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CEOWORLD magazine - Latest - CEO Opinions - CEOs Eye AI Investments Amid Economic and Regulatory Challenges: Insights from KPMG’s 2024 Outlook

CEO OpinionsTech and Innovation

CEOs Eye AI Investments Amid Economic and Regulatory Challenges: Insights from KPMG’s 2024 Outlook

The 2024 KPMG CEO Outlook gathered perspectives from over 1,300 CEOs at major global corporations, including 400 based in the United States, to assess how they are navigating ongoing market volatility. The study highlighted that while CEOs are eager to capitalize on the potential of generative AI (GenAI), challenges such as workforce readiness, data integrity, cybersecurity, ethical usage, and governance remain key obstacles to broader adoption.

According to the report, CEOs indicated that the primary areas for GenAI investment over the next three years would be in information technology (74%), sales and marketing (59%), and finance and accounting (48%). The KPMG AI & Digital Innovation Survey showed that a significant portion of these investments will be channeled through mergers and acquisitions, with an expected average expenditure of $37 million on M&A activities, and an additional $30 million allocated to data and analytics over the next 12 months.

Despite these planned investments, 68% of CEOs anticipate that tangible returns will take three to five years to materialize, while just 21% foresee benefits within a one to three-year window.

As global businesses encounter rising regulatory demands to disclose environmental, social, and governance (ESG) impacts, organizations are poised to increase spending on sustainability initiatives in the next three years. Many companies view sustainability not just as a compliance necessity but as a strategic opportunity to enhance financial performance both now and in the long term.

However, confidence in meeting net-zero targets by 2030 is mixed, with only 54% of CEOs expressing certainty in their ability to achieve these goals. They cited the complexities of decarbonizing supply chains and a shortage of skilled labor as major barriers. While 70% of CEOs remain dedicated to their climate-related strategies, they are adjusting their communication approaches to better align with evolving stakeholder expectations, and 27% have already updated their strategies accordingly.

ESG reporting remains a priority amid tightening regulatory requirements, with organizations ramping up investments across various aspects of the sustainability reporting process. The KPMG 2024 Sustainability Organization Survey revealed that 90% of respondents plan to increase spending on ESG reporting over the next three years, focusing on hiring dedicated ESG personnel, implementing specialized software, and enhancing employee training.

In terms of workforce dynamics, the report found a significant shift in return-to-office trends. While only 34% of U.S. CEOs expected a full return to the office earlier in the year, that figure has now risen to 79%, with just 17% of companies maintaining hybrid work models. Many organizations are employing a combination of incentives and disincentives to encourage office attendance, with 86% of CEOs expressing a willingness to reward employees who regularly come into the office with preferred assignments, promotions, or raises.

CEOs are also concerned about the impact of an aging workforce on recruitment, retention, and company culture. Nearly 89% of respondents acknowledged this challenge, and 32% identified the wave of retirements combined with a lack of qualified replacements as the most significant factor affecting their operations.

On the topic of generative AI’s impact on the workforce, 72% of CEOs believe that while it may not drastically reduce overall job numbers, it will necessitate reskilling and the redeployment of existing talent. Additionally, 27% expect GenAI to generate more jobs than it displaces. A significant 80% of CEOs emphasized the need for companies to invest in skills development and lifelong learning to ensure a steady pipeline of future talent.

GenAI’s greatest value is seen in tasks that require creativity, analytical skills, and consultation. Companies are advised to focus on identifying high-impact use cases, followed by a careful breakdown of job roles to pinpoint tasks that could benefit most from GenAI augmentation. Successful integration of GenAI is expected to address gaps created by changes in operating models, organizational structures, and job redesign, ultimately leading to enhanced productivity, increased capacity, and the transformation of traditional workplace frameworks.

 

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CEOWORLD magazine - Latest - CEO Opinions - CEOs Eye AI Investments Amid Economic and Regulatory Challenges: Insights from KPMG’s 2024 Outlook
Anna Siampani
Anna Siampani, Lifestyle Editorial Director at the CEOWORLD magazine, working with reporters covering the luxury travel, high-end fashion, hospitality, and lifestyle industries. As lifestyle editorial director, Anna oversees CEOWORLD magazine's daily digital editorial operations, editing and writing features, essays, news, and other content, in addition to editing the magazine's cover stories, astrology pages, and more. You can reach Anna by mail at anna@ceoworld.biz