The newtransformation
agendaAs humanity andtechnology grapple to findtheir optimum balance,
KPMG professionals
explore four transformation
priorities that can help
ensure performance,
ROI and growth intransformation.

Originally published by KPMG in the US
kpmg.com

Introduction
The stakes have never been higher for business transformations. To keep up with changing markets, competition,and technology, many companies are undertaking multiple, often continuous, transformations to update internal
processes and connect with customers, partners, and suppliers.1 And, in an era of “compound volatility,” acombination of disruptive events and powerful structural changes is creating a less forgiving business environment,with higher costs, high interest rates, and tepid global economic growth.2
Senior corporate leaders recognize that running successful transformations will be critical to their ability tocompete and grow. They need transformations to accelerate future state outcomes with profitable growth andefficiencies — and to help pursue new strategies. Without transformation, they know they will not be able toexecute their strategies and keep up with the competition. But they are also rightfully concerned about the history oftransformations that disappointed or didn’t yield lasting improvements.
This paper looks at how the transformation agenda has changed. KPMG in the US surveyed both top leadersand middle managers to get their insights on the opportunities and challenges and business transformation
today. For business leaders, the top objective — and challenge — is capturing value from transformations. The US
firm’s research also found that there is widespread concern about how to execute complex, interconnected, andcontinuous transformation efforts. Middle managers also identified concerns about capability gaps and burnout fromcontinuous transformations.

Based on this research, the perspectives of clients, and the insights of KPMG transformation professionals, we havedeveloped a new transformation agenda that prioritizes action on four fronts:

1

Placing value at the center. Executives identified that the top area they would approach differently in theirnext transformation would be to increase focus on value. Transformations can create strategic, financial,and operational value, but only if value is the north star of every project.

2

Investing in people and culture. When transformations fall short or don’t “stick,” culture and people
issues are often to blame. Executives identified the two biggest challenges in making value fromtransformation stick were: 1) leadership change and shifting focus, and 2) a change management programthat did not lead to adequate adoption. Transformation leaders need to invest more in creating buy-in, giving
people the necessary tools and resources, and maintaining an active feedback loop to understand, iterate,
and adapt based on what is working.

3

Orchestrating projects and the people experience. With multiple and continuous transformations
projects, it is critical to manage timelines, deadlines, and resources. Companies have, on average, threetransformations running at the same time. This underscores the importance, and challenge, of creating
broad-ranging, integrated plans to manage the complex streams of work.

4

Developing the right technology and data foundations. Executives cited the technological capability gap
as the top challenge encountered during transformation. Almost any business process transformation or
growth initiative today will involve a technology element. Companies need the systems, data, talent, andagility to develop support new digital initiatives.

We believe that companies that master today’s more complex transformation agenda will be stronger competitors inwhat promises to be a more challenging environment. They will be better able to adjust cost structures for the new
realities, tap new sources of growth, remain resilient in the face of disruption, and meet whatever challenges arise in
their markets.
1

For more on this topic, please see “The art of continuous transformation,” KPMG in the US, 2023

2

For more on this topic, please see “Mastering compound volatility,” KPMG in the US, 2023

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The new transformation agenda2Forceschanging thetransformation
agendaOver the past two decades, business transformations
have become an important strategic tool. Companies
have automated processes, redefined roles, built new
business and operating models, and remade entire
organizations. These undertakings have often been
arduous and challenging — change programs
almost always are. Results were often mixed — ordifficult to quantify — and value was difficult to achieve.

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The new transformation agenda

3

The quest for value
Seventy-six percent of top executives in the US firm’ssurvey said that creating value — improve businessperformance and ROI, and grow market share — is their
top objective for transformation projects. Making surea transformation pays off is increasingly important at atime when the cost of funding projects is rising, and thestrategic stakes are higher.
Yet, executives also know that the odds of successfulvalue creation are challenging. According to the survey,
only 19 percent of transformation projects returned
significant value. The top reasons for not capturing
value, KPMG professionals said, is insufficient focus
on value and inadequate upfront investment. Middle
managers cited lack of adequate KPIs as a barrier tovalue capture.
It appears that there is a bit of a disconnect between
top leaders and middle managers in their perceptions ofwhat constitutes value in a transformation.
Top leaders focused on achieving short-term financial
value — perhaps a sign of the times. Managers weremore likely to say that strategic objectives such as

Exhibit 1: What are the top three ways
your organization defines success for atransformation project?
Improved business performance
39%
Improved ROI/capital efficiency
25%
Grow market share
12%
Improved customer experience

improved customer experience are the most importantsource of value in a transformation. Both groups agree
that whatever form of value they are looking to capture,they struggle with tracking and measurement.

