various forms of RPA. There are mature solutions in the market and documented efficiencies gained and savings achieved. You have the [IBM] Watsons, you have Blue Prism, IPsoft, Automation Anywhere, and many vendors and providers that have built businesses around automation, so there are plenty of solutions that demonstrate it’s not hype.

Hype comes in with the new, more advanced forms of RPA based on newer technologies and capabilities such as cognitive computing. RPA is built on technologies that have been in the market for many years but more recently there have been significant advances in very key areas such as NLP (natural language processing), significant growth in basic computing power, and major advances in capabilities to process unstructured data that are enabling RPA to rapidly evolve. This last point is critical because over 90 percent of the world’s data is unstructured. The capability to rapidly and accurately make sense out of this data is a huge advancement. There have also been great advances in machine learning, that is, contextual learning in which an environment or system is trained to understand a topic and then can independently get smarter going forward.

Relative to business process and IT outsourcing, RPA is and will continue to have a great impact. Today, clients are increasingly asking, “Should we automate or should we outsource?” Automation is going to happen either way. It’s just a question of whether the service provider enables automation or a client does it internally or both. When considering utilizing a provider, key issues to address include how and how much is it adopting RPA, what benefits can it bring to its clients, and what are future plans for expansion of its usage. The alternative for a client considering expanding deployment of RPA internally involves asking does it have the skills and appetite for change, does it want to take on vetting and implementing technologies, what are change management issues to address, and how does it organize to support these efforts—via the IT group, business units, through an RPA center of excellence, etc.

STAN: Continuing the discussion on the impact that RPA is going to have on the outsourcing industry, will its growth and maturation decimate some firms that provide services easily automated? These firms will have a lot less staff, but will they have higher profitability and can they manage the transition from labor to digital? How much of this scenario is a near-term reality that’s impacting service providers already, or is the scenario that enough of the work they perform is still customized enough that RPA will not have a huge near- to mid-term impact? And a follow-on question from the client perspective, should they really care about the business model of the service provider and RPA’s potentially negative impact on it? Or should buyers have concerns that RPA could threaten their providers’ economic viability and therefore their ability to provide the services clients still need?

DAVE: When it comes to the service provider, it is a simple case of automating to survive. Providers that do not aggressively embrace RPA will soon be unable to compete with their brethren that figured out how to exploit RPA across their operations. This is especially the case with labor-based offshore outsourcing where we are already seeing diminishing returns due to rising wage levels and dwindling labor arbitrage benefits.

Automation can bring providers tremendous benefits such as instant scalability, improved activity and accuracy, greater process consistency and predictability, and hedge against rising wages and high turnover rates. There is also enhanced auditability such that a provider has the capability when a problem occurs to examine logs and determine exactly what happened. This is not to say that every activity is fully automated, but where applicable automation offers providers great benefits there are many practical challenges in adopting and expanding efforts and this is where many providers will stumble and some will fall.

Many providers are already actively utilizing more advanced RPA services, though often still in pilot or experimentation efforts. We are working with providers proposing or utilizing more advanced forms of RPA to our clients and having discussions around, “What does my client get out of that? How do they benefit? What do they see that different and better?” If RPA is behind the scenes and through its usage providers get greater margins, how do clients benefit from these gains? Service providers must automate but the real question is, what do they put forward to your client as a result of automation, what is in it for them, and at what cost?

STAN: If I’m a client considering the adoption or expansion of the use of process automation, what are some of the key things I need to consider? If I’m a client assessing RPA opportunities, how much should I focus today on established technologies and services and how much on the cool emerging areas of RPA such as IBM’s Watson or IPsoft’s Amelia?

DAVE: You’re talking to an engineer, so “cool” is always fun but not necessarily beneficial. When you look at the opportunities for automation, in some ways it’s similar to assessing outsourcing opportunities. So to the questions, “What should I be considering? What could I automate?” I answer, “Is it a task repeated frequently? Is it fairly predictable? Is it a process that’s based on fairly well-established rules?” That’s the kind of thing that you see in outsourcing as well, along with, “Does the work vary in volumes? Does it scale up and down?”

RPA also adds some additional dimensions, such as is there an electronic trigger for automation. By this I mean you need something that’s going to start an automaton, so you need to have the ability to trigger it based on something that starts the process. Another point to address is are there multiple technology systems involved and are they adequately integrated and interconnected.

