FINDING GROWTH IN AN UNCERTAIN WORLD - 22ND ANNUAL GLOBAL CEO SURVEY - IRISH ANALYSIS - PWC
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22nd Annual Global CEO Survey - Irish Analysis Finding growth in an uncertain world pwc.ie/ceosurvey
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22nd Annual Global CEO Survey - Irish Analysis
Contents
Foreword 01
1
A cautious outlook for Ireland 03
2
Looking inside-out for growth 09
3
Mind the information gap 17
4
Activating the AI revolution 23
5
Solving the skills shortage 28
6
Methodology and contacts 33
Foreword
I am delighted to present the Irish analysis of PwC’s The survey highlights that CEOs need to make better
22nd Annual Global CEO Survey. Once again, it provides use of data analytics as a means to identify efficiencies
some fascinating insights into the issues which are and opportunities. Using their data in the right way will
top of mind for business leaders in Ireland. The survey also enable them to take advantage of the upcoming
reflects the views of 235 Irish and 1,378 global CEOs Artificial Intelligence revolution. But in order to be
and was conducted in Autumn 2018. The previous Irish confident that their organisation is fit for the future they
survey was conducted in Spring 2017. must first solve the key skills challenge.
The majority of Irish CEOs are cautiously optimistic People are always the key to a successful organisation
about the future, but more recognise investment and that’s something I’ve found to be true throughout
is needed in emerging technologies and key skills. my own professional career. It is becoming more
At the time the survey was conducted, over half of important that people are equipped to be part of
Irish business leaders were positive about the future the workforce of the future. By engaging, training
prospects for the economy and the future performance and empowering our people, we are setting up the
for their organisation’s revenue growth. However, platform for future improvement, innovation and
possibly reflecting external uncertainties, a quarter success. Adopting effective change strategies and
(25%) felt unfavourable about the prospects for the Irish deploying skilled resources will successfully deliver your
economy, up from 17 % in 2017. Key challenges include growth priorities.
the unavailability of key talent, at an all-time high, cyber
threats and geopolitical uncertainties. As we look out to 2019 and beyond, with the realities of
Brexit front of mind, PwC is here to help you manage the
As external uncertainties persist, it is interesting to risks and realise the opportunities. Talk to us today.
see how Irish CEOs, like their global counterparts,
are turning their attentions to the areas within their
own control to drive growth. For example, they
anticipate organic growth, new products and services
and operational efficiencies will be the key drivers
Feargal O’Rourke
of growth in the year ahead. In the light of external
disruptors, such as Brexit, it is critical that CEOs take Managing Partner,
PwC Ireland
charge of their own destiny in as much as they can.
01 | 22nd Annual Global CEO Survey - Irish Analysis
The messages for CEOs:
Ensure your Close the Prepare for Invest in
organisation is information gap the Artificial key skills
fit for growth Intelligence
revolution
CEOs’ focus is turning inward, As CEOs look inside their To help unlock internal growth The skills challenge is at an all
to things they can control in their businesses for growth potential in their organisations, time high in the history of the
businesses. That means they opportunities, they are contending CEOs are paying close attention survey. The majority of Irish
must ensure their organisations’ with gaps in their organisation’s to emerging digital technologies CEOs see this as the biggest
combination of processes, tools, data analytics capabilities. Irish such as Artificial Intelligence (AI). threat to business growth. Irish
knowledge, skills and culture CEOs need to ensure that they Irish CEOs need to understand organisations must again look
are fit to cultivate, deliver and are extracting the maximum value how AI can be applied in their inwards and invest in their
sustain growth. out of their data to allow them businesses, and ensure their workforce to make them fit for the
to leverage new technologies in organisations have the right talent, future, providing the right training
sustainable ways. data and technology to exploit AI and career development support.
opportunities.
02 | 22nd Annual Global CEO Survey - Irish Analysis
1 A cautious
outlook for Ireland
Ireland’s business leaders are cautiously optimistic about the
next 12 months. They are positive about the prospects for
the economy, and strongly believe in their own organisation’s
growth. However, they are not unaware of the external
threats and uncertainty that Brexit and international policy
changes may bring. A quarter of the CEOs we canvassed are
concerned about the prospects for the economy, up from
17% in our previous survey.
25%
of Irish CEOs are uncertain
about the future prospects
of the economy
03 | 22nd Annual Global CEO Survey - Irish Analysis
What do Irish CEOs know The economic outlook are more pessimistic about the
about the future? future performance of the global
As far as Ireland’s economic economy – in fact, much more so.
