Germany based companies are reportedly relying increasingly on generative AI as a performance driver. This, according to a research study shared by KPMG.
The results of the KPMG study “Performance Improvement Strategy” highlight significant adoption of AI across businesses.
More intense competition, difficult financing conditions and a shortage of skilled labor are said to be forcing companies in Germany to boost performance, the KPMG research study noted.
In fact, the research report pointed out that more than half of firms in Germany markets are already using generative AI in order to effectively automate key processes to improve their overall business performance.
And cost-cutting measures liek reducing investments or staff cuts are only occasionally on the agenda, the KPMG update claimed.
In view of the challenging economic environment, many firms across Germany are looking for ways to improve their business performance.
The research report added that they are relying on tech in particular: more than half of them (54 per cent) have used generative AI and other technologies for greater process automation in the past three years.
About a third (35%) intend to follow suit in the coming year.
And 59% of firms have also opened up or optimized new markets in the last three years, while 23% plan to do so in the coming year.
In the coming year, firms also want to optimize their working capital (57%) and enter into new strategic alliances (40%) to improve performance.
Many firms have now cut costs in the past, meaning that cost-cutting programs are out of the question for the majority of them: Fewer than 10% of companies are planning to cut investments, limit recruitment or reduce staff.
Merely a fifth want to cut other operating expenses. 39% have or want to stop initiatives that are not directly relevant to earnings, for example in the area of ESG.
These are the key findings of the “Performance Improvement Strategy 2024” study, for which KPMG surveyed 250 managers from German companies in Germany.
As noted in the research report, firms based in Germany have rarely had to master so many challenges at the same time as they do now.
And more intense competition, difficult financing conditions and a shortage of skilled labor are leading to a mixed situation in which business performance is becoming one of the most important issues.
According to the respondents, employee skills (57%) and the availability of data (47%) have the greatest influence on increasing business performance in the short term.
In the medium and long term, however, they estimate their influence to be increasingly weaker.
In contrast, most companies focus on risk management (43%), market conditions (38%) and their own strategic orientation (38%) in the medium term.
In the long run, about half of those surveyed rate technological equipment and location factors such as infrastructure and financial resources as the most promising measures for improving performance.
When questioned about why performance enhancements in the company are necessary, around 68% of interviewees cite “more intense” competition or the entry of new competitors first.
This is followed by more challenging financing conditions (49%) as well as a shortage of skilled workers (43%).
In contrast, additional costs from regulation and ESG, increasing personnel costs or trade policy instruments likes embargoes or customs duties have “less of an impact” on performance.