But to your point, there is a very broad spectrum of automation tools and platforms and capabilities. On the base level of RPA capabilities, for example with screen scraping and workflow, clients can deploy these tools and gain benefits fairly quickly, though there is the requirement to build supporting workflow manually. It is also not necessary to automate an entire process; good benefits accrue from partial automation. Some tools, especially those supporting IT services and that have been in the market for several years, come with often extensive configuration and functional knowledge out of the box.

There is definitely a requirement for larger investments when it comes to higher end RPA services such as cognitive computing. This investment is in dollars for the platforms and the time to develop them. Even the best of the cognitive tools have contextual learning needs in that it is necessary to “teach” the system in a defined topical environment first before it has the capability to get smarter and learn independently.

Look at what IBM’s Watson does, for example, in the medical and the oncology world. Watson did not come out of the box understanding cancer. First, it was necessary to teach Watson about cancer, which required strong domain knowledge (i.e., what are the trusted sources to use for teaching) as well as the legwork to teach (i.e., where to get content, how to filter, what are the privacy issues, what’s in it for the contributor). It was then necessary to teach it prognosis versus diagnosis and understand, for example, what are the key characteristics of a tumor. Once this was done, it was possible to set Watson free to analyze millions of images and millions of case studies and medical records. But it’s that contextual learning that can take years of perfecting before you set it free and see the benefits.

So the benefits you get are going to vary greatly with which way you enter. Most of our clients will or already have adopted RPA via base level capabilities such as screen scraping, workflow, and process automation type of tools that provide knowledge and value out of the box.

STAN: So for most clients it is “walk before you run” and have realistic expectations about how long it’s going to take to be able to achieve some of the bigger benefits of this technology. But are there other risks organizations should be aware of when they are considering adoption or expansion of process automation?

DAVE: There clearly are risks clients need to understand and address proactively. RPA is not a panacea. It represents some phenomenal advances in computing capabilities and has tremendous applicability, but it’s not a panacea for all problems nor will it always work as planned. One major risk clients face is that RPA is not a “drop in and walk away” effort. Just as you cannot, or should not, hire employees and leave them alone for the next 50 years and assume they’re going to do their job as required. Just as every human employee requires ongoing training and support, so do automaton efforts. The automaton has initial knowledge that its owner must maintain and enhance over time. This is why governance is important as a discipline and group. Once automation in enabled, there are requirements to maintain required enhancements, make changes to logic to reflect changes in the business, implement new technical capabilities, and respond to lessons learned. These are all elements that a governance group must ensure are addressed. Automata do what they are told, and if what they are told is outdated and  inaccurate, the automata will start to do the wrong thing until corrected. Performing the governance role to address this ongoing need is one of the key roles for humans to still perform as more activities are automated.

STAN: So to wrap up and summarize, we still will need to keep a few people around going forward to do training, governance, and perform other activities you just described and to interpret and validate the results of the output from automated systems and processes. But Dave, what is your perspective on the long-term implications of this from an employment standpoint? Should this be a worry for the white-collar workers of the world, particularly those in jobs such as audit, or is the scenario that in the future there will remain a strong need and demand for humans, especially to really help to craft automation technologies and systems into something that can provide meaningful business benefits?

DAVE: In some ways this is a little different than the industrial revolution that entailed getting rid of some of the manual labor and moving workers up the food chain in terms of activities performed. One thing different with automation is that it attacks all sections of the food chain. There is definitely a major potential employment impact across a broad range of occupations. It is not just a situation of “I have 100 people doing this. Now I’ll have these 50 go off and be fully automated and I’ll repurpose them to run the automata.” This job shifting is not viable for some to many workers, and as automation systems advance less human intervention is needed. Ultimately, the ratio of automata to humans will be anywhere from 5:1 to 15:1 depending on the activity.

Employees are needed to maintain topical knowledge, vet sources on input for quality control, and oversee the automata. Just not a lot of them! There is the opportunity to free up members of the workforce, similar to the case when organizations outsource, to do more strategic work, but there is going to be a drought in job opportunities when the automata are fully implemented across all aspects of the hierarchy of responsibility.