#1 improve KPIs

thing managers said leadership
could have done better:

Increased complexity andintensity
By definition, a transformation involves a significant
change — the digitization of a critical process, adopting
a new go-to-market model, or modernizing a support
function. Today, large corporations typically undertake
multiple transformations simultaneously.
In the executive survey, two thirds of respondents said
that there are typically three or more transformation
programs running simultaneously in their organizations.
Sixty percent say that transformation has become
continuous or nearly so.
The increased pace and intensity of transformation
efforts also creates challenges. In the survey of
middle managers, 56 percent said too much change
is underway, and 51 percent say it’s all happening too
quickly. Managers also complain that transformation
work is adding hours to workweeks and creating stressfor themselves and their employees. This creates therisk of burnout and the loss of employees who are
difficult to replace in a tight labor market.

Exhibit 2: Number of transformations each
respondent is undertaking:9%

7%

Successful entry into new market or channel

10%

18%

1

8%
Increased agility and capability for firm to pivot quickly
5%

2
14%

17%

Rapidly respond to external market forces

4
5

2%
Improved employee experience

3

6
35%

1%
Source: KPMG in the US survey of executives on transformation,
February 2023
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Source: KPMG in the US survey of executives on transformation,
February 2023

The new transformation agenda

4

60%

of senior leaders
say thattransformations
have become
continuous

Exhibit 3: What were the top threechallenges that you have encountered while
implementing transformation within yourorganization?
Technological capability gaps
11%
Labor skill gap/shortage
10%
Process capability gaps
9%64%

of employees
who work an
additional
6-10 hours reporthigh stress

Limited leadership buy-in/support
8%
Unclear vision/not linked to strategic vision
8%
Burn out/disengaged employees
8%Capability gaps
Across industries, top leaders in the survey said thatproper alignment of people and capabilities is themost important factor in a successful transformation.
However they also acknowledge the challenges ofgetting the right people and the right technology inplace. Businesses in the US have been dealing witha talent shortage for years. Today, with historically
low unemployment, it is more difficult than ever tobring on skilled talent. This includes the kind of whitecollar employees whose roles have been transformed(by automating routine tasks) so they can be moreproductive in higher value-added work such as analysis
and reporting.
Executives also said that the top three challenges
they encountered in implementing transformations
were a series of capability gaps: technological, labor,
and process (see Exhibit 3). These gaps are likely to
grow. In our recent survey on how executives expect
to adopt generative AI — a technology that is boundto play leading role in future transformations — only
22 percent of executives said that they were confident
that their company has the right technology and data
infrastructure for generative AI, and 15 percent felt
their company has the right people in place to integrate
generative AI into the business.3
For more on this topic, please see “KPMG survey of executives
on Generative AI,” KPMG in the US, March 2023

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Insufficient focus on change management
8%
Project management capability gaps
6%
Difficulty establishing/tracking
6%
Difficulty balancing the needs of technology and business6%
Value/ROI realization too slow
5%
Other*
15%*Other category includes: Value/ROI realization too slow, Under investment/
under prioritization, Desired outcomes not achieved/sticking, Higher cost ofcapital/difficulty raising capital, Budget overruns, and Improper support from
implementation partner
Source: KPMG in the US survey of executives on transformation,
February 2023

The new transformation agenda

5Managing execution risks
Executives and middle managers agree that execution
risk is growing in transformations. But they differ on
the nature of these risks. Senior leaders worry that theobjectives and rationales for transformation are notwell understood and communicated effectively. Middle
managers, however, say that leaders have madeclear what the transformation is about, but have notprovided adequate resources and tools to make thetransformation succeed.

76%of employees are
involved in threeor moretransformation
workstreams

Loss of momentum remains a top threat. The focus
of top leaders is diverted from the transformation
by other priorities, especially when there is turnoverat the top. When focus shifts away, leaders losecredibility with managers and staff. That adds tothe people and culture challenges that undermine
transformation. Leaders need to be steadfast and stayvisibly committed through their actions and words tothe change, probably for longer than feels necessary,to enable managers to lock in the desired change andembed new ways of working.

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The new transformation agenda

6

A newtransformation
agendaA successful transformation goes beyond routine
performance improvements or cost take-out tosignificantly change how an organization operates.
It can allow a company to pursue new strategies
and compete more effectively, creating strategic andfinancial value. The costs and stakes of transformation
have always been high, and they’re rising as multiple
and continuous transformation initiatives become
necessities in a faster-paced and less forgiving
business environment.
To meet management’s aspirations for transformation
today, we recommend that leaders focus on fourpriorities in the transformation agenda: value creation,
culture and people, orchestration, and building thetechnology foundation to enable the changes. These
efforts are not mutually exclusive. For example people
and technology are essential to value creation.
Orchestration will touch value creation, people,
and technology.

