Executives Cite Customer Demand, Technology As Top Reasons They Are Changing Their Business Models

KPMG Survey: Executives Cite Customer Demand, Technology As Top Reasons They Are Changing Their Business Models

Business Transformation among the KPMG Presentations Planned at Oracle OpenWorld 2013

Increasing and more sophisticated customer demands are forcing companies to adopt new business models and deploy advanced technologies to help improve productivity and better leverage financial resources, a new survey from audit, tax and advisory firm KPMG LLP indicates.

The KPMG survey of executives from more than 900 U.S.-based multinationals and asset management firms uncovered a new alliance between CFOs and CIOs. The survey findings were distributed today in advance of Oracle OpenWorld 2013, the world’s largest conference for Oracle customers, partners and engineers, where KPMG will deliver presentations on transformational technology solutions using Oracle software.

“With the changing customer dynamic, CFOs and CIOs want the most strategic technologies to better manage the back office and the broader workforce in order to maintain margins in product or service delivery,” said Stephen G. Hasty, a KPMG partner and U.S. Innovation Leader for Advisory, who leads the firm’s Transformation initiative.

“Technology that is geared to help drive performance in support of a customer-centric focus is taking center stage,” Hasty said. “In fact, more KPMGand more company leaders see that emerging IT advancements can drive business improvements to help them grow their business and maintain a competitive posture in the market, even amid rising costs for raw materials and narrowing margins for products.”

Thirty-three percent of KPMG survey respondents said customer demand was the most common trigger for transforming their business model, while technology and domestic competition were tied for second (30 percent each), said the executives who could select more than one “trigger” in responding to the KPMG survey.

Hasty says that customer demands can range from wanting mobile access to be able to shop and pay for products and services, to expectations of better product quality and improved access to customer-service questions. The evolving C-suite link has CIOs scouring the increasingly crowded and complex technology landscape for the right solution to help operations meet those demands, while also helping the CFO oversee and measure how the organization can best make investments, improve performance, remain competitive and help drive growth.

Respondents to the KPMG survey said they believe new and emerging technologies were critical to the success of strategic initiatives planned in the next 18 months. Data and analytics and business process management tools (both 54 percent) scored highest in the survey, while respondents also selected mobile and core system modernization (both 49 percent), digital media (48 percent) and cloud (47 percent) as important to meeting their organizations’ goals.

Stephen Chase, KPMG’s service line leader for Technology, says transformation is about aligning and servicing your customer, optimizing your supply chain, and managing risk and tax issues, as well as about having a better view of the financials and an improved strategic oversight of the workforce.

“The CFO and CIO are deploying emerging technologies to help their operational peers across the organization implement more sophisticated reporting and analytics to improve measuring how their units are performing,” said Chase. “Recent economic events underscored for many executives that transparency and agility has become increasingly important for businesses to predict and anticipate customer, competitive and market changes.

“Put simply, companies need to continually transform their organization’s business model, using new and emerging technologies to help manage performance and cut costs,” he said.

The majority (63 percent) of respondents from companies that are getting ready for, are undergoing, or have completed transformations say that they have a formal process for prioritizing business transformation initiatives.

“Undertaking broad changes to a business operating model—covering everything from the financial, risk and tax transformation, to human capital management, acquisitions and target markets—can create an operation that is innovative, agile, responsive to change, and focused on customers to get ahead of competitors and the marketplace,” said Hasty. “Technology opens up the possibilities — and pitfalls — of cloud environments, social media interaction, data and analytics, and wide-scale mobility, creating entirely new industries and enterprises at the same time that they redefine how existing businesses operate and influence consumer choices.

“Constant change in the business environment requires internal and external capabilities with a deep and current knowledge of each component of a transformation effort – including market dynamics, regulatory and tax rules, technology advances, operational practices, and program implementation techniques,” said Hasty. “These individuals working closely within a program governance model can develop and execute on the optimal transformation strategy, helping to realize maximum value and return on investment.”

The survey findings are part of a larger KPMG report on Transformation planned for a fall release. Respondents to the survey, conducted in June and July of 2013, included 67 percent from the ranks of C-level executives, while the rest were managing director or above.

KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative (“KPMG International”). KPMG International’s member firms have 152,000 professionals, including more than 8,600 partners, in 156 countries.

Source: KPMG LLP http://www.us.kpmg.com

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