A new report released Wednesday says 73 per cent of Canadian industrial companies expect to invest less than five per cent of their annual revenue on digital technology which is not nearly enough to make them competitive globally.
The report, Building up to transformation, by KPMG in Canada, surveyed C-suite leaders at 165 companies across Canada.
“We found that companies have significant digital ambitions and high expectations for returns on investment, but their level of investment is too modest and, at times, too linear,” said Stephanie Terrill, KPMG’s national leader of its management consulting practice, in a news release. “To truly move the dial, companies need to do more than make incremental investments to build digital capabilities; they need to build a modern digital foundation for a great leap forward.
“Digital transformation is no longer an option – it’s essential to remaining competitive. They need to at least double, if not triple, their investments.”
Key findings from the report include:
- 50 per cent of companies are investing in digital technology to create a competitive edge;
- 80 per cent expect a return on investment in three years or less, with 41 per cent looking for returns in two years;
- 34 per cent think digital transformation will require a significant hiring of new talent;
- 45 per cent feel they are in a good position relative to their peers when it comes to digital implementation; and
- 60 per cent are concerned about cyber security risks.
“While mining and energy companies already use digital technologies, such as self-driving trucks to haul ore or integrated sensors to monitor pipeline, machinery, or equipment integrity, more could be done. Industrial companies need to capitalize on the benefits from new exponential technologies, such as robotics, machine learning, machine-to-machine (M2M) communication, and the Internet of Things (IoT),” said the report.
“Companies are overlooking quick wins that are comparatively easy to implement, such as cloud services, while others struggle to achieve the integration needed to realize the full potential of data . . . As well, many seem to have dismissed the opportunities and insights that big data can offer. The survey findings reveal that only one in five (21 per cent) are actively leveraging data analytics.”
“Everyone is dabbling in digital technology to some degree, but it’s not clear many are doing so with a destination in mind,” said Terrill.
“Productivity expectations are only going in one direction: up,” added KPMG’s Yvon Audette, Chief Operating Officer, Management Consulting Services. “Companies should already be investing in IoT-compliant technology, especially to connect their legacy equipment. It’s fast becoming a baseline requirement for companies in these capital asset-intensive sectors; those that fail to invest in IoT will quickly fall behind.”
Mario Toneguzzi is a business reporter in Calgary.
The views, opinions and positions expressed by columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of our publication.
