Home Latest Feeds Technology News PwC – The year of business transformation

PwC – The year of business transformation

PwC – The year of business transformation


Despite their more optimistic economic expectations, CEOs are less optimistic when asked about the expected development of their own revenues, according to PwC’s global and domestic survey. Whether it’s generative artificial intelligence or sustainability, business leaders have recognized the need for fundamental business transformation.

Compared to the results of last year’s survey, the proportion of CEOs who expect better growth in the world economy in the next 12 months has more than doubled, while the proportion of managers who are worried about their own company’s long-term business viability has risen to 45 percent – he pointed out in this year’s report published in January (27th Annual Global CEO Survey) by PwC. In the underlying survey, in which 4,702 CEOs from 105 countries took part, 38 percent of the interviewed leaders were optimistic about the expected economic performance of the world in the short term, while only 18 percent of the respondents held a similar opinion in 2023.

According to tradition, the consulting company prepared the domestic edition of the report this year as well. The 13th PwC Hungary CEO Survey published in February – in which 297 company managers participated – revealed that the optimism of our CEOs is above average, 54 percent of them trust in the improvement of the growth rate of the global economy, and 60 percent of them in the domestic economy.

Only 22 percent predict a slowdown both globally and in Hungary, compared to 76 and 85 percent last year, respectively. For the first time in the history of the survey, Hungarian business leaders were more optimistic about economic growth than about the development of their own incomes. The percentage of those who believe in the growth of their company this year fell to the level of 47 percent measured in 2012. Among the external risk factors, half of the respondents highlighted the effect of inflation and the lack of skilled labor, while the volatility of the macroeconomics and the exposure to geopolitical conflicts and cyber threats were highlighted by a third of the respondents.

It is necessary to change

This year, more than half of the domestic companies plan to raise prices, and more than a third plan to increase the number of employees. Only four CEOs out of ten admit that their company’s business model and processes must be changed in order to maintain competitiveness in the long term.

Compared to last year’s survey, the proportion of those who believe that their company will lose its viability within ten years if it continues on its current path has not changed – 43 percent, almost the same as the global average. However, the global survey reveals that smaller companies – those with annual sales of less than $100 million – are more at risk, as 56 percent of their managers made a similar statement.

In the last five years, domestic companies have improved their ability to create business value by developing new products and services (54 percent), developing technological capabilities in-house (32 percent) or expanding them from external sources (44 percent), and through strategic partnerships (47 percent). In this context, the regulatory environment received a halved assessment, according to almost half of the CEOs, it encourages, while more than a third of them say it hinders the transformation of companies. About a fifth of the respondents see a further barrier to transformation in the bureaucracy within the organization, the lack of technological capabilities of the workforce, and limited financial resources.

Globally, however, two-thirds (64 percent) of CEOs said that the regulatory environment is at least partially hindering the transformation of business models, and slightly more than half cited workforce skills gaps. According to the global survey, managers see a serious obstacle to transformation even in less efficient company operations – in their opinion, roughly 40 percent of the time spent on routine tasks, from decision-making to correspondence, is misused.

Generative AI – opportunity and challenge

Globally, the vast majority of CEOs see generative artificial intelligence as a catalyst for the transformation of business, which also increases the efficiency and innovation power of companies. In PwC’s global survey, nearly three-quarters (70 percent) said that in the next three years, this technology will significantly transform the way business value is created, delivered and captured.

Even in the short term, the respondents expect a lot from generative artificial intelligence. Almost three-fifths of the respondents (58 percent) expect product and service quality to improve in the next 12 months, and more than 40 percent expect an increase in income and profitability.

At the same time, the respondents see not only opportunities, but also challenges, and according to the majority of them (69 percent), realizing the transformational benefits of generative AI will require, for example, further training of the workforce. A similarly high proportion of them are concerned about the growing cyber risks accompanying technology and the spread of misinformation. Almost half of the managers fear that their company will be fined, sued, or its reputation damaged in some other way due to the insufficiently responsible use of generative AI.

In Hungary, however, the spread of generative artificial intelligence is still waiting to happen. It plays a role in the operation of only 18 percent of domestic companies, and only a little more than a quarter (27 percent) of managers said that generative AI is already included in their technology strategy. Exceptions to this are the technology and telecommunications sector, as well as the media and entertainment industry, where the level of expectations and fears is also higher than average.

In the next one year, however, many more people expect the transformative role of generative artificial intelligence. According to 52 percent of managers, technology will improve the quality of products and services, and 56 percent also expect more efficient use of working time – these rates are even higher than the global average. More than 60 percent of the participants of the domestic survey believe that generative AI will require the acquisition of new skills from employees in the next three years, and will also change the way business value is created and the nature of competition in their industry.

By the way, with regard to generative artificial intelligence, half to three-quarters of Hungarian CEOs are concerned about the same risks as the majority of their international colleagues.

Climate-friendly investments

Although just over a tenth (13 percent) of Hungarian managers are worried about climate change, at least their percentage has not decreased since last year’s survey. At their company, they have already started or are planning to switch to a more climate-conscious operation this year, in order to offset the effects of the energy crisis that directly affects them and their customers.

Most of them improve their energy efficiency (84 percent), develop new, climate-friendly products, services or technologies (64 percent), or develop solutions to increase their customers’ resilience to climate change (52 percent). Almost half of the companies have started retraining their employees in this direction, and 40 percent of them are already taking climate risks into account in their financial planning.

At the same time, 13 percent of domestic companies do not consider it their task to reduce the emissions caused by it – it is noteworthy that among them the proportion of telecommunications and entertainment companies leading in the use of artificial intelligence is outstanding. Decarbonization is mostly hindered by two factors, the lower return on climate-friendly investments and the complexity of regulations, which were highlighted by almost half of the respondents.

According to PwC’s global survey, however, a growing group of CEOs see not only risks, but also opportunities in the impact of climate change on industries. Almost a third of them now say that in the next three years this process will transform the way business value is created, delivered and captured, while in previous years this proportion was more like 25 percent.

They also try to fulfill their commitments in practice. 76 percent of the respondents reported on increasing energy efficiency, and 58 percent on the development of new, climate-friendly products, services and technologies. At the same time, only 45 percent said that they take the risks of climate change into account in their financial planning, and so far less than half of the companies have also prepared to deal with the physical risks of climate change.

The answers collected testify to the significant support for decarbonization, only a quarter of the respondents said that it is hindered somewhat by the lack of top management support at their company. Like their Hungarian colleagues, more than half of the CEOs participating in the global survey see the complexity of the legal regulations and the lower return on climate-friendly investments as the biggest obstacle, although it seems that they are beginning to accept the latter difficulty. In fact, four out of ten international leaders indicated that they typically accept threshold values ​​1-4 percentage points lower for climate-friendly investments than for other investments.



Please enter your comment!
Please enter your name here