Investment in Technology and Digital Transformation - Spanish Business Priorities in 2018
The Spanish business sector is optimistic following a decade of economic crisis. The GDP recovery of 2017, after three years in a row of 3%-plus growth, has made companies consider investing again. Tech tools at the service of corporate strategy are the core focus of investments planned for 2018.
According to a KPMG Spain report on the country’s financial prospects, prepared in collaboration with the Spanish Confederation of Business Organizations (CEOE) and analyzing the economic and business outlook according to over 1,900 executives, digital transformation has become the second-most-important strategic area for Spanish firms in 2018. Process improvement and the rollout of new goods and services are the most and the third-most important, respectively.
Digital transformation: number-one priority in banking
By sectors, the automotive and real-estate industries are the most optimistic, given their good results and growth prospects. In the car industry, 84% of the executives polled said they expect sales to climb over the next 12 months, while the figure for the property sector was 76%. The report highlights the changing expectations of the banking sector, one of the most important for the economy. Only 9% had “poor” or “very poor” expectations, down from 40% the last time the poll was taken. One of the main challenges facing Spain’s finance sector is digital transformation. “Banks need to make significant investments in technology to step up to the digital transformation challenge”, said Francisco Uría, the KPMG EMA partner for financial services and senior partner of KPMG Abogados, “both to improve the customer experience and boost efficiency”. 82% of banking executives polled said digital transformation was their number-one priority".
Focus of investments
Over half the executives polled (57%) expect to increase investments in 2018.
In figures, 63% mentioned technology tools as their first investment objective for the coming year.
Their second priority, accounting for 42% of responses, was to invest in training and the recruitment of better-qualified staff.
Thirdly, 4 out of every 10 employers mentioned internationalization and R&D as their main investment targets in 2018.
Digital transformation as a growth strategy
Digital transformation was the second strategic priority of the employers and executives consulted in the KPMG report. The digital economy is an unavoidable reality and it's important to be prepared if you want to remain competitive. Guillermo Padilla, KPMG Spain partner responsible for management consulting, is pleased that Spanish firms are giving digital transformation the attention it deserves and points out that a change of technology and business mindset are needed. “The speed of technological disruption requires an even greater commitment on the part of companies,” he said. “Change is needed across the board. This is a cultural transformation that must involve people and processes alike.”
There are clear benefits to digital transformation, as vouchsafed by the employers who have already undertaken it and begun to adapt their resources and structures to the new online environment. They include:
Although aware of the need to adapt to the digital economy, some 19% of firms polled say they haven’t yet started a digital transformation. That’s a not inconsiderable figure - indeed, it’s quite symptomatic. Is digital transformation really a priority for Spanish companies?
Analysts are concerned that despite the increased interest in digitalization companies still don’t see issues like cybersecurity, information protection, or disruptive technology as a threat. “Spanish firms should pay more attention to the risks associated with the digital transformation of their business”, said Pablo Bernard, KPMG Spain partner responsible for risk consulting. “Strategic preparation for the technological disruption we are experiencing across all sectors, with a special emphasis on managing growing risks and anticipating the emerging opportunities, will be the cornerstone of an organization's survival and success going forward”, he said.
International expansion and growth is another strategic priority for employers, the report found. Internationalization has been one of the principal drivers of economic recovery in Spain in recent years, explaining why nearly half the employers consulted (41%) will continue to boost their international presence over the next 12 months. International activity is therefore strengthening its position as a growth driver for Spanish firms.
In relation to the countries where firms are looking, most of the executives polled prioritized Latin America (principally, Mexico and Brazil), the European Union (especially France, Germany, UK, and Italy) and the US, followed by China and the Middle East.
But again, the experts sound a note of caution. “Although Spanish firms have been going global to great success in recent years, we must remember that the environment is increasingly complex. Geopolitical events like Brexit or the change of government in the US, the development of new spending patterns arising from market places, and digital transformation processes pose a major challenge. That's why companies need flexibility, foresight, and suitable strategic planning to leverage these challenges into opportunities”, says KPMG Spain partner for internationalization, Antonio Hernández.