30 January 2011
MUSCAT - More than 90 per cent of senior executives across 22 countries say their organisation's success depends on managing today's complex business issues, primarily the regulatory landscape and information management, but less than half believe the actions they are taking to manage complexity have been very effective, says a new study from KPMG International.
The study 'Confronting Complexity: How business globally is taking on the challenges and opportunities' revealed that 70 per cent of executives believe increasing 'complexity' -- caused by regulatory compliance, information management, government oversight, changing operating models, speed of innovation, tax policy and other factors -- is among their company's biggest challenges.
"Powerful forces have reshaped the global business landscape in the last few years, accelerating the rise of complexity as a source of challenge, change, risk, unpredictability and even opportunity that executives must understand and embrace with new tools and skills in order to succeed," said Timothy P Flynn, Chairman of KPMG International, the global network of professional services firms providing Audit, Tax and Advisory services.
Michael Armstrong, Partner-in-Charge of the Oman Office, said: "The findings of the KPMG study are equally relevant for Oman and the region. Complexity in managing business in the region is also increasing with new regulations, increased competition, varied and increasing resource requirements, growing risks in multiple areas of business and the demand of clients and customers for businesses to offer value for money. Businesses in Oman and the region are responding swiftly to be ahead in the game and advisory firms like KPMG are working closely with business and Government to help them meet their goals.
The KPMG global study, which consisted of interviews with 1,400 senior executives in 22 countries globally, found that at least seven out of ten executives believe complexity can create new opportunities for their businesses, including gaining competitive advantage, creating better strategies, expanding into new markets and improving efficiencies.
"The KPMG research indicates that although complexity and its challenges are placing increasing pressures on organisations, opportunities really do exist for those who can think differently and turn potential hurdles to their competitive advantage. Indeed, we see businesses increasing their focus on managing complexity to be better positioned to capture the opportunities," Flynn added.
Some of the top-line findings of the KPMG global study also suggest that complexity is global -- reaching across both mature and developing markets, as well as across industry sectors.
"Complexity is increasing, three quarters of the respondents say complexity has increased for their organisations over the past two years, and a majority expect things to become even more complicated in the coming two years.
"Complexity is not static -- about half of respondents expect the causes of complexity to shift over the next two years, and a majority says their companies will need to take different or additional actions to manage complexity, and increased risk is the greatest challenge presented by complexity, along with increased costs and the need for new skills."
Businesses taking action to address complexity
The KPMG research shows that business is taking significant actions to address complexity, particularly in the areas of information management, business organisation and human resources. But success has been mixed with only a minority finding the actions they have taken to be very effective in addressing complexity.
The most effective actions taken according to the research have been improving information management, business reorganisation, investing in new countries or geographies, and conducting mergers or acquisitions, but still, fewer than half of executives say these actions have been very effective.
"Business needs the ability to manage simply, continually streamline, not create internal bureaucracy, and be good at executing," said Alan Buckle, Global Head of Advisory for KPMG's network of firms. "We find that organisations are most successful when they keep their business models simple and don't create more complexity of their own with the actions they are taking."
Regulation, technology are key factors
Regulation is identified in the research as the leading cause of complexity globally, cited by almost three-quarters of executives surveyed. Closely related to regulation, government oversight is identified by 60 per cent of respondents as a leading cause of complexity. The research reveals one of the driving issues with regulation to be global inconsistency; in fact, close to 90 per cent of respondents say governments should work together to make the global regulatory environment less complex. The research also shows technology to be a critical issue, both as a cause of complexity and a key solution. Information management is the second-most identified cause of complexity in the survey as well as the top focus for businesses in addressing complexity. Speed of innovation is also shown to be a growing cause of complexity, particularly in developing economies.
Looking out two years, a majority of executives surveyed expect the speed of innovation to be an even more important cause of complexity for their businesses.
Complexity is producing need for new skills
The need for new skills to manage complexity is a key challenge for business according to the research, identified by more than three-quarters of executives globally.
Not surprisingly, the need for new skills to address complexity most impacts the technology sector, where more than 80 per cent say it is a top challenge. Geographically, the need for new skills is shown to be particularly acute in Brazil, China and Japan, where 90 per cent of executives surveyed identify it as a critical challenge.
"The need for new skills reflects the challenges businesses are facing in addressing complexity and leveraging it to their advantage," said Flynn. "There are many drivers of complexity and organizations need to be agile, adopting specific strategies with the right talent and resources to respond."