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The new transformation agenda

7How a transformation creates value
A successful transformation is a fundamental shift in the way an organization does business that spans departments,
functions, and business units, and delivers significant company-wide improvements. First and foremost, the change
is aimed at creating strategic value — finding ways to reach a new set of customers or improving loyalty — that gives
the company competitive advantage, which translates into financial value, too. Value is also created through operating
improvements when business processes are transformed. Transformation can create value across any, and all, of
these areas, each with a differing time to value (with operational value typically the fastest to be realized, strategic
value the longest, and financial value in between).

Strategic

Financial

Operational

The pursuit of bold, long-term
ambitions with fundamental
business model changes toaccelerate future state outcomes.

Substantial improvements in the
top and/or bottom.

Significant improvements inefficiency, productivity, quality.

 ompetitive advantage
Cthrough reimagining customer
experience or enhancing
differentiation.

 evenue growth, throughRfocused sales, product,
marketing, and channel
investments.

 ositioning, such as how aPcompany is perceived in themarket based on brand identity
or reputation.

Cost optimization improving
direct and indirect efficiency.

Expansion into new markets or
product segments organically or
inorganically.

Cash flow improvement
freeing up cashflow to invest in
future differentiation.

 trategic alliances orSpartnerships that enhancecapabilities and market reach.

Process improvements that
boost efficiency and reduce
waste.
R esource optimization suchas using time, money, andmaterials more efficiently.
Quality improvements in
products or services.
 igitization or the adoption ofD
new technologies to improve
fundamental processes.
 ptimizing organizationalOfootprint through onshoring,nearshoring, or offshoring.

A successful transformation is a fundamental
shift in the way an organization does businessthat spans departments, functions, andbusiness units, and delivers significant
company-wide improvements.

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The new transformation agenda

8

01

Placing value at the centerTransformation programs can often lack a clear definitionof the value goal and how it will be achieved. KPMG
professionals also find that there may be a fundamental
misunderstanding about how transformations create
value. A transformation is not business-as-usual
performance improvement — cutting the cost ofpurchasing by a nominal percentage. That’s part of the
procurement leader’s day job. By contrast, transforming
the supply chain to improve customer satisfaction andbe more resilient to geopolitical and climate risks is a
strategic undertaking that may take a year or two, change
multiple processes, and redefine supply-chain jobs.
Transformation success starts with defining exactly how
the change will create value. What are the sources ofvalue that will be created through transformation? Will
we accelerate a repositioning of our offering to be morecompetitive? Are there immediate financial and costbenefits? What are reasonable, specific value goals?
How will we track progress against strategic, financial,and operational goals? How do we prevent the cost fromleaking back in? How do we make the changes stick?
Value articulation becomes increasingly important ina business environment where the cost of capital andinternal hurdle rates have increased — and it is harder
to find easy/rapid transformation opportunities. To define
and pursue value. transformation leaders should takeadvantage of advanced analytics tools, including artificial
intelligence, to pinpoint value. Digital twins can help
model the future state (i.e., how a new automation will
perform) and test alternative approaches to determine

the best way to realize value. Generative AI is a tool that
could be useful in such analysis.
During the transformation project, program
management and the steerco should continuously
monitor how all three types of value are being
captured — or not. There will likely be course
corrections along the way, but leaders should also be
careful to retain focus on the large strategic goals.
This is an easy place for the communication between
executives and managers to break down, so the value
delivery leader needs to be vigilant in communicating
to all the stakeholders — especially the managers andemployees on the ground — why changes are needed
and then make sure everyone is on the same page.
In addition to having clear goals and metrics,
transformations that deliver the intended value also:
Assign value delivery leader. Acknowledging thatrunning a transformation is a full-time job, identify
a leader whose sole responsibility will be to deliver
outcomes — and align this leader’s compensation to
the value delivered.
Go deeper with data. Use advanced tools, rigorous
analytics, and new data sources to identify the sourcesof value, key dependencies, and ways to realize value(see “Using data analytics to calculate value”).
Define value to achieve. Agree the value that thetransformation will achieve by creating milestonebased outcomes (releases, people training, value
measures, etc.), ensuring the data can be gathered tomeasure the outcomes, and baselining the measures.

Using data analytics to calculate value
Not all sources of value are obvious or intuitive. By analyzing performance data, you can find additional ways
to create value for strategy and transformation. A global banking client asked a KPMG member firm to help
understand why it was not matching the rate of return of peer institutions. KPMG professionals compared
the bank to its peers on a range of metrics, such as revenue growth, profitability, online engagement, as
well as looking at data literacy. It turned out that the client bank had far fewer employees with data andanalytics knowledge than its peers — and the top performing banks in profit per employee were those withthe highest levels of data literacy across their organizations, including among top leaders. The bank with thegreatest data literacy had twice the profit per employee as the client bank. This informed a plan for the bankto build data and analytics capabilities in all levels of the organization.

