Short termism around digital transformation ROI frustrates UK CEOs

Tensions are starting to show between CEOs, Boards and management teams when tackling digital transformation projects, according to some of Britain’s biggest businesses.

In a survey of 150 UK CEOs, it found that the majority said they were frustrated by short termism and the pressure from their Board to deliver results on multi-year digital transformation projects: 72 percent cited unreasonable expectations for return on investment related to digital transformation.

Instead leaders wanted their Boards to take a long term view of tech investments, with 64 percent advising the company would only begin to see a return on investment (ROI) in Artificial Intelligence (AI) in three to five years after the initial outlay. Similarly, over half of the CEOs (52 percent) agreed on the same ROI time scale for process automation technologies like robotics.

Despite its challenges, the disruption is welcomed by UK CEOs. The vast majority of the CEO cohort (95 percent) agree that it is more of an opportunity than a threat, but 86 percent are overwhelmed by the time needed to make progress.

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Lisa Heneghan, partner and digital transformation lead at KPMG UK said: “Digital transformation is no longer a choice, it’s an essential driver of revenue, profit and growth. Business leaders need to move away from simply fulfilling client needs, in sometimes laborious ways, to using technology achieve results with more depth, efficiency, and decrease the probability of error.

“The reality is that digital transformation isn’t a simple change that can be implemented overnight and deliver results straight away. 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 engrained processes, to make the change otherwise there is a real possibility of being left behind by technology first businesses.”

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Meanwhile, one in two CEOs expressed doubt in the skills of their wider management team, confessing they were not confident their immediate team had the right experience to oversee the radical change the organisation needed.

CEOs were also uncertain about the long term impact technology would have on the size and shape of the workforce, advising that it would not necessarily result in a smaller workforce in the immediate future.  In fact, 71 percent of UK CEOs said in the short term AI would create more jobs, because firms needed new experts to use the technology being introduced into the company.

“While much has been said about the negative impact of AI on the job market, in the short term we expect it to create jobs in some sectors.  Companies are hiring in technical experts to oversee the implementation of new systems, before they make wholescale changes to their workforce,” concluded Heneghan.

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