MUSCAT - More than 90 per cent of senior executives across 22 countries say their organisation's success depends on managing today's complex business issues, primarily the regulatory landscape and information management, but less than half believe the actions they are taking to manage complexity have been very effective, says a new study from KPMG International.
The study 'Confronting Complexity: How business globally is taking on the challenges and opportunities' revealed that 70 per cent of executives believe increasing 'complexity' -- caused by regulatory compliance, information management, government oversight, changing operating models, speed of innovation, tax policy and other factors -- is among their company's biggest challenges.
"Powerful forces have reshaped the global business landscape in the last few years, accelerating the rise of complexity as a source of challenge, change, risk, unpredictability and even opportunity that executives must understand and embrace with new tools and skills in order to succeed," said Timothy P Flynn, Chairman of KPMG International, the global network of professional services firms providing Audit, Tax and Advisory services.
Michael Armstrong, Partner-in-Charge of the Oman Office, said: "The findings of the KPMG study are equally relevant for Oman and the region. Complexity in managing business in the region is also increasing with new regulations, increased competition, varied and increasing resource requirements, growing risks in multiple areas of business and the demand of clients and customers for businesses to offer value for money. Businesses in Oman and the region are responding swiftly to be ahead in the game and advisory firms like KPMG are working closely with business and Government to help them meet their goals.
The KPMG global study, which consisted of interviews with 1,400 senior executives in 22 countries globally, found that at least seven out of ten executives believe complexity can create new opportunities for their businesses, including gaining competitive advantage, creating better strategies, expanding into new markets and improving efficiencies.
"The KPMG research indicates that although complexity and its challenges are placing increasing pressures on organisations, opportunities really do exist for those who can think differently and turn potential hurdles to their competitive advantage. Indeed, we see businesses increasing their focus on managing complexity to be better positioned to capture the opportunities," Flynn added.
Some of the top-line findings of the KPMG global study also suggest that complexity is global -- reaching across both mature and developing markets, as well as across industry sectors.
"Complexity is increasing, three quarters of the respondents say complexity has increased for their organisations over the past two years, and a majority expect things to become even more complicated in the coming two years.
"Complexity is not static -- about half of respondents expect the causes of complexity to shift over the next two years, and a majority says their companies will need to take different or additional actions to manage complexity, and increased risk is the greatest challenge presented by complexity, along with increased costs and the need for new skills."
Businesses taking action to address complexity
The KPMG research shows that business is taking significant actions to address complexity, particularly in the areas of information management, business organisation and human resources. But success has been mixed with only a minority finding the actions they have taken to be very effective in addressing complexity.
The most effective actions taken according to the research have been improving information management, business reorganisation, investing in new countries or geographies, and conducting mergers or acquisitions, but still, fewer than half of executives say these actions have been very effective.
"Business needs the ability to manage simply, continually streamline, not create internal bureaucracy, and be good at executing," said Alan Buckle, Global Head of Advisory for KPMG's network of firms. "We find that organisations are most successful when they keep their business models simple and don't create more complexity of their own with the actions they are taking."
Regulation, technology are key factors
Regulation is identified in the research as the leading cause of complexity globally, cited by almost three-quarters of executives surveyed. Closely related to regulation, government oversight is identified by 60 per cent of respondents as a leading cause of complexity. The research reveals one of the driving issues with regulation to be global inconsistency; in fact, close to 90 per cent of respondents say governments should work together to make the global regulatory environment less complex. The research also shows technology to be a critical issue, both as a cause of complexity and a key solution. Information management is the second-most identified cause of complexity in the survey as well as the top focus for businesses in addressing complexity. Speed of innovation is also shown to be a growing cause of complexity, particularly in developing economies.
Looking out two years, a majority of executives surveyed expect the speed of innovation to be an even more important cause of complexity for their businesses.
Complexity is producing need for new skills
The need for new skills to manage complexity is a key challenge for business according to the research, identified by more than three-quarters of executives globally.
Not surprisingly, the need for new skills to address complexity most impacts the technology sector, where more than 80 per cent say it is a top challenge. Geographically, the need for new skills is shown to be particularly acute in Brazil, China and Japan, where 90 per cent of executives surveyed identify it as a critical challenge.
"The need for new skills reflects the challenges businesses are facing in addressing complexity and leveraging it to their advantage," said Flynn. "There are many drivers of complexity and organizations need to be agile, adopting specific strategies with the right talent and resources to respond."
© Oman Daily Observer 2011