It’s not a gloom-and-doom scenario. It is not my impression that people are going to be faced with tremendous unemployment, but I will say it is not as simple as trimming the bottom and moving people to the top, because the jobs at the top also are going to be impacted by automata which are doing work that humans do not do well, processing huge amounts of data. There is no training that’s going to get a human to be able to go out and look at a million images in a matter of two minutes, so I think that is where it’s impactful and that is why it’s not a clear “just remove them from here; I’m going to move them on top.”

STAN: I think you’re right on that and I think it has always been easier said than done to take people who have been doing more mundane and transactional work and to make them more strategic. It is a great aspiration but does not always work. And I think as you just highlighted, with the ability to process huge amounts of data, there’s only so much people can do or cannot do in that respect. So I think it will be very interesting to watch, but obviously this is the reality that’s happening and the clients need to understand when and where to adopt and how fast.

About the authors:

Dave has spent the last 30 years helping companies and clients leverage technology to deliver enhanced business solutions. The more recent part of this 30 year road trip has utilized his early-career hands-on experiences to help clients better understand how best to leverage IT technology without being consumed by it. Most recently Dave’s focus has been on robotic process automation (RPA)a technology approach to displacing client knowledge workers with “virtual workers”just another method that Dave can use to help clients craft their unique approach to transforming the way they do business.

Stan leads research and thought leadership efforts for KPMG Global Management Consulting, focused on trends, issues, and futures in enterprise services transformation and optimization, the threats and opportunities from market disruptions and disruptive technologies and best practices in responding to and capitalizing on these market trends.

Related Insight:

 

Process Automation: Today’s Reality, Tomorrow’s Good, Bad, and Ugly
An Interview with KPMG’s Cliff Justice

Stan Lepeak
Director, Research and Thought Leadership
KPMG Global Management Consulting
Cliff Justice
Principal
KPMG Innovation and Enterprise Solutions

STAN: Cliff, obviously there’s a lot of talk and hype in the market today around robotics process automation (RPA), cognitive intelligence, and artificial intelligence. Some of these topics and technologies have been around for quite some time, so what is different today from what we have seen in the past?

CLIFF: There is a lot of change happening in how technology is being applied to automate tasks and decision making. If we look at what’s been developing over the last five years, it centers on a growth in investment in cognitive technology, a form of artificial intelligence that reasons and interacts more like humans as opposed to traditional tabular computing. We’re seeing today for the first time practical, cost-effective use cases involving cognitive technology and traditional process automation coming together to actually create a new class of digital labor.

STAN: How far can this go? We’ve seen that process automation can perform standardized, redundant types of tasks and rules-based activities, but how far is this going to go relative to being able to fully supplant white-collar workers?

CLIFF: This is a big question, and I don’t think anybody has a definitive answer, but if you really look at the scope, it is massive. It will impact everyone considered a knowledge worker, from clerical staff through professional judgment-oriented services like accountants, engineers and lawyers, and even the medical profession and the highly-skilled decisions that physicians and research scientists make. It is akin to the way the Industrial Revolution automated muscle. This is automating the types of cognitive, contextual decision-making that has always been the privy of humans and expert humans. So there is a lot of speculation in terms of how far this will go, but even the most conservative estimates are that it will impact one-third to one-half of the knowledge work economy, a $9 trillion a year market that represents approximately 30 percent of the global spend on labor.

STAN: The Industrial Revolution analogy is a good one. It brought great advances in efficiency and effectiveness, but was also very disruptive to labor markets. Whole classes of labor were displaced and you had situations such as Luddites in the United Kingdom smashing machines and rioting. So what will be the impact on workforces today? There is a lot of discussion around the need for workers to “evolve” their skills and move on to perform more strategic activities, but I think in some to many cases that is wishful thinking from a skills, training, and ambition standpoint.

CLIFF: There is no denying that any type of technology disruption does impact the short-term nature of employment and work. This is just part of change. You can point to the disruption that happened during the Industrial Revolution, but there is no denying that global standards of living improved significantly compared to pre-Industrial Revolution levels. The quality of life became better and standards of living became higher. The result was the creation of more jobs across all industries performing activities few could have imagined prior to the Industrial Revolution. This happened because people and workers gained the capabilities to innovate on top of the mechanization of very manual, labor-intensive tasks instead of just performing those tasks. So disruption will happen, but this allows us to free up innovation. It enables organizations, especially first movers, to use to competitive advantage of talent and labor what would otherwise be consumed in mundane tasks to innovate and create new services and market opportunities and new ways of generating profits that have not existed before.