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The new transformation agenda

9Case study — KPMG in Germany

How a robotics leader turned quick-win cost reductions into
long-term value
With the effects of the pandemic and supply chain
disruptions creating massive uncertainty acrossthe manufacturing sector, this key global industrial
robotics supplier and technology developer wanted
to find opportunities to reduce the cost base andprepare the company for future growth.
Leveraging deep experience in high-tech
manufacturing, human resources, processoptimization and business structuring, the KPMG
in Germany team analyzed the organization’s data,comparing the organization against market norms,
to identify a number of areas and job roles that coulddeliver significant cost reduction opportunities.

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Critically, the findings were overlayed against theorganization’s over-riding objective — to develop new
robots and bring them to market — to help ensure
any measures taken would not impact future growth.
The project went beyond cost out-take. The team
was also able to look across the organization’s
product development process to identify key
challenges and develop robust action plans to help
solve them. In doing so, the organization was able toachieve quick wins and create long-term value.

The new transformation agenda 10

02

Investing in people and culture

Successful, expeditious transformations rely on
people changing how they do things, but our brains
are wired to resist change that happens too fast.
Humans — leaders, managers, and employees — all
have a cognitive bias for the status quo, making thehuman element of transformation the most complex
and likely to fail. Overcoming this resistance andconvincing people to embrace the change and makeit happen is essential for transformation success.
Yet transformations often focus disproportionately
on quickly delivering new technology or processes,arguably because these change elements seem moretangible, familiar, and actionable.
If organizations want successful transformations, theymust get intentional about the people element ofchange. This starts with getting the basics right. Thechange vision (what good looks like) must be clear,
relatable, and actionable to those who will implement
the change.
Then, leaders need to truly model the change throughtheir actions and words. Leaders can host town
halls and issue memos, but how they show up andmodel the change every day will have far greater
impact on whether employees believe the change isreal or credible. Executives know this. In the survey,
executives said that top reasons for transformations
coming up short were insufficient leadershipalignment, vision, and funding.
Companies also need to have a clear understandingof their capacity for change. As noted, in the surveyof middle managers, 56 percent felt that too muchchange is underway, is happening too quickly, and iscreating stress for themselves and their employees.
With limited staff capacity and high stress, companies
need to be thoughtful when aligning resources withtransformation needs.
Solving for the human factor in transformations requires
going beyond standard communications and training,which on their own will not change behaviors. Changing
mindsets and behaviors requires a more holistic, humancentric approach focused on organizational culture.
Human-centric means investing in understanding,empathizing, and co-creating the people experience ofthe change. It’s not just about managing a change that’s
being designed, it’s about empathetically designing
the experience that people engage with at work

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Exhibit 4: Factors leading to failedtransformations
Rank the top three issues (1 being the mostimportant) that lead to failed transformations? n =200; rank order: top 3

leadership
26% Insufficientbuy-in/stakeholder alignment

Unclear vision/not linked
to strategic vision

23%

13% Underinvestment
in funding challenges
Lack of agility within org/challenges in coordinating

8%

Insufficient focus onchange management

Benefits too slow
to realize/not sticking

15%

9%

7%

Other**Other category includes: Project Management capability gaps,
Establishing/tracking metrics, Labor capability gap, Burnout/disengaged
employees, Technological capability gaps, and Lack of support from
implementation partner
Source: KPMG in the US survey of executives on transformation,
February 2023

The new transformation agenda 11

that facilitates the new way people will behave after
the heavy lifting of the transformation is done. This
understanding should be part of the future state design,along with the new processes and technology that will
enable people to operate differently and more optimally.
Ultimately, there must be true accountability for thechange to get the human experience right. This includes
measuring employee sentiment and behavioral change,
and adapting activities along the way. Do employees
see that leaders are truly modeling the change? Are
employees making the needed shifts in how they
think and operate? Are they receiving the training they
need? What’s working? Where are we struggling? What
additional support do people need to be successful?
Learn from the answers and turn the lessons into
timely, iterative, and agile actions. This will increase thelikelihood of transformation success and accelerate thespeed of delivery and impact.
Companies can take action in three areas to to help
ensure a successful people and culture change:
Build belief and make the vision real. Once thetransformation strategy has been set, invest thetime upfront to test and iterate the vision for thetransformation to ensure that it is clear, relatable to all
staff (especially those upon whom success depends),
and drives action.
Sustain visible leadership commitment. Align theobjectives of the transformation to the long-term
strategic goals and values of the company. Leadersneed to have skin in the game and signal the change
is real before others will invest — hold leaders
accountable for both successes and failures of thetransformation.
Improve employee engagement and enablement.
Establish frequent feedback loops that capture
sentiment and behavioral change to identify andaddress what is — and is not — working.

