KPMG: IT chiefs vote for innovation, but are they forgetting tech debt?

Despite geopolitical tensions, KPMG’s latest Global tech report 2022 has found there is a widespread appetite across business for new and emerging technology platforms.

Based on a survey of 2,200 executives in Q2 2022, the report found that businesses are keen to embrace new technologies and are poised to invest in new tools, with customer value the primary driver of all tech activity.

According to KPMG’s research, more than two-thirds of businesses (67%) expected to embrace emerging platforms such as crypto, the metaverse, Web3, near field technology (NFT), quantum computing, virtual reality and augmented reality (VR/AR,) 5G, and edge computing within two years. The study also found that over half (57%) of businesses are engaged in transformation to improve customer experience, while 88% said they are advanced in their adoption of cloud technologies.

Customer experience is one of the primary drivers for unlocking digital transformation budgets, according to KPMG. This covers customer-centric experiences, which requires designing workflows, services and products to meet customers’ needs in the most effective way possible. “Our respondents indicate that marketing, customer service and sales functions are benefiting the most from digital transformation programmes, a direct result of the customer-centric techniques that respondents are deploying,” said the report’s authors.

Commenting on the drive to customer-centricity, Barry Brunsman, global leader, CIO centre of excellence at KPMG International, said: “Customer experience is substantially motivating enterprise investments in IT and is becoming synonymous with digital transformation. Tech strategies are anchored to creating loyalty-winning experiences, to safeguard income and encourage [high] levels of repeat revenue from customers.”

Not surprisingly, the report shows a high degree of cloud adoption. The KPMG study found that 88% of respondents said they are advanced in their adoption of cloud technology, and just under three-quarters (73%) are migrating strategic workloads to the cloud. Just 15% of businesses said they have already completed migration and are looking to optimise their systems.

KPMG found that the organisations that are extremely effective at digital transformation, and seeing the highest return on their investment, are the most likely to have fully met or exceeded their objectives with cloud programmes.

Among the questions KPMG asked in its survey was one concerning technical debt, where the IT function struggles with maintaining older systems as new technology is introduced into the business. As new systems are deployed, those being replaced often continue to operate in the business and require ongoing maintenance. The level of maintenance work builds up over time as more new systems are deployed.

Some industry experts estimate that technical debt accounts for up to 40% of annual IT budgets.

About three-quarters of respondents (73%) to the survey said the long-term maintenance costs attached to deploying systems have little to no impact on their IT ambitions.

In comparison to the global average, respondents operating from India are most likely to feel that their IT ambitions are inhibited by tech debt (11%). KPMG found that just over half of all respondents (53%) usually address enterprise IT upgrades in line with an agreed schedule. In the report, KPMG warned that poorly managed technical debt can trigger integration issues and lower overall productivity levels.

“To avoid creating fragmentations that could harm customer interactions, blueprints for emerging technologies should not overlook the importance of minimising tech-debt responsibilities,” said the authors.

The KPMG report quoted Michael Natusch, chief science officer at Prudential, who said: “It’s very easy to build pretty prototypes; it is very hard to build features that actually go live with real customers, while minimising the chances of technology debt becoming an issue.”

KPMG suggested that incorporating feedback from IT execution teams into early planning for emerging technologies can help these innovation efforts to support seamless engagement with customers.

Looking at KPMG’s findings, which show that respondents were less concerned about technical debt, Brunsman said: “Tech debt is a real issue, but the elimination of tech debt doesn’t show up as a rationale for investment.”

In his experience, other business outcomes provide the basis for the investment and tech debt is resolved as an ancillary benefit. “Elimination of tech debt is not a motivator for investment, but it is a benefit of that investment,” said Brunsman.