Based on the past ten years of prospects are concerned, CEOs Nearly 30% believe that the global
global survey data, Irish CEOs are displaying the same cautious economy will contract in the
appear to have special predictive optimism they showed the last next 12 months, a record jump in
powers about the outlook for time we sought their opinions in pessimism from 5% in 2018.
global growth in the following 12 2017. At a time when uncertainty
months. The degree of change in is rife, we shouldn’t be surprised This leap is not particularly
their confidence about their own that enthusiasm is being curbed. surprising. Irrespective of where
organisation’s revenue growth But we are also seeing a creeping CEOs are located, international
prospects correlates almost increase in concern about the trade tensions and political
directly with actual changes in national economy, possibly driven uncertainty, as well as stricter
global economic growth. by the realisation that external monetary and fiscal policies
challenges, like Brexit, pose more all play out differently, but with
However, the analysis shows of a threat to prosperity than the same general result: a more
that Irish CEOs have weaker previously thought. cautious outlook for global
predictive powers when it comes economic growth. Overall,
to the outlook for Irish economic This increase in uncertainty is also global and Irish CEOs are more
growth in the year ahead. This reflected in the equivalent global polarised this year in their views
may be because business growth CEO survey PwC undertook, as on economic growth; fewer CEOs
is more susceptible to external well as international and national take the neutral stance that it will
global factors rather than national economic indicators. The global stay the same.
influences. survey shows business leaders
30%
of global CEOs believe the global economy
will contract in the next 12 months
04 | 22nd Annual Global CEO Survey - Irish Analysis
Exhibit 1: Question:
Many CEOs expect economic Do you believe economic growth will
improve over the next 12 months?
growth to improve
Ireland: % ‘favourable’ about future growth prospects for Ireland’s economy
57%
Global: % who stated the global economy will ‘improve’
92%
86%
76%
of Irish CEOs are positive about 74%
71%
the future growth prospects for
Ireland’s economy
58% 57%
57%
44%
37%
42%
31%
29% 29%
27%
22%
16%
14%
18%
15%
3%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
05 | 22nd Annual Global CEO Survey - Irish Analysis
Most major economic organisations have Exhibit 2: Question:
adjusted their 2019 forecasts downward.
For example, the International Monetary However, there is a rise in those Do you believe economic
growth will improve, stay
Fund (IMF) in January 2019 cut its world
growth forecasts for 2019 and 2020. The saying growth will ‘decline’ the same, or decline over
IMF predicts global growth will be 3.5% the next 12 months?
this year, and 3.6% in 2020, down 0.2 and
0.1 percentage points respectively from
last October’s forecasts. They put their
forecasts down to weakness in Europe and
emerging markets, warning that “failure
Ireland: % ‘favourable/unfavourable’ about future growth prospects for Ireland’s economy
to resolve trade tensions could further
destabilise a slowing global economy”.1 Global: % who stated the global economy will ‘improve/decline’
Unfavourable/decline No change/don’t know Favourable/improve
The same outlook is mirrored in Ireland. In
January 2019, The Central Bank predicted
“Ireland’s economy will grow by 4.4% Ireland Global Ireland Global
in 2019 if the UK leaves the EU with an
agreement on March 29th”. However, the
17% 17%
bank warned that a no-deal Brexit could 25% 29%
result in a “reduction in economic growth
(GDP) by up to 4 percentage points in the
25%
first full year.”2 18%
29% 53%
57% 58%
42%
29%
Source:
1. IMF, World Economic Outlook Update: A Weakening
Global Expansion, January 2019
2. Central Bank of Ireland, Quarterly Bulletin No.1 2019 2019 2017
06 | 22nd Annual Global CEO Survey - Irish Analysis
The business perspective Exhibit 3: Question:
Both global and Irish CEOs are more Irish CEOs confidence in their How confident are you
about your organisation’s
confident in their own business’
growth than they are in the organisation’s prospects for ‘strong prospects for revenue growth
prospects for the economy in the over the next 12 months?
year ahead. 84% of Irish business growth’ is at a record high
leaders expect to see revenue
growth in the year ahead, and 35%
expect that growth to be strong.