71%

of senior leaders
say that thealignment ofpeople andcapabilities acrossfunctions is very
important todeliver a
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The new transformation agenda 12

Case study — KPMG in Vietnam

Transforming to a digital future by connecting the customer
experience
Customers expect digital convenience. For the
insurance sector, a simple, consistent and humanapproach makes life better for clients.
AIA Vietnam has embraced this approach with its
digital transformation journey by enhancing theirinsurance offerings during a time of need, creating anelevated and orchestrated customer experience (CX).
KPMG in Vietnam — alongside KPMG in India, KPMG
in Hong Kong (SAR), China and KPMG Australia —helped AIA take an outside-in approach by connecting
the changes in their market with the changes thatneeded to be driven internally.
What started as an evaluation of their CX strategy
quickly evolved into the development of an
implementation roadmap for personalized andmeaningful interactions that leveraged KPMG’s
proprietary journey mapping tool — KPMG Discovery
and Microsoft Dynamics 365. The KPMG teamdesigned 20 digital journeys for new business,
servicing and claims, resulting in an enhanced CX
at many touchpoints. The team adopted an Agile
approach and drew on agile principles by applying a
regular cadence, synchronizing with cross-domainplanning, drawing on data-led measurement andevaluation to manage milestones. This focus on
coordinating and integrating capabilities helped leadto the transformation of AIA’s sales function thatdrove a clear increase in automation and straightthrough processing (STP), starting at 0 percent in
2021 and reaching 36 percent by the end of thesecond quarter of 2022.

Are you putting customer insights at the heartof your digital transformation?
“Working with KPMG on our digitaltransformation and putting customers at thecenter of everything we do was done in true
partnership, working together on how we
can transform and be a leader in Vietnam incustomer centricity. Our transformation journeyat AIA continues, but we have built a strong
understanding and foundation to take us into
the future with the help of KPMG.”
Wanda Britton
Chief Customer Officer at AIA (Vietnam)

This engagement has enabled AIA Vietnam to
digitize and automate their business and better
serve their customers.

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The new transformation agenda 13

03

Orchestrating projects
and the people experience

Running multiple complex transformation efforts
creates a whole new set of challenges. For all — orany — of these efforts to succeed, transformation
leaders need to be able to manage an array of
projects, processes, and people experiences. For
example, they must understand how a project in
one function or business unit could have unintended
consequences in another part of the corporation. They
must keep multiple initiatives on track, accounting
for interdependencies that might impede the work.
They must be ready to sequence the new initiatives
in a manner that prevents costs from re-emerging andmaximizes broader organizational impact.
Those companies that succeed with transformations
today have superior capabilities in drafting clear,detailed, outcome-based roadmaps and orchestrating
multiple initiatives in parallel. They have a clear
view of their target state including business andtechnology blueprints, desired customer and employee
experiences, and understand how each initiative willcontribute to this. The best transformation roadmaps
are focused on outcomes, take a cross-functionaland enterprise-wide view and enable the leadershipteams to drive integration across initiatives andmake prioritization decisions. Combined with leanbut effective governance, these roadmaps can help
leaders orchestrate one comprehensive, fully integrated
approach that enables better, faster outcomes andmitigates risks.
Orchestrating multiple initiatives in parallel will always
present challenges, but it’s essential — and possible.
For example one major financial institution that simply
banned departmental transformations to focus teams
on bigger value — and avoid the siloed projects that
often miss value targets. A better approach is todevelop a true orchestration mindset that extends
beyond stage gates, checklists, and templates towards
well-defined connections.
A company can align around standard planningintervals, for example, agree on a definition of what
constitutes a release, and use an enterprise-widetaxonomy to describe impacts on the operating model.
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initiatives — and when — each team knows where it
stands without needing to fully understand every otherteam’s solutions.
Companies can take action in three areas to enablesmooth orchestration:
Develop an enterprise view of change. Understandthe totality of change that is happening across theorganization by gathering all transformation eventsand initiatives into a single view and establish periodic
review and formal governance to keep it current.
Align on guidelines to manage initiatives. Invest
time to define a clear set of enterprise-wide designprinciples and objectives that will guide decisionmaking on each individual initiative, and help manage
discrepancies between initiatives and their impacts
across front/middle/back office functions.
Track value early and often. To realize the valueof your transformation invests requires tight
management that goes beyond the typical program
management office. Leaders need clarity on howeach initiative is contributing to the value, haveleading indicators to identify issues that may impact
intended benefits and be willing to pivot if new facts
emerge while staying focused on the goal.

