Digital transformation, and use of emerging technologies like AI are the key issues Australian business professionals will focus on during 2025 and beyond, KPMG’s annual Keeping Us Up At Night survey finds.
Concerns over the slowing economy, and cost of living are also prominent, the survey of 320 businesses found, but talent – “recruiting and retaining staff – has dropped down the list of top priorities.”
Top 5 challenges in 2025 survey Top 5 Challenges in 2024 survey:
- 53% – Digital transformation and optimization and extracting organizational value from it. 43% – Protecting and dealing with cyber risks.
- 42% – Protecting and dealing with cyber risks. 42% – Talent acquisition, retention and upskilling to meet a digitized future.
- 39% – Cost controls in an inflationary environment 41% – dealing with evolving regulatory processes, reporting changes and impacts.
- 39% – New technologies, including AI, and the use cases and ethics that arise when implementing. 38% – Digital transformation and optimization and extracting organizational value from it.
- 38% – Dealing with evolving regulatory processes, reporting changes and impacts. 38% – Cost controls in an inflationary environment.
Andrew Yates, KPMG Australia CEO said:
“We were not surprised that controlling costs in an inflationary environment still ranks in the top 3 issues. The high core inflation is also making any immediate interest rate cuts less likely which will be a frustration for many business leaders. Having said that, survey respondents did not indicate rate cuts would see a significant increase in their business investment in 2025.”
The study, the 7th in the KPMG series, found that digital transformation and optimization has “moved up from 4th in 2024 to top the list of biggest issues facing businesses over the year.”
Similarly, it rose from 4th to first in their priorities “over the next 3-5 years, with 53% of respondents nominating it.”
Cyber issues were second top challenge for the next 12 months, while controlling costs in “an inflationary environment was joint third, up from 5th last year.”
Joint third priority for 2025 was dealing “with new technologies, including AI, up from 6th last year.”
This was also a strong second (48%) in the list of top “challenges over the next 3-5 years, while identifying future market segments for growth was third biggest priority, looking ahead (46%).”
This issue saw a notable rise “from 5th last year.”
Overall, the top three issues for the next 3-5 years – “digital, new technologies, and future growth sectors – were significantly ahead of any other challenges nominated.”
The 4th biggest was “10% behind.”
Top challenges in next 3 to 5 years ahead:
- 53% – Digital transformation and optimization and extracting organizational value from it.
- 48% – New technologies, including AI, and the use cases and ethics that arise when implementing.
- 46% – Identifying and growing future market segments and/or innovation opportunities for growth.
Top societal issues impacting business:
- 48% – Meeting the challenges of housing availability and affordability.
- 48% – Preparing for a future skills gap: technology, data scientists, health workforce shortfall.
- 47% – Geopolitical disruptions and shifting levels of regional/global tension and cooperation.
Third in the wider societal concerns list, was geopolitics, which can be attributed to the “escalation of international trade tensions and the rising issue of tariffs, which has added to the general sense of unease in the global and domestic economy.”
Brendan Rynne, KPMG Chief Economist, said:
“The policies proposed by President-elect Trump are inflationary in nature – however, what is actually implemented, and when, remains unresolved at the moment. To the extent a range of economic policies do get implemented that result in price levels for traded goods increasing globally then this will make the pathway for interest rate cuts in Australia more challenging.”
Andrew Yates said:
“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. 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.”
As noted in the update from KPMG, the rise of AI in the survey is notable.
KPMG see its potential as transformative for businesses, and like many of their clients, the firm says it is “significantly investing in this area.”
It is encouraging that separate research they “have carried out indicates that returns on AI investment are either meeting, or in many cases exceeding companies’ expectations.”
As mentioned in a blog post, given the difficult state of the economy and the public finances, “increasing productivity is essential for Australia to generate sustainable growth.”
They firmly believe AI can play “a key part in that, as businesses are starting to report.”