This represents the highest level of
Ireland: % growth Ireland: % strong growth
confidence for strong organisational
growth in the history of the Irish Global: % growth Global: % strong growth
report. It is also interesting to see
given the imminent departure of the 90% 88% 88%
UK from the European Union that 84% 85% 84% 85% 84%
84%
81% 81%
this should be the case: how are
businesses expecting to achieve 81% 82% 82%
71% 77%
this growth in light of the challenges 75%
that face them? Throughout the
59%
remainder of the survey we will 64% 56%
53% 54%
detail how businesses can achieve 50%
this growth in light of the challenges
they are facing. 48% 40% 42%
39% 39% 38%
36% 35% 35%
29%
35%
35%
21% 31% 29%
26% 26%
21%
18% 18% 18% 18%
14% 14%
of Irish CEOs expect strong revenue
growth in the year ahead 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
07 | 22nd Annual Global CEO Survey - Irish AnalysisExhibit 4: Question:
A majority of Irish CEOs expect Do you expect headcount at your
organisation to increase, decrease or stay
their headcount to increase the same over the next 12 months?
Making your headcount count Decrease
One way CEOs plan to achieve No change
this growth is by expanding their Increase
workforce. Their intention to
recruit is at an all-time high for the
Irish survey, with nearly two-thirds Ireland Global Ireland Global
of Irish CEOs planning to increase
their headcount in the year ahead. 10% 11%
20% 16%
However, given the challenges
organisations are facing in finding
27%
skilled people and Ireland’s low 40%
26% 32%
unemployment rate, it remains to
be seen if these recruitment plans
are achievable.
63%
63%
54% 52%
49%
2019 2017
of Irish CEOs expect to expand their
workforce in 2019, an all-time high
08 | 22nd Annual Global CEO Survey - Irish Analysis2 Looking inside-out
for growth
We’ve seen that CEOs are confident in their own organisation’s growth
potential, but less so in the potential for the Irish economy. Their focus
is turning inward, to things they can control in their businesses. They
are planning to invest in organic activities within their organisations
that they believe will propel them to success: operational efficiencies,
creating new products and services and increasing headcount. But
those activities are planned against a backdrop of challenges related
to the ease of doing business: the ease of finding skilled people is it
an all-time high, and cybersecurity remains a considerable concern.
70%
of Irish CEOs are planning
on driving revenue
through organic growth
09 | 22nd Annual Global CEO Survey - Irish AnalysisThe reality of growth Exhibit 5: Ireland Global
Organic growth, the growth Faced with the new Organic
70%
rate a company can achieve by growth
increasing output and enhancing realities, organisations 71%
efficiency internally, is by far
the greatest source for growth are turning inward to Launch of a
new product
58%
in the year ahead, according
to Irish CEOs. Faced with new drive revenue growth or service 62%
realities and external challenges,
organisations are looking at how 54%
Operational
they can drive revenue growth Question: efficiencies
77%
on their own terms in a way they
can control. Over half of the Which of the following activities,
CEOs we canvassed expect to if any, are you planning in the Enter a new
33%
launch a new product or service next 12 months in order to market
37%
in the year ahead, and almost the drive growth?
same number will seek growth
by making their operations more New strategic 29%
efficient. Overall, Irish CEOs are alliance or
joint venture 40%
displaying more caution than
their global counterparts when it
comes to inorganic growth: just a 21%
third will enter a new market and New M&A
37%
just one in five will seek a new
merger or acquisition.
Collaborate 16%
with
entrepreneurs
or start-ups 32%
9%
Sell a
business
14%
10 | 22nd Annual Global CEO Survey - Irish AnalysisExhibit 6: Question:
Irish CEOs see the UK Which territories do you
consider most important for
as, by far, the most your organisation’s growth
prospects in the year ahead?
important territory for
potential growth
When seeking locations for potential Ireland Global
international growth, Irish CEOs see
the UK as, by far, the most important
territory, followed by the US, Germany and 44%
China. With Brexit on the horizon, and a
potential contraction of opportunities for
trade, there is a new necessity for Irish
34%
organisations to increasingly diversify into
markets other than the UK such as China.
