The disruptors are the disruptedKPMG International —November 2016

Disruptive technologies barometer: technology sector

2© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

As agents of change, technology companies have always been at the forefront of disruption.

3

Today, an ever-increasing range of emerging technologies are disrupting the sector with exponential speed.

© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

4© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

KPMG International commissioned Forrester Consulting to conduct a survey of technology decision makers to understand how they are prioritizing and investing in disruptive technologies and found the following insights...

5© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Many technology leaders express optimism about disruptive technologies

6© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Disruption has a positive sidesay they’ve seen a positive impact on both their organizations and their industry

are excited about the ability to enter new markets

see opportunities to develop new monetization models

67%

51%

46%

7© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Technology leaders see considerable opportunity, but they have concerns about disruptive technologies.

8© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

believe their companies are “very prepared” in their strategic vision

feel they have a strong knowledge of available

technology solutions

Less than 1/3 of tech leaders…

32%

31%

9© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

So how can business leaders make the best bets when investing in disruptive technologies?

10© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

The tech sector is investing in a range of disruptive technologies to increase operational and customer effectiveness

11© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Disruptive technologies can be applied to two different areas of businessTechnologies that attract, serve, and retain customers

Customers

Technologies that drive operational excellence, productivity, and agility

Operations

12© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

They are transforming business models and the customer experience 38%47%39%

IoT is the leader in developing new products and services

D&A helps tech firms market to customers more effectively

Digital payments and currency is

being used to monetize products and services more effectively

13© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Three biggest aids to productivity

48%

49%

48%

… and improving operations models

IoT

D&A

Robotics

14© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Most are investing in a number of different technologies

To increase productivity (36%)

To improve the quality of products and services (41%)

Base: 580 business and IT decision-makers at technology companiesSource: A commissioned study conducted by Forrester Consulting on behalf of KPMG, January 2016

Where are tech firms investing?

15© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

IoT tops the list of investments, followed by cloud and D&A .

61%

60%60

%IoT

Cloud

D&A

Top investments

16© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Are tech firms getting value from their investments in disruptive technologies?

17© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Based on impact and investment, disruptive technologies fall into 5 stagesKPMG framework: Disruptive technology value map(Investment versus impact model)

Table stakesMaturing

Sunrise/sunsetStrategic

Nascent

TechnologiesTechnologiesTechnologiesTechnologiesTechnologies

D&ACloudMobile

Social media

Internet of thingsMarketing platforms

Wearable devices Virtual/augmented realityRobotics3D printing

On-demand market based platformsDigital payments & currencyArtificial intelligence & cognitive computing

Low

Impact

Investment Impact

Investment Impact

Investment Impact

Investment ImpactLow

Medium

MediumMedium

High

HighHigh

High

Low

Base: 580 business and IT decision-makers at technology companiesSource: A commissioned study conducted by Forrester Consulting on behalf of KPMG, January 2016

Investment

18© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Those that got it right…

Getting investment timing right

saw the new technology trend earlier than their competitors

invested earlier than their peers

Base: 580 business and IT decision-makers at technology companiesSource: A commissioned study conducted by Forrester Consulting on behalf of KPMG, January 2016

Whether tech businesses want to be first movers or fast followers, they need, above all, to be agile, to ensure they don’t get left behind

54%

46%

19© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Only 54 percent say their C-suite keeps a close

eye on disruption

However, tech firms need to reshape their organizations.

Disruptive technologies are not a high enough priority on tech industry leaders’ agendas

20© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Successfully navigating disruption: five key takeawaysUnderstand the organizational impact of disruptive technologies01

Align investment in disruption with corporate strategy02

Strike the right balance between investing in today’s and tomorrow’s technologies03

Demonstrate investment agility04

Set the organization on the path to transformation05

21© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

For more information, please visit www.kpmg.com/tmtbarometer.

kpmg.com/socialmedia kpmg.com/app

© 2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

The KPMG name, logo are registered trademarks or trademarks of KPMG International.