Investment in UK digitalisation stalls despite COVID-19, reveals new survey

BY Fraser Tennant

More than half (56 percent) of businesses in the UK are not planning to increase investment in digital transformation, despite the coronavirus (COVID-19) pandemic accelerating the need for digitalisation, according to a survey published this week by Cheil UK.

The survey, which features the views of more than 200 senior decision makers from medium to large businesses in the UK on their plans for digital transformation post-COVID-19, reveals a general lack of continuity as to what the term ‘digital transformation’ means.

The retail sector, for example, lacks unity, according to the survey, with the majority of retail leaders disagreeing on what digital transformation means for their industry. Similarly, 33 percent of financial services sector respondents said their digital transformation plans had been “rolled back a lot” by the pandemic.

More promisingly, when asked what digital transformation means to their business, 48 percent of financial services sector leaders said optimising online performance and investing in new technology for in-store experiences, while 41 percent indicated setting up new digital propositions alongside core business.

“Challenges with budgets are apparent and valid, but we will see the ramifications of not investing in direct to consumer, digital and customer service in the coming months and years,” said David Bedford, director of digital strategy at Cheil UK. “This is not just about moving capabilities online; consumers expect to be kept safe when shopping in store and investment in digital capabilities – from virtual reality to contactless payments to increasing hygienic shopping experiences – is key to success in the future.”

Of the sectors planning to invest more in digital transformation, the top response among business leaders to improve customer experience was implementing faster delivery solutions and easier returns – a key challenge during lockdown as commerce switched to online. Other popular solutions included creating new products, improving site search, and better data collation and interrogation.

“The growing appetite for online purchases should be a wake-up call for those still asleep when it comes to ecommerce and digital capabilities,” continued Mr Bedford. “If you cannot provide the shopping experience your customer wants when they want it, they will move on.”

The survey also found that 75 percent of respondents were unimpressed with the majority of other businesses’ online customer experience.

Mr Bedford concluded: “The customer experience is key, and in a COVID-19 and post-COVID-19 world, this has to be considered and embedded as part of digital transformation to meet the needs of today’s customer.”

News: UK business leaders scale back plans to invest in digital transformation

CFOs fear Brexit will hit business in long-term, claims new survey

BY Fraser Tennant

A challenging and uncertain macroeconomic environment caused by Brexit fears is weighing on UK companies and their job creation and investment plans, according to a new Deloitte survey.

In its ‘CFO Survey: 2019 Q2’ – which features the views of 79 chief financial officers (CFOs) from 48 FTSE 350 companies –  Deloitte reveals that 83 percent of company chief financial officers (CFOs) say they expect the long-term business environment to deteriorate as a result of the UK leaving the European Union (EU). Furthermore, only 4 percent believe the time is right to take greater risk onto their balance sheets.

In terms of the short-term effects of Brexit, pessimism remains elevated, states the report, with 62 percent of CFOs expected to reduce hiring – the highest level in three years – and 25 percent likely to cut their M&A activity. The survey findings also show a drop in confidence among CFOs, with only 9 percent saying they are more optimistic about the prospects for their company than they were three months ago.

“Events in the last three years, and recent news suggesting the economy shrank in the second quarter, have added to worries about the impact of Brexit,” said Ian Stewart, chief economist at Deloitte. “This is not solely a question of the long-term outlook. Brexit has not happened, but it is acting as a drag on corporate sentiment and spending.”

According to the survey, almost two thirds (62 percent) of CFOs expect to reduce hiring in the next three years as a result of Brexit and almost half (47 percent) expect to reduce capital spending, suggesting a cautious approach from businesses.

“Ironically, risk appetite in the corporate sector has slumped just as it has taken off in the equity market,” added Mr Stewart. “Measures of financial market volatility have declined, even though a majority of CFOs rate uncertainty as being at high or very high levels.”

Furthermore, the survey found that UK companies remain focused on defensive strategies with 52 percent citing cost control as a strong priority. Increasing cash flow is also a strong priority for 43 percent of CFOs, down from 52 percent in Q1.

Richard Houston, senior partner and chief executive of Deloitte North and South Europe, concluded: “Companies are looking for more certainty around our country’s economic future, as they prepare themselves for a post-Brexit environment.”

Report: Deloitte CFO Survey: 2019 Q2

Majority of US companies lack compliance automation strategies, claims new report

BY Fraser Tennant

Compliance leaders in the US are yet to fully automate their compliance activities in order to respond more efficiently to shifting regulatory expectations and a changing risk landscape, according to a new KPMG report.

The report, ‘Innovating compliance through automation’, found that only one in five chief information officers (CIOs) and chief compliance officers (CCOs) said they had a well-defined strategy to automate compliance in the next two years. However, 90 percent did say they had plans to increase funding for automation in the coming years.