Which remains the second most attractive 27%
market for growth globally. 24%
44%
14%
13%
9%
8%
of Irish CEOs say the UK is the
number one territory for growth UK USA Germany China
11 | 22nd Annual Global CEO Survey - Irish AnalysisChallenges to growth Exhibit 7:
75%
Geopolitical 76%
Geopolitical
Global 2019
uncertainty 89%*
According to the survey, the Ireland 2019 93%*
availability of key skills and cyber
threats top the list of concerns uncertainty Ireland 2017
Ireland 2016
Uncertain
73%
67%
68%
keeping Irish CEOs awake at economic growth
night, whilst geopolitical risks remains the 73%
continue to be the leading
leading economic
62%
Increasing tax 67%
economic threat. Since the burden 93%
77%
survey was conducted, Brexit
is an increasing concern as threat to Irish CEOs 51%
developments continue to unfold Future of the 66%
Eurozone 75%
in the UK. We continue to advise N/A
businesses to plan for all Brexit Question: 70%
scenarios, including a no-deal Trade conflicts 64%
outcome. Economic/policy and N/A
N/A
environment threats (% who
66%
Compared to their global said ‘somewhat concerned’ or Exchange rate 63%
counterparts, Irish CEOs ‘extremely concerned’) volatility 73%
75%
are much more concerned
about immediate issues on 73%
63%
their doorstep, including real Over-regulation 75%
estate costs, inadequate basic 78%
infrastructure and the future 51%
of the Eurozone. They are less Inadequate basic 61%
infrastructure 84%
concerned about their readiness 67%
to respond to a crisis, a pervasive
78%
lack of trust in business and Policy / political 62%
uncertainty 65%
volatile energy and commodity 83%
prices.
Climate change 57%
56%
& environmental N/A
damage N/A
*refers to Brexit
12 | 22nd Annual Global CEO Survey - Irish AnalysisExhibit 8: Global 2019 79%
Availability of 84%
Availability of key Ireland 2019 key skills 81%
81%
Ireland 2017 69%
skills is the leading Ireland 2016 Cyber threats 79%
78%
86%
business threat Speed of
technological 60%
63%
69%
to organisations change
Changing consumer
60%
63%
growth prospects
54%
behaviour 47%
47%
33%
54%
Real estate costs N/A
N/A
Question:
50%
Changing workforce 52%
Business threats to organisation’s demographics N/A
N/A
growth prospects? (% who
50%
said ‘somewhat concerned’ / Supply chain 47%
disruption N/A
‘extremely concerned’) N/A
55%
45%
New market entrants 65%
76%
58%
Readiness to 43%
respond to a crisis N/A
N/A
50%
Lack of trust in 38%
business 48%
50%
52%
Volatile energy 31%
costs 36%
54%
54%
Volatile commodity 34%
prices 36%
54%
13 | 22nd Annual Global CEO Survey - Irish AnalysisIreland 2019 Ireland 2017 Ireland 2016
Resounding vote of confidence in Ireland Exhibit 9:
The survey confirms Ireland’s attractiveness A positive outcome Positive outcome for Ireland
on Brexit negotiations
33%
46%
as a location for foreign direct investment,
on Brexit is critical for
N/A
with 96% of CEOs from multinational
companies based in Ireland saying they will 41%
increase or maintain their level of investment maintaining Ireland’s Retaining a competitive
corporate tax rate
52%
58%
in Ireland in the coming year. The same
CEOs identified that there are three key attractiveness for FDI Ability to attract a highly
32%
factors in making sure they maintain or 42%
skilled workforce
45%
increase their investment in Ireland:
Question: Ensuring we have sufficient 27%
1. A positive outcome on Brexit negotiations high quality housing / 18%
2. Retaining a competitive corporate tax rate What factors are critical accommodation 17%
3. Ability to attract highly skilled workers for maintaining/increasing 18%
Maintaining / Increasing
Ireland’s attractiveness as a Ireland’s competitiveness
47%
47%
Ensuring that we have sufficient high- location of choice for FDI?
quality accommodation and maintaining (Top three ranked) Maintaining our attractive 18%
our national competitiveness were also innovation, R&D and Knowledge 5%
considered important factors in ensuring Development Box 30%
that Ireland’s standing as a location for 18%
investment continues. No barriers to Ireland-US trading
24%
relations - tariffs/etc
N/A
This report demonstrates that locating in
Tax reform by the US 14%
Ireland is a very positive experience for 27%
Administration not impacting
multinational companies and we have seen negatively on Ireland’s economy N/A
the results of this in recent years as existing
FDI companies based here expand their 14%
Reducing the personal
29%
operations significantly. tax burden
35%
5%
Political stability in Ireland 4%
24%
14 | 22nd Annual Global CEO Survey - Irish AnalysisInsight
Making your business fit for growth Capabilities can be defined as a well- put them ahead of their peers.They have
designed combination of processes, tools, efficient decision-making processes that
It is interesting to see how business leaders knowledge, skills and organisational design involve and are agreed to by all staff.
