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31 March 2020

Companies ramp up digital transformation efforts as Covid-19 unmasks business flaws, survey finds

Almost half of C-suite execs say they will focus more on digital and tech investments once crisis eases

By Ben Edwards

Pic of The IBM Watson IoT Center and Microsoft Headquaters in Munich Germany

The IBM Watson IoT Center and Microsoft Headquaters in Munich Germany Shutterstock

Business leaders across the world are taking steps to increase automation and prioritise digital transformation plans as the coronavirus pandemic exposes shortcomings in their operating models, according to a study by consultancy EY.

The EY Global Capital Confidence Barometer survey of more than 2,900 C-Suite executives found that 41% of respondents were investing in automation at a faster clip in response to the crisis, with another 43% of business leaders saying they will speed up investments in digital and technology once some normality has returned.

Steve Krouskos, global vice chair of EY’s transaction advisory services, said: “Business leaders are seeing their transformation plans paused or slowed currently. With these plans set to restart, possibly with added energy, once the situation stabilises, executives will have to make faster moves to reimagine, reshape and reinvent their business and create long-term value.”

Almost three-quarters of respondents expect the Covid-19 outbreak to have a severe impact on the global economy, with more than half forced to put contingency measures in place to mitigate supply chain disruption. 

Krouskos said: “There is no playbook for this situation and the C-Suite is reconfiguring and readjusting its response in real-time as events evolve rapidly. Covid-19 has created new vulnerabilities and unforeseen challenges. For most companies, the full impact on revenue and profitability across value chains are still highly uncertain.”

While 54% of executives expect the economic recovery from the pandemic to drag into next year, more than half of respondents say their intention to pursue M&A opportunities over the next 12 months remains unchanged. Some 38% say they will focus more on a target’s business resilience when evaluating deals, with another 39% expecting valuations to fall as a result of the crisis.

Krouskos added: “The ongoing Covid-19 outbreak and its impact on major economies has not caused dealmakers to shelve their plans entirely. Deals continue to be a powerful means to reshape portfolios and accelerate the transformation imperative facing CEOs.”

Further reading on AI and digital transformation

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Less than a quarter of UK lawyers use AI-assisted tech, research finds

Advances in artificial intelligence fuelling law firm profitability fears, survey finds

More women must enter male-dominated legal tech to guard against AI bias, conference hears

EU unleashes ambitious AI regulatory agenda 'to make tech optimists of us all'

Law firm investment in automation lagging behind other sectors, survey finds

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