The top concerns in 2020 for Australian business leaders
Going into 2020, most Australian businesses remain concerned about the disruptive nature of digital transformation, while an increasing number of business leaders are worried about the global political and economic environment. This is according to a new survey conducted by KPMG.
The survey claims to “cut through the noise” as market watchers heatedly debate the future of Australia’s economy. KPMG has spoken to C-suite business leaders at the threshold of the new year for three years running now, trying to determine the top market forces that are atop their list of concerns.
Reports from earlier this year indicated that despite the plethora of disruptive forces making their way through global markets, Australian business leaders remain relatively positive in their outlook. Most executives currently view changes such as digitalisation as opportunities rather than challenges.
Nevertheless, there is a great deal of investment and subsequently a great deal of uncertainty that accompanies digital transformation, and business leaders in Australia appear to be aware of this. Digital transformation has now been at the helm of the list of concerns for all three years that KPMG has conducted the survey.
“The fact that digital transformation has once again topped the list is understandable, given it is both profoundly necessary and monumentally difficult. There are two key drivers for digital transformation: maintaining ongoing relevance in the market by continuing to meet customer expectations, and the reduction of operating expenses,” said the report.
Costs have been among the main barriers to digital transformation for many in Australia, although recent analysis has shown that businesses that take the leap have benefitted. KPMG reports that businesses seem aware of the level of innovation and reinvention required to drive a successful digitalisation process.
Nevertheless, concerns around innovation and disruption seem to have fallen down the list of worries this year. Where these two topics previously followed digital transformation in second, it has slipped to fourth this year, losing its place to concerns around the global political and economic environment.
According to the authors, business leaders are struggling to remain calm as they observe a global decline of “economic logic” and its replacement with “political logic,” citing the US-China trade war and Brexit as prime examples of this shift. Such a shift is touted to breed instability, which is scarcely good for business.
Experts and business leaders alike are concerned that the current rate of polarisation is likely to create another cold-war like scenario in the future, with the global business environment being forced to choose between economic engagement with the US and trade with China.
Amid this uncertainty, KPMG highlights that there is also the likelihood of opportunities emerging to establish new trade relations and supply-chain structures. Here emerges the third biggest concern for Australian businesses going into the new year – that of regulatory challenges.
Various sectors in the Australian economy have come under sharp scrutiny last year, ranging from the Royal Commission for the banking sector to the Australian Securities and Investments Commission’s revelation of poor audit practices. This has forced many businesses to make structural changes.
“This trend toward more – and more stringent – regulation is almost guaranteed to continue well into the 2020s. Government will remain under community pressure to get tough, introduce more laws, and to enforce them more vigorously,” said the report.
Other major causes for concern in Australia include tackling sustainability and climate change, navigating faltering public trust, developing strong leadership capabilities, as well as the ever present need to upskill the workforce.