in Ireland are mirroring global sentiment and culture that delivers a specific outcome
and taking a protectionist approach to their - namely, future growth and success. Building a culture in your business that
business plans. They are retrenching their makes you fit to grow means empowering
positions and looking inwards, to what they By being laser-focused on developing your employees and making them
can control themselves. the things that make them exceptional emotionally connected and committed
and stand out, businesses can create a to your future collective success. It also
The CEOs we spoke to in our survey dynamic proposition. It will attract new means having a high level of shared
expect their business growth in the coming customers, make current clients loyal proficiency where people collaborate
year to be driven organically. In order sources of business and focus the whole across functional boundaries to raise the
to achieve that, businesses need to be organisation on collaborating to stay ahead standard of their output.
prepared to look at all aspects of their of the pack.
organisation. They need to be prepared At the heart of the highest performing
to make difficult decision and make When you know what it is that differentiates organisations is a culture of excellence
themselves fit for growth. you and what will make you successful, and continuous improvement. Their
businesses need to direct resources to culture recognises and acknowledges their
Being fit to grow means finding ways to support what sets them apart. Focus capabilities as strengths to be played to.
sustain profitability and cultivate growth, should be placed on those differentiators Every member of staff adopts and lives
irrespective of the climate. In practical that will give the highest strategic and those values, every day. This is the culture
terms, that means focusing on developing financial returns. Doing that might mean that businesses need to be fit for growth.
and nurturing the things that set them changes to operating models or supply
apart, and turning them into competitive chains. But the priority should always be
advantages. It also means having a lean efficiency.
and agile operating model that can expand
Amy Ball
and contract depending on circumstances. The most successful businesses accept
change as a cultural norm. They are not Finance Transformation Leader
Organisations need to understand which afraid to divert resources to the right places
+353 1 792 5836
of their capabilities will help them succeed. amy.ball@pwc.com
at the right time to develop capabilities that
15 | 22nd Annual Global CEO Survey - Irish AnalysisFour priorities 1 Focus on differentiating capabilities
to make your Identify three to six differentiating capabilities — the
things your company does better than anyone else
business fit for — that enable you to compete most effectively in
growth you cannot the areas where you choose to do business.
afford to ignore 2 Align cost structure
Deploy your investments and business costs
against your key differentiating capabilities —
protecting “good costs” while pruning “bad costs”.
3 Reorganise
Build an organisation that can sustain cost
reductions and that enables managers to drive
growth. Don’t just work on the lines and boxes, but
change the way the organisation works.
4 Enable change and cultural evolution
Put your culture to work: Help people change what
they do and how they do it, by focusing on a few
critical behaviours.
16 | 22nd Annual Global CEO Survey - Irish Analysis3 Mind the
information gap
CEOs are unequivocal in their belief that data, and the way they
interpret it, is an essential component of their organisation’s long-
term success. They need to be clear and certain about financial
projections, customer and client preferences, business risks and
their employees’ views and needs. However, the survey reveals a
significant information gap between the data they need, and the
data they receive. To make their organisations fit for growth, CEOs
need to bridge this gap. The key to that is finding the right analytical
talent able to turn raw information into actionable intelligence.
19%
On average only 19% of Irish
CEOs said the information they
receive is adequate
17 | 22nd Annual Global CEO Survey - Irish AnalysisExhibit 10: Question:
CEOs face issues with their data adequacy, Thinking about the data that you personally use to make decisions
about the long-term success and durability of your business,
with a huge gap between the data they how important is the following data and how adequate is the data
you receive: (% who stated the information was ‘important’ or
consider important and the comprehensiveness ‘critical’; % who stated the data received is ‘comprehensive’).