STAN: There has always been the complaint that a large proportion of the time spent in, for example, information technology groups or finance and accounting, has been doing transactional work instead of performing intelligent analysis that provides more value and is also more interesting work. Process automation is a great vehicle through which workers and organizations can do more intelligent versus transactional work. What does this mean relative to outsourcing, especially business process? Many organizations have outsourced and often sent work offshore to gain access to reasonably skilled labor that was cheaper. Does this become less relevant going forward?

CLIFF: For many years we have been taking activities that have been transactional in nature and moving them to low-cost geographies to take advantage of labor arbitrage opportunities. But what we are talking about with automation and cognitive technology is eliminating labor for that specific activity altogether, which makes geography less relevant for those types of tasks. We are moving towards talent and skills connected through common technologies and collaboration mechanisms to really drive innovation and differentiation in terms of, for example, product design and development, as opposed to just low-level transactional task automation. This will impact offshoring, not all in a negative way, but certainly the nature of the work that is being offshored today is the type of work that’s in scope for process automation and cognitive technology.

STAN: Where should a client organization go today and in the future to get help with adopting and expanding their automation efforts? Is it directly to pure-play process automation providers or, ultimately, do you think some of the traditional outsourcers will provide the technology, support, and services?

CLIFF: We’re going to see a whole new mix of players. There’s going to be players that bring the technologies, digital solutions, and associated services to the table that are agnostic to human labor or human resources. Legacy players must quickly adapt and develop automation and cognitive capabilities, but there are new players emerging that are bringing laborless or light solutions to the table to deliver some of the same services that have been very people and labor intensive for the services in the past, such as call centers.

STAN: If I’m part of an end-user organization assessing automation opportunities, what are the one or two things on which I should really focus, either from gaining an understanding of the market and the players or looking at my activities that I am performing and understanding what can be automated?

CLIFF: Key is really understanding the dynamic nature of this industry. Just like Uber came and disrupted the taxicab industry and the transportation industry almost overnight, that’s what we’re seeing as a potential to happen here in the services that we’ve traditionally known as outsourcing and the services that we’ve moved into low-cost labor markets. But in areas such as call centers you’re looking at technologies like IPSoft’s Amelia. We’re seeing technologies like IBM’s Watson begin to emerge into areas of business service such as oncology and in healthcare. Many other types of technologies in the category of artificial intelligence are beginning to automate activities that traditionally required human judgment and decision making. Clients must clearly understand the landscape of the players and the services they are offering and use that to assess where there is potential in their organization.

We also advise doing a lot of pilots and experimentation. This is an area that’s very new, so take one or two areas that you think are candidates for automation and begin to do experiments. Determine if you can disrupt yourself before somebody else does, and look at those experiments as potential extensions and proxies for other parts of the business. Lay out journey and opportunity maps and begin to capitalize on those opportunities. The business case in the area of robotic process automation is very compelling. The payback periods are very quick. The investment costs are low. The investment gets progressively more extensive as you move up into the classes of automation and technology, but history has shown that those costs come down very quickly as the technology improves. Gaining the ability for an organization to change is really the time-consuming and inhibiting aspect of it, so it is critical to really understand if and how your organization will be able to change and adopt new ways of working and new ways of adopting technology to deliver services to your client.

STAN: Disrupt yourself before someone else does it is very sound advice.

About the authors:

Cliff is a Principal in KPMG’s Innovation and Enterprise Solutions team, leading the firm’s Cognitive Innovation initiatives. He is a leading authority on global service delivery model design and sourcing with more than 20 years of experience in operations, outsourcing, offshoring, and enterprise services transformation.

Stan leads research and thought leadership efforts for KPMG Global Management Consulting, focused on trends, issues, and futures in enterprise services transformation and optimization, the threats and opportunities from market disruptions and disruptive technologies and best practices in responding to and capitalizing on these market trends.