Be ready to sequence
new initiatives
in a manner thatprevents costs fromre-emerging andmaximizes broader
organizational impact.

The new transformation agenda 14

Case study — KPMG in the UK

Handling scale and complexity
FTSE100 company and pharmaceutical company
AstraZeneca needed to overhaul the way it ran its
buying process across 11 key markets for 35,000
users and US$9bn spend with 20,000+ suppliers.
Operating with eight instances of a procure-topay (P2P) platform was hampering AstraZeneca’s
visibility of their supplier relationships, and had
inefficiencies baked in — especially around handling
local taxation rules.
“There were two impacts on the business that
we were looking to address” said Alastair Smith,AstraZeneca’s Change Management & Supplier
Enablement Lead. “The first, making sure that
AstraZeneca is a great place to work for our
employees and our scientists. The second is making
sure that our relationships with our suppliers are as
efficient and effective as they could possibly be.”AstraZeneca turned to KPMG in the UK to deploy
KPMG Powered Enterprise Procurement enabled by
Coupa, that could deliver a step-change in the user
experience and provide multi-functional and multigeographical requirements aligned around a coreglobal design and process.

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Having started with a readiness assessment,
AstraZeneca brought together a number of key
stakeholders from across the globe to formallylaunch the program with a KPMG Ignition event. A
pre-mobilization phase — designed to lower projectrisk — included a detailed program plan (considering
the impact of interlinked projects), data assessment
and preparations for data cleansing, supplier andchannel analysis across 20,000 suppliers, andcreation of cross-functional governance to drive
decisions at pace.
AstraZeneca was determined to design and deliver a
standard global process (on a single instance), whileaccounting for local regulatory, tax and legal matters.
KPMG member firms leveraged their local expertiseto help overcome local regulatory challenges.
85 percent of P2P transactions are now fully digital.
Enhanced accuracy and automation of indirect tax
processes have led to requisition-to-order timehalving on average, with invoice approval time down
by around 75 percent.

The new transformation agenda 15

04

Developing the right technology
and data foundations

Many transformations start with the assumptionthat technology will somehow make it all work. But,in reality, technology can also become a barrier andhold back a transformation. Transforming a process orfunction with new technology can be highly disruptive;
more than half of the middle manager survey
respondents complain about the disruption that digitaltransformations cause.
However, companies with a well-developed technology
platform and data strategy in place — a strong
technology foundation — are more likely to be able toexecute a successful transformation and do it over andover again. A modern data architecture that is scalable,
flexible, secure, and aligned to the objectives of thetransformation is essential. For example, companies
that succeed in transformations often have adopted
self-service tools that let employees rapidly access theinformation that they need, when they need it. This
enables faster, more effective problem solving anddecision making, while decreasing costs and burden on
support teams.
Companies that lack a strong data architecture andmodern tools — and that still struggle with the“technical debt” of outdated technology — face higher
costs, longer timelines, and limited ability to bring on
new technology, such as AI. A proper foundation canoffer three types of benefits.

1

Strategically, a rock-solid foundation will
enhance decision-making throughout thetransformation process, avoid waste, enable
better allocation of resources, and initiate afaster path to value.

2

Technically, this foundation will streamline
implementation processes, cut down ontechnology surprises, improve agility, andreduce risk.

3

Support for the transformation will increase
if employees see that the program will givethem better tools to let them use their timeeffectively.

@2023 Copyright owned by one or more of the KPMG International entities.
KPMG International entities provide no services to clients. All rights reserved.

To build the right technology foundation, start bydetermining the organization’s data and technicalmaturity. Then identify what needs to be built — or
acquired or accessed from a cloud. Building off these
insights, companies can make three key moves:
Align transformation and technology roadmaps.
Ensure your technology roadmap fits yourtransformation goals. Become familiar with yourecosystem partners (both current and new), andmake sure they’re solving problems and unlocking
valuable features. Also, be mindful of data security
and privacy.
Address technical debt. Eliminate projects thataren’t delivering value and prioritize ones that meetyour transformation objectives. While you’re at it, tidy
up your data management and governance.
Empower innovation. Give end users the tools
to develop fresh ideas that can improve teamdiscussions, business processes, or customer
experiences. Encouraging bottom-up innovation can
unlock potential value that might go unnoticed if
solely developed centrally.

