Survey flags technology as top business challenge for 2025
Australian business leaders are set to focus on overcoming digital transformation and emerging technology challenges in 2025, according to a KPMG report.
A new KPMG report has revealed that the top challenges for business leaders throughout 2025 will be digital transformation and emerging technologies such as AI.
The report, Keeping us up at night, highlighted the main challenges businesses were likely to face, with economic and cost-of-living concerns having remained near the top of the list.
The report, created from a survey of 320 businesses, also found that recruiting and retaining staff had dropped down the list of priorities as cost and technology challenges rose to the top.
KPMG Australia CEO Andrew Yates said it was no surprise that controlling costs in an inflationary environment still ranked in the top three issues.
“The high core inflation is also making any immediate interest rate cuts less likely which will be a frustration for many business leaders,” he said.
“Having said that, survey respondents did not indicate rate cuts would see a significant increase in their business investment in 2025.”
Fifty-three per cent of respondents said digital transformation and optimisation and trying to extract organisational value from it would be the top challenge during 2025.
This was followed by 42 per cent who said protecting and dealing with cyber risks and 39 per cent who noted cost controls in an inflationary environment.
In comparison to the top challenges in 2024, dealing with cyber risks was ranked number one, followed by talent acquisition and evolving regulatory processes.
Over the next three to five years, it was forecasted that digital transformation and optimisation were likely to remain in the top spot of concerns and challenges.
New technologies such as AI were also set to remain towards the top of the challenges and concerns list over the next three to five years, according to the report.
Yates said despite the surge of AI in the list of business concerns, it was still considered to have significant transformative potential for businesses.
“Technology, AI and cyber were the issues of most relevance to our business leaders, who are increasingly joining these together as a single critical and interconnected issue,” he said.
“Leaders are also concerned about meeting associated demands into the future, with preparing for a future skills gap in areas such as technology and data science also joint-top of the wider societal challenges impacting business.
It was noted that dealing with stakeholder expectations including regulators had risen on the list of concerns for the upcoming year.
Based on the survey, this challenge had risen to sixth place on the list of priorities, which identified it as a growing challenge for executive management and board directors.
Yates noted an element of surprise in reference to the drop in recruitment and talent retention on the list of concerns and challenges for 2025.
“It is interesting to see recruitment and retention of talent sliding down the list, given that unemployment is still at historically low levels,” he said.
“The large increase in migration during the last two years will have played a part in businesses feeling they can meet their staffing needs, and there may be some continuing hangover from the COVID era where many businesses took on additional staff and have kept them.”
“But the lack of skills in key areas of technology is still a clear concern.”
KPMG chief economist Brendan Rynne said despite the survey being heavily focused on negative challenges, the results highlighted optimism for the future.
“While the immediate focus for 2025 will be on controlling costs, our survey shows leaders also looking past the current gloomy economic conditions and starting to focus on new growth markets over the next few years, which is a notable change from last year’s survey,” Rynne said.
“We do see things picking up slowly in the second half of the year and our respondents are clearly keen to make moves for growth when that happens.”
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