Related Insight:

 

Process Automation and Job Loss
Not as Bad as You Might Think, Maybe: An Interview with KPMG Australia’s Bernard Salt

Stan Lepeak
Director, Research and Thought Leadership
KPMG Global Management Consulting
Bernard Salt
Partner
KPMG in Australia

STAN: Bernard, what are you seeing in the market today around artificial intelligence as it relates to the displacement of white-collar workers, and what is different today from what we have seen in the past?

BERNARD: I think that the situation today with robotics and automation is very different than in the past. In the ’80s and ’90s, there was a movement towards automation in blue-collar work. “Robotification” eroded the blue-collar workforce. Then you had the offshoring impact where blue-collar jobs were actually shifted to low labor cost countries such as China. Of course this had major social and political ramifications. But the situation today is different. The advent of artificial intelligence means that white-collar jobs are being eliminated. Robotification and artificial intelligence will change the nature of white-collar work. This, of course, poses significant operational issues for business as well as significant social and political questions and issues. For example, if you have a large proportion of a workforce unable to get work, how do you organize the society where everyone gets access to the means to prosperity? These are some of the great challenges of our times that we must resolve. These are not just corporate business issues, as they create social and political ramifications.

STAN: What are the types of jobs that are the likely candidates for automation in the white-collar world in the next two to five years? Is it really just the more mundane tasks or are there things that today might be viewed as highly specialized that could also go the way of automation?

BERNARD: Mundane and repetitive jobs such as accounts payable, for example, will often be eliminated. This is similar to how jobs such as bank teller have already been eroded because of automatic teller machines. These shifts have been underway for the last ten years or so, so the question is how far up the food chain can job loss go? Could we, for example, see the job of schoolteacher being diminished in the future? I’m not sure that we’re going to have all our kids being taught by robots in the future, but the school-teaching workforce is an extraordinarily large workforce in any country and it’s an annual labor cost that bears heavily on the taxation budget. Artificial intelligence programs, for example via an IBM Watson-like machine, will make contributions to education. There are huge potential cost savings to annual budgets for state and federal governments from removing the reliance on the school-teaching workforce.

STAN: Turn it back to the perspective of the worker when we first looked at outsourcing and then offshore outsourcing and now automation – one of the proactive arguments has always been that those who are left behind will reskill them and do more value-added work. I have always been skeptical of this scenario. Do you think those who are left behind from job automation have the potential to do bigger, better, and more strategic things?

BERNARD: The key point is assuming these types of workers have the skills to evolve. It is possible over a generation with a strong focus on education at the grade school and the high school level and even into university, if we focus on the STEM skill sets—science, technology, engineering, mathematics—as well as enterprise, innovation, and entrepreneurship. We should be creating our own jobs of the future through innovation, but the right mind-set in the population and in the workforce is required. The issue is that it could take 20 years to create a workforce with the required skills to do this. The problem is going to be in the next 10 or 15 years as we deal with people who only have skills to work in blue-collar jobs or low-level, white-collar jobs that will disappear. The challenge is to manage that transition. This is a corporate, social, and political issue. It goes to the very heart of the question of what sort of society do we want to live in in the 2020s. We want a society that is fair, that is equitable, and gives opportunity for everyone in that society. We should be focused on education and the overall means to prosperity in the future. It’s not necessarily about wealth transfer from those with money to those without; it is about education and providing the means for everyone to better themselves in the future.

STAN: How practical do you think the scenario is today relative to the political and business environment to do what you describe?

BERNARD: We should be focusing on education skills, so your kids at school should focus on skills that are most likely to deliver a creative, innovative job of the future. We need to focus on reskilling, upskilling, even relocating workers that had a job in one state may need to relocate to another state. Labor forces need to be more flexible. We need the right attitude. We need labor to be more accepting that change is a given and we need to be adaptive in addressing change. These are not necessarily actions that can be put into place today with an outcome tomorrow. These are actions that would be put into place with an outcome over five or ten years, and this is what is so difficult about this. But if you recognize the need to change now, hopefully you get to the sort of society that we’re all aiming to get to within 10 or 15 years.

STAN: So the solution is a more strategic scenario versus a shorter-term operational one. Individuals who may lose their jobs or who are managing a group of people who may disappear, may need to make adjustments over the next few years because it is a long-term proposition to solve the problem.