66%

of middle
managers haveexperienced
a majortechnology
transformationin the last two
years

The new transformation agenda 16

How can generative AI redefine
transformations?
Generative AI is expected to have a significant
impact on transformations — as a tool to help designand execute transformations, and as a means oftransforming operating models and processes.
KPMG member firms are working with companies touse generative AI in areas such as:
Shared services
In finance, purchasing, and HR, generative AI is being
adopted to help streamline reporting, offload repetitive
tasks, and generate communications.
Cybersecurity
Generative AI is being used to help detect anomalies,
identify fraud and network intrusions, detect insider(employee) threats and software vulnerabilities.
Research and development
Pharma companies are exploring whether generative AI
can speed the search for new therapies. In asset
management, generative AI can help build ETFs.
Software development
Generative AI is helping companies improve code
generation quality, design, and compliance toguidelines. Software developers can spend more time
designing, less time coding.

@2023 Copyright owned by one or more of the KPMG International entities.
KPMG International entities provide no services to clients. All rights reserved.

The new transformation agenda 17

Case study — KPMG in Norway

Unleashing emerging technology to transform the supply chain
With 28 retail stores supported by a healthy online
offering, Barnas Hus is Norway’s leading children andbaby products retail chain. But recent times haveseen a rapid transition in the Norwegian retail space,
and the leadership team at Barnas Hus recognized
the need for transformation. Ongoing supply chain
issues suggested that the connection between
warehouse and stores needed re-thinking.
With a vision of a new technology-focused, cloudpowered integrated platform, Barnas Hus worked
with KPMG in Norway and opted for KPMG Powered
Enterprise | Supply Chain enabled by Microsoft
Dynamics 365 to help make the business fit for the
future.
A new state-of-the-art warehouse utilizes robotics
to accurately pick, sustainably pack and track every
product heading into stores, giving Barnas Hus the@2023 Copyright owned by one or more of the KPMG International entities.
KPMG International entities provide no services to clients. All rights reserved.

visibility of inventory it always needed. Now, store
managers and customers get the right products
faster and the foundations have been laid for artificial
intelligence (AI) and machine learning (ML) gains
further down the road.
High-quality data and analytics allow the company
to understand customers better and create
streamlined, more efficient journeys, making it more
likely for customers to return in the future. Shortly
after the Powered Supply Chain enabled by Microsoft
Dynamics 365 implementation, Barnas Hus achieved
its biggest month ever in terms of revenue. This boldnew vision is quickly helping to pay dividends.
Is your supply chain designed for growth?

The new transformation agenda 18

How KPMG can help
KPMG member firms work closely with clients through their transformation journeys, from setting
the initial vision to seeing that through to execution. With deep industry knowledge and experience,
member firms deploy an integrated, cross-functional business transformation approach designed
to help work with our clients to optimize performance, digitize processes, and drive growth
while navigating economic volatility and rapid market shifts. Whether it’s working with the latest
technology, integrating an acquisition, or adapting a business model to new challenges,
KPMG professionals can offer the right mix of capabilities to thoughtfully address clients’ concerns
to avoid pitfalls and raise the chances of success.

The KPMG approach

Trusted

T

ne

sf
n
a
r

Poweredormation Jour

E l eva t e

nsf

Connected

E l eva t eormation Jour

y

Tra

ne

KPMG digital transformation suiteyScalable managed services
KPMG member firms can help clients succeed witha portfolio of transformation technology solutions:
Connected Enterprise: Aligns your business aroundyour customers to create a seamless, agile, digitallyenabled organization that is designed to deliver better
experiences and new levels of performance and value.
Powered Enterprise: Transforms functions withtarget operating models that are designed with the
future in mind for optimized processes, governance,
KPIs, people skills, and data.
Trusted Imperative: Build trust and confidence inthe business and the digital transformation journeyby predictably navigating risk and regulation — anddeliver on the promise to keep customer datatrusted, safe, and secure.
@2023 Copyright owned by one or more of the KPMG International entities.
KPMG International entities provide no services to clients. All rights reserved.

Elevate: Quantifies value-creation opportunities
using a data-driven approach — helping to achievemeasurable improvements to revenue, margin
expansion, cost management, and capital structures.
Transformation Journey: Continuously plan,prioritize and orchestrate transformation initiatives as
end points shift to deliver results that matter.
Managed Services: Combine leading technology
with functional and sector expertise to handle
knowledge-intensive processes across yourenterprise — on a subscription, as-a-service to drive
outcomes like resilience, customer retention, andstakeholder trust.