Among the report’s key findings: (i) 36 percent of CIOs and CCOs said that attention from leadership and stakeholders is a top challenge they have encountered or expect to encounter in implementing compliance automation; (ii) when asked what is limiting their ability to automate compliance activities, 70 percent of CIOs and CCOs named data integrity and 67 percent pointed to data availability as leading factors; and (iii) 32 percent of CIOs and CCOs said the availability of resources to support automation is lacking.

Furthermore, CCOs and CIOs differ on their view of the subject matter knowledge their organisation requires to tackle compliance automation, with approximately 18 percent of CCOs stating knowledge was lacking while 40 percent of CIOs pinpointed this as the main automating compliance challenge.

"Companies are automating routine operational tasks to increase efficiencies and lower costs," said Amy Matsuo, a principal in KPMG’s risk consulting services and national leader of regulatory insights practice. "The next step is for organisations to pivot from using automation in operational processes to deploying it for compliance analytic and predictive purposes. To do so, they must first prioritise compliance activities that can be automated while setting expected returns on investment."

According to the report, compliance activity priorities are based on product safety (42 percent), industry specific regulations (41 percent), cyber security and information protection (36 percent), privacy (29 percent), fraud (27 percent) and consumer protection (22 percent) regulatory obligation categories.

Ms Matsuo concluded: "Organisations will need to identify personnel with the appropriate skills, knowledge and availability to undertake automation. This requires a unique skillset that blends an understanding of business operations, compliance issues and risk management with technological proficiency."

Report: Innovating compliance through automation

British Steel cuts 400 jobs in bid to secure “long-term future”

BY Fraser Tennant

In a streamlining process designed to ensure its long-term growth, British Steel is to cut 400 jobs at its sites in the UK, Ireland, France and the Netherlands – approximately 10 percent of its 5000-strong workforce.

The cuts will be made in managerial, professional and administrative roles, despite first quarter profits being a reported £21m.

The company has stated that the cuts are part of the company’s ongoing transformation – which has already seen it commit £170m toward improving its manufacturing operations during its first three years. British Steel was saved from collapse two years ago when investment firm Greybull bought the business for £1 from Tata Steel.

British Steel is also taking further steps to secure a sustainable future, including continuing to improve manufacturing performance and increasing turnover through strong sales.

“We have made a strong start to life as British Steel but our external environment is constantly changing,” said Gerald Reichmann, British Steel’s chief financial officer. “It is unfortunate we need to go through the proposed redundancy process but by focusing on profitable, niche products I am confident we will create a long-term future for our business and the communities in which we operate.”

British Steel has made it clear that no site closures are being considered as part of the streamlining process. The company has also said that it remains committed to making significant investments in its core products – rail, wire rod, construction and special profiles – along with its iron and steel-making operations.

“It is important our business continues to evolve,” said Roland Junck, British Steel’s executive chairman. “We have already committed £120m to capital expenditure projects and are pressing ahead with the £50m upgrade to our Scunthorpe Rod Mill. However, the pace of change we need in this challenging industry requires further and continued investment along with more agile and efficient operations. To help us achieve this, we have to make difficult decisions.”

Mr Reichmann concluded: “Strong market conditions support the approach we are taking – we have a robust order book and continue to secure significant contracts with customers, old and new, around the world.”

News: British Steel plans to shed 400 jobs 'a body blow' to workforce

Data scientists top UK CEO recruitment wishlist, claims new survey

BY Fraser Tennant

Illustrating their increasing role in supporting future business growth, data scientists have been named the most important workforce capability by UK chief executives, according to a new survey by KPMG.

In its ‘Growing pains: 2018 Global CEO Outlook’ report, KPMG states that more than two thirds of survey respondents (69 percent) named the data scientist role as important in supporting future growth plans, followed by emerging markets experts (57 percent) and emerging technology specialists (55 percent ), such as artificial intelligence professionals.

The KPMG analysis also suggests that firms should focus on the impact of technological disruption as well as considering business opportunities beyond domestic markets.

“UK CEOs are encouragingly bullish on their resourcing requirements and evidently more so than their counterparts elsewhere in the world,” said Mark Williamson, partner and head of the people consulting practice at KPMG in the UK. “This sends a powerful message to the world that UK business leaders can see past market uncertainty and are focused on future-proofing their operations.”

In order to respond to technological disruption, the report also notes that UK businesses need to treat technology disruption as part of an integral part of business strategy, and respond by looking at ways in which their workforce can change its size, shape and composition to meet the strategic demands of the next decade.

“Fundamentally, the nature of digital disruption is potentially transformative if approached with the right mindset,” continued Mr Williamson. “Technology disruption is becoming such an integral part of business strategy that we expect business leaders to increasingly establish their own training programmes and invest in external support.”

The KPMG report showcases the views of 150 UK leaders and a further 1150 chief executives across the globe.

Mr Williamson concluded: “UK business leaders are embracing digital disruption and are confident in the potential for automation to create jobs in the near future. The rise of the data scientist is clear evidence of this sentiment and shift in priorities within UK boardrooms.”

Report: ‘Growing pains: 2018 Global CEO Outlook’