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ACCELERATED DIGITAL TRANSFORMATION DURING PANDEMIA WILL HAVE MORE INVESTMENTS, SAYS EXECUTIVES



The covid-19 pandemic accelerated the digital transformation of companies, according to Brazilian CEOs. This is what the global CEO Outlook 2020 survey, carried out by the consultancy KPMG, points out: 67% of the executives surveyed said that the digitization of operations had advances that put the business months and even years ahead of what they expected; for 20%, the digitization process remained as it was before the pandemic; and, for only 13%, the process was delayed or rendered unfeasible because of the crisis.

For most CEOs (87%), there was also an acceleration in the creation of a new workforce, since the pandemic made it necessary to hire more employees to deal with automation and artificial intelligence systems; the minority (13%) kept the team the same size.

CEO Outlook is a global survey conducted by KPMG. The 2020 edition heard, between January and February, 1,300 CEOs from major world economies, 270 CEOs from South America and 50 Brazilian CEOs. Between July and August, more than 315 global CEOs, 80 South Americans and 15 Brazilians were interviewed to understand how their views could have changed during the pandemic.

According to Charles Krieck, president of KPMG in Brazil and South America, the concern with the digital transformation has existed for a long time in the corporate environment, but its implementation process was slower. “The pandemic brought about the acceleration of digital transformation and perhaps the realization that the process that we already found very fast, was not fast enough. It needs to be even faster, ”he says.

The research shows that, in relation to investments, 53% of Brazilian CEOs said they intend to invest capital in the purchase of new technologies and digitalization, while 47% will give priority to the development of skills and capabilities of the workforce.

“The crisis affected companies’ revenue for a period and also their ability to invest. In the end, this is a good thing, because companies will think much more about doing it correctly”, says Krieck. “In the short term, and this is already happening, companies are reviewing their business models, to invest in the technology and the correct digital transformation. In the medium and long term, this will go much faster than we think”, he adds.

Part of the digital transformation of companies, remote work appeared in the survey as a trend also for the post-pandemic: 100% of Brazilian CEOs said they will reduce office space because they will keep part of the team in home office and 94% intend to continue to develop the use of digital collaborations and communication tools for remote work after the pandemic has passed.

As advantages of this form of work, the expansion of the potential talent pool (86%) and the improvement in communication with employees (60%) were mentioned. Another positive point was the greater involvement of companies with the local communities where they are based (80%). “When we talk about remote work, think about the job market. It will change radically, increasing competition”, says the president of KPMG.

“There are people who believe that we no longer need physical space. I’m in the middle. I think we do need somewhere to meet, maintain the culture, hold meetings, for people to see and interact, at least in an adaptation phase. Because digital is not the same as physical”, says Krieck.

With a digital adaptation, there is also a need for investments in cybersecurity. According to Krieck, the concern with this theme will grow. “I foresee and I am already seeing large investments being made for data protection, device protection, network protection, among others”, he says.

Among the CEOs interviewed, 66% believe that a strong cyber strategy is fundamental to generate confidence in the main shareholders and 86% said that their organizations see information security as a strategic function and a potential source of competitive advantage.

CEO Outlook 2020 also shows the growing concern of investors and customers for companies to adopt good ESG practices, which refer to environmental, social and governance aspects of the company. During the pandemic, with less movement of people on the streets and the new model of remote work, pollution levels in cities decreased, fueling the debate on sustainability.

The survey indicates that, among the CEOs interviewed, 60% intend to ensure that the sustainability gains achieved during the crisis are preserved. For 53% of the executives interviewed, it is likely or very likely that the management of risks related to climate change will be a key factor in maintaining their positions in the next five years.

Krieck comments that simple actions can have a big impact in relation to sustainability, in addition to reducing expenses. “Exchanging the plastic cup for the paper, using your own mug or even reducing air travel, which is another trend. Couldn’t these trips become a video conference?” He asks.

“We have learned so well how to deal with scarcity, in saving, that, in the future, we will be able to produce at less cost and with less damage to the environment. I think there is a lesson here that, not only here in Brazil, but the whole world learned, which will help a lot in ESG aspects”, he says.

In the survey carried out before the pandemic, climate change already appeared among the socio-environmental factors of greatest pressure for CEOs (82%), along with the loss of jobs due to automation and new technologies (78%), use of personal data for financial gain ( 74%), gender inequality (66%), income inequality (44%) and sexual harassment and discrimination (42%).

For 74% of respondents between January and February, there was already a significant demand for more transparency in ESG reports from stakeholders, regulators and customers, and 80% said that ESG management will be instrumental in driving long-term growth. For companies looking for a broad investor base, 70% of CEOs pointed out that robust ESG reports were no longer optional.

Diversity and inclusion were also addressed by the research. During the pandemic, 73% of the executives interviewed said that it was necessary to put more focus on the social component of their organizations’ ESG program. The survey also sought to know the level of confidence of the executives in the anti-discrimination and anti-racism measures that organizations have been adopting: 73% are confident or very confident. In addition, 60% of CEOs plan to announce new measures against racism.

Even before the pandemic, the survey pointed out that, for 66% of executives, the lack of progress in diversity and inclusion could undermine public confidence in the CEO. For the president of KPMG, there are four main pillars in relation to this theme: gender, sexual orientation, race and people with disabilities.

“If there is no diversity and inclusion, no matter how rich people’s experiences may be, you will never actually have or will never get the most out of that team. This is increasingly clear and it is very much related to the recognition that the important thing is the human being”, he says.

The president also declares that there are programs and actions for inclusion in the market today that are necessary. “And this is not an isolated action, something that you do solo. This is something that you connect with the community, that you join efforts, that you bring society, ecosystems and when you are together, the business works very well. I am very optimistic about the actions of a more just society. But you have to act. If you do not act, you will not succeed ”, he declares.

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