The new transformation agenda 19

Transformation neverstops. Neither do we.
At KPMG we believe that business transformation is too good an opportunity to
miss. Combining the right tech and the best processes with people whose insightis as broad as it is deep, are essential ingredients to successfully transform. KPMG
member firms have worked at the heart of global businesses for many decades,
helping clients realize the full potential of their people and technology and working
together to achieve real-world outcomes. Because when people and technology are
in harmony great things happen.
Making a world of difference:
KPMG people can make all the difference on your transformation journey. Together
we can help you to orient your business around the customer, optimize functions
for a new era, manage enterprise risk and regulation for a safer future, rise to a newlevel of value creation, and create an environment for managing ongoing change.

Related thought leadership:@2023 Copyright owned by one or more of the KPMG International entities.
KPMG International entities provide no services to clients. All rights reserved.

The new transformation agenda 20

Authors
Atif Zaim
National Managing Principal,
Advisory
KPMG in the US
E: azaim@kpmg.com

Phil Hoskins
Principal, Advisory
KPMG in the US
E: phoskins@kpmg.com

Nalin Kumra
Principal, Advisory
KPMG in the US
E: nalinkumra1@kpmg.com

Tracey Keele
Partner, Advisory
KPMG in the US
E: tkeele@kpmg.com

Jeanne Johnson
Principal, Digital Transformation
KPMG in the US
E: jeannejohnson@kpmg.com

Rob Barrett
Principal, Advisory
KPMG in the US
E: rhbarrett@kpmg.com

Adam Pollak
Principal, Advisory Strategy
KPMG in the US
E: apollak@kpmg.com

Survey methodology
To better understand perspectives, challenges,
and opportunities in transformation planning andexecution, KPMG in the US deployed two surveys
on transformation in the first half of 2023, with all
firms surveyed generating more than US$1 billion in
annual revenues.
In February, we surveyed 200 global C-suite and senior
executives to better understand their transformation
objectives and priorities in a time of a downturn,drivers of transformation activities, factors behindtransformation success, and transformation planning.

across the surveys gives us a more broad-ranging
understanding of the current transformation
landscape across roles from manager up.
No industrial sector represented more than
29 percent or less than 7 percent of results, allowing
for deeper analysis by sector. US firm professionals
used additional data quality checks to remove badquestions and bad respondents. We analyzed data
though descriptive statistics, cross-tabulation, andcontingency tables, validating every analysis against
test assumptions and distributional properties.

In May, we surveyed 1,002 US-based middle
managers with similar goals. Comparing results@2023 Copyright owned by one or more of the KPMG International entities.
KPMG International entities provide no services to clients. All rights reserved.

The new transformation agenda 21

To learn more about how KPMG member firms can help your transformation,please contact:
Ian Hancock
Global Head of Consulting
KPMG International
E: Ian.hancock@kpmg.co.uk

Simon Benson
Partner in Charge, Transformation
Service Group
KPMG Australia
E: sbenson@kpmg.com.au
Keith Cowley
Partner, UK Transformation CoE Lead
KPMG in the UK
E: keith.cowley@kpmg.co.uk
Jubran Coelho
Partner, Consulting and Private
Enterprise
KPMG in Brazil
E: jpcoelho@kpmg.com.br
Conor McCarthy
Partner, Management Consulting
KPMG in Ireland
E: conor.j.mccarthy@kpmg.ie
Silvester Liu
Partner, Management Consulting CIOAKPMG China
E: silvester.liu@kpmg.com
Michael Klubal
Partner, Management Consulting
KPMG in Canada
E: mklubal@kpmg.ca

Natasha Moore
Global Lead Transformation
KPMG Australia
E: nmoore1@kpmg.com.au

Ido Alon
Principal, Management Consulting
KPMG in Israel
E: idoalon@kpmg.com

Manuel Hinojosa
Partner, Advisory
KPMG in Mexico
E: manuelhinojosa@kpmg.com.mx

Joseph Fuccillo
Senior Director, KDN Advisory
KPMG in the US
E: jfuccillo@kpmg.com

Belen Diaz Sanchez
Partner, Corporate Services
Transformation
KPMG in Spain
E: belendiaz@kpmg.es

Rahsaan Shears
Transformation Delivery Service Line
Leader
KPMG in the US
E: rshears@kpmg.com

Paolo Coacci
Partner, Advisory
KPMG in Italy
E: pcoacci@kpmg.it

Jacques Cornic
Partner, Advisory FSP Insurance
KPMG in France
E: jcornic@kpmg.fr

Sang-Weon Park
Partner, Executive Office
KPMG in Korea
E: sangweonpark@kr.kpmg.com

Marco Lehmann
SAP & Finance Transformation
KPMG in Germany
E: mlehmann@kpmg.com
Toyosuke Fukushima
Digital Transformation Acceleration
KPMG in Japan
E: toyosuke.fukushima@jp.kpmg.com

Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities.

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Designed by Evalueserve. | Publication name: The new transformation agenda | Publication number:139076-G | Publication date: December 2023