BERNARD: You need to see the bigger picture to set realistic expectations. There is also the benefit that in the future many people will be released from the boring, repetitive type of blue-collar and white-collar work and released to actually pursue jobs or activities or occupations that they find more rewarding and more creative. Not everyone will necessarily pursue a job that delivers the most possible income. Sometimes people will choose an option that delivers them a lifestyle. I could see, for example, escape for more people pursuing creative activities or wellness activities, not particularly exceptionally well-remunerated but people doing what they want to do in the future as opposed to what they have to do in the future.

STAN: That’s a great point. So in the long run are you optimistic or are you pessimistic on this? Because there are a lot of pessimists out there saying the world is coming to an end. No one is going to have a job 30 years from now. There’s going to be 45 percent unemployment. But it sounds like you view that there is potentially a different angle to that pessimistic story.

BERNARD: I think it comes down to your almost philosophical view of how you see humanity going forward. One view is that over the next 10 or 15 years it is going to go from bad to worse with a vast pool, underemployed, unemployed, unemployable people who will become disaffected, radicalized, and who feel they don’t have the prospect of sharing in the prosperity of the nation, and you have antisocial behavior as a consequence. This is a particularly dark, bleak, and scary scenario. But for some people putting forward this negative view of the future it is quite empowering and serves an agenda. There is another view of the future that the next 10 or 15 years will be a period of extraordinary change for the good. There will be pain that there is no easy solution to address but the human condition is naturally resilient, creative, and aspirational. People want to create a positive society. People will create through innovation, energy, and enterprise new businesses of the future. There will not be vast car assembly manufacturing plants, for example, but there will be microbusinesses, creative businesses, and wellness businesses. It comes down to whether you have faith in the human condition, faith in the country, and faith in the freedoms of a country like America or Australia. I have faith that ultimately those positive attributes of humanity will come through.

STAN: And I think that’s a very positive note to end on.

About the authors:

Bernard is widely regarded as one of Australia’s leading social commentators by business, the media and the broader community. He is a partner with KPMG in Australia, where he founded the specialist advisory business, KPMG Demographics.

Stan leads research and thought leadership efforts for KPMG Global Management Consulting, focused on trends, issues, and futures in enterprise services transformation and optimization, the threats and opportunities from market disruptions and disruptive technologies and best practices in responding to and capitalizing on these market trends.

Related Insight:

 

The CIO and Digital Success

Marc Snyder
Managing Director, CIO Advisory
Head of Global Centre of Excellence at KPMG

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Digital success for CIOs

The 2015 CIO Survey shows a wide range of approaches taken by organizations to plan and deliver a successful digital strategy. KPMG member firms have helped many of these organizations realize the opportunities for digital. Based on this experience, we believe that the following factors are critical in helping today’s CIOs achieve digital success.

  1. A clear digital strategy. The digital strategy needs to articulate how to truly support the business and enable it to achieve its strategic goals. Three quarters of businesses in the survey have or are working on a formalized digital strategy but the biggest challenge faced in response to digital disruption is a lack of vision.
  2. An impassioned and committed CEO. Central to the success of digital is ensuring that the strategy is both understood and championed by the CEO. Too often ownership is split between multiple parties with fragmented relationships which can hinder the embedding of digital change within the organization.
  3. An innovative and flexible culture. Adopting an agile approach and putting innovation front and center is critical. Governance and operating models need to evolve to embrace other functions, especially marketing, to help CIOs effectively manage new areas of digital demand.
  4. A digitally proficient workforce. Digital is a separate skill set from old IT, so savvy CIOs will be bringing in the right talent as quickly as they can. Success will require a combination of up-skilling existing teams and bringing in talent from other functions that are not traditionally IT.

How prepared are you for digital success? KPMG has developed its Digital Business Aptitude (DBA) assessment tool to help organizations measure their readiness for digital transformation. Take a few minutes and measure your organization’s DBA via our self-assessment diagnostic.

Related Insight:

CIO Careers: Fulfilled but Still Mobile

Marc Snyder
Managing Director, CIO Advisory
Head of Global Centre of Excellence at KPMG

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CIOs are happy — but on the move

These are good times for CIOs. Eight out of ten report that they are either ‘fulfilled’ or ‘very fulfilled’ in their roles. The pace of CIO salary growth seen in the last few years appears to be slowing, and only a third of CIOs report pay increases. But memories from the worst of the recessionary years still linger, and CIOs admit that even sluggish salary growth is better than the negative salary inflation seen in the trough of the recession. In addition, three fourths of CIOS enjoy significant benefits such as a company car, incentive plans, and equity.

Despite being generally satisfied with their current position, more CIOs plan to move to a new job in the near future. A quarter expect to be in their current role for less than a year; a similar proportion plan to leave within two years; and the majority expect to change roles within five years. Only one in five see themselves staying at their current job for a decade or more. When asked, more than half of CIOs (52 percent) say they want to stay in IT for their next role. Over a tenth (13 percent) would consider moving into a Chief Digital Officer role to enhance their career.

Related Insight:

New window: Take the 2016 Harvey Nash Survey

Cyber Security: From Problem to Possibility

Marc Snyder
Managing Director, CIO Advisory
Head of Global Centre of Excellence at KPMG

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Is your company cyber secure?

A cyber-attack is not just a technology risk, it’s a real business risk.

That’s what CIOs and other executives recognize in the face of today’s highly publicized hackings into major global brands and government institutions. One in four CIOs reported that their organizations have had to deal with a major IT security incident in the past 12 months. Nine in ten CIOs report that a malicious and serious cyber-attack could damage the operations and positive brand image of the company. Nevertheless, an overwhelming majority believe that the security measures they put in place do not materially inhibit their ability to innovate.

In other areas of technology management, almost half of CIOs enjoyed budget increases in the past 12 months, unchanged from 2014 and up from 42 percent in 2013. Demand for software application development appears to be falling, from 60 percent of CIOs in 2010 to 53 percent today, while data center demand is growing, from 50 percent of CIOs in 2011 to 53 percent today. At the same time, outsourcing for network and software maintenance is becoming less popular. Both have seen gradual but steady declines over the last six years.

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The Pressing Concern of People, Skills, and Talent

Marc Snyder
Managing Director, CIO Advisory
Head of Global Centre of Excellence at KPMG

Talent scarcity — the new normal in the Digital Age?

People, skills, and talent are top of mind for today’s CIOs. In fact, nearly six out of ten CIOs believe that skills shortages will prevent their organization from keeping up with the pace of change. This trend started last year, and it appears to be only accelerating. Compared to 2013, concerns about skills are up by over 30 percent.

So what kind of skills do CIOs need the most? Big data / analytic skills head the list by a wide margin — almost six times higher than change management, the second skill most in demand. The proportion of CIOs who plan to increase their technology headcount is at a five-year high in 2015. More than four in ten now look to hire new IT talent in the coming months. Meanwhile, the need for more traditional IT skills in areas such as enterprise and technical architecture has fallen. IT leaders’ demand for social media skills has also been declining, perhaps because social is becoming more the responsibility of marketing.

Talent retention remains a significant concern for nearly 90 percent of CIOs, especially at smaller organizations. At the same time, the proportion of women in IT leadership roles has reached only 8 percent. A large majority of CIOs also reported that they prefer full-time teams on permanent contracts.

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Into An Age of Disruption: CIO Priorities, Challenges, and Opportunities

Marc Snyder
Managing Director, CIO Advisory
Head of Global Centre of Excellence at KPMG

A new shift toward outward-facing initiatives

The 2015 Harvey Nash CIO Survey, published in association with KPMG, presents the views of almost 4,000 technology leaders from more than 50 countries. The survey is the world’s largest study of IT leadership, providing insights and guidance about how to succeed in today’s fast changing IT environment.

This year’s Survey offers a number of surprising results. For the first time in several years, respondents indicated a change in relative priorities. For example, the years of cost-cutting since 2008 seem to be coming to an end as the global economy continues to recover, Two-thirds of CIOs now report that they work for organizations where the CEO is more interested in IT projects that make money rather than save costs.

Compared to 2013, today’s CIOs are much more focused on outward-facing initiatives. Business intelligence has seen the biggest jump in the last year, and customer engagement the biggest rise over the two years. Social media and reputation management also share top rankings. Operational efficiencies remain the top CIO priority, including increased overall efficiency and enhanced business processes. IT performance has slipped from first to third as a top priority.

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 New window: Take the 2016 Harvey Nash Survey