of the data they are receiving
Ireland: Important Ireland: Comprehensive
Global: Important Global: Comprehensive
94% 94%
91% 90%
86% 86% 85%
92% 92% 90%
87% 73%
83% 82% 80% 70%
66%
69%
48% 58%
42%
50%
34%
41% 29%
24% 22% 30% 30% 37%
22% 21%
15% 18% 17% 16%
15%
23% 22% 24%
20% 18%
12% 15% 15% 9%
13% 8%
Financial Data about your Data about Data about the Data about your Data about Benchmarking Data about tax Data about your Data about the Data relating to Data about the
forecasts and customers’ your brand and risk to which employees’ views how the latest data on the implications/risks supply chain effectiveness how efficiently impact of climate
projections and clients’ reputation your business is and needs technology trends performance of arising from your of your R&D you utilise the change on the
preferences and exposed benefit or disrupt your industry decisions processes real estate you business
needs the industry peers occupy
18 | 22nd Annual Global CEO Survey - Irish AnalysisIrish organisations lag global
counterparts on leveraging data
Organisations both globally and in Ireland
92%
are clear: they know the information
they need in order to make strategic
decisions for their ongoing business
success. But, many are struggling with
the comprehensiveness of that data they
receive. A striking finding from the report is of Irish CEOs said the data about their
the significant information gap that exists customers’ preferences and needs
between the data CEOs need, and what was critical or important for long-term
decision making.
they get.
For example, 92% of Irish CEOs said the
data about their customers’ preferences
and needs was critical or important for
long-term decision making. But only 12%
said the data they receive about their
customers was comprehensive.
The survey also highlighted acute
limitations in the data that enables
businesses to perform financial forecasting,
data about their brand and reputation, and
imminent business risks. Interestingly, there
was also a scarcity of data about how the
latest technological trends will disrupt their
industries, a topic we will return to later in
this report (refer to page 23).
19 | 22nd Annual Global CEO Survey - Irish AnalysisAs CEOs turn their attention to what Exhibit 11:
they can actively control inside their
organisations, they confront cracks A lack of analytical
in their own capabilities in spite of
having information at their fingertips. talent is impeding
They find their decision making is
frustrated, as they are unable to data adequacy
corral the data into useable and
actionable intelligence. According
to the research, the primary reasons Question:
for this frustration is the lack of
analytical talent, followed closely What are the primary reasons the data
by the unwillingness of customers you receive is not adequate?
and clients to share information.
Poor data reliability was also singled
out as a frustration. Without clean,
relevant and correctly labelled data,
organisations cannot progress their
efforts on Artificial Intelligence,
which CEOs overwhelmingly agree Ireland Global
will have a significant impact on
their businesses within the next
five years. 47%
Lack of
analytical talent
54%
47%
Unwillingness of 44%
customers and clients
to share information 42%
37%
of Irish CEOs believe a lack of Poor data reliability
analytical talent is the reason the data 50%
they are receiving is not adequate
20 | 22nd Annual Global CEO Survey - Irish AnalysisInsight
How to unlock the potential of data have taken different paths. One approach teams by heavily valuing intuition and
and analytics is to make a very big investment in the experience as a way to make decisions.
technology required to handle big data. Executives from these types of companies
Many companies are actively using Other companies have taken the opposite are often heard to say things like, “I know
advanced data analytics, but it’s not as approach: They’ve built only the technology my customers. I don’t need all this extra
simple as just buying some new technology required for their immediate needs. The data that you’re bringing me.” But no
and hiring some statisticians. Gaining most successful path is the one that lies one is suggesting using analytics as a
real business benefit from investments in in between. It’s better to plan investments replacement for judgment and intuition.
big data and advanced analytics means for the mid-term, to anticipate some of Rather, analytics has the potential to
overcoming three key challenges: talent, the new use cases the company might become a much more powerful aid to
technology and culture. not be ready for yet, but can anticipate. If judgment and intuition.
Talent: In order to make real progress with your company is like most, the number of
use cases requested will grow as decision The bigger picture, however, is that
big data, companies need an elite core of companies and their senior leaders have to
data scientists: highly trained professionals makers experience firsthand the benefits of
more robust data and analytics. realise that the era of big data is here and
who know how to use the advanced even if they themselves don’t fully embrace
statistical algorithms and machine-learning Culture: This might be the most difficult it, ignoring it is not an option. Because big
protocols that are necessary to handle challenge to overcome. When it comes data is so prevalent now, the technology
very large and varied amounts of data to bringing big data into the corporate and analytic solutions will also continue to
coming in at high speed. What they need culture, there are two kinds of companies. improve, increasing the amount of insight
is someone who understands enough Some firms have big data baked into their that can be gleaned from each byte.
about the possibilities, potentials and business model. These companies have
procedures of big data to help craft the no culture issue around big data, because
solutions that will ultimately be of value to big data was part of the equation from
the business person. Day One. Darren O’Neill
Technology: Having the right technology Then there are the more traditional, Data and Analytics Consulting Leader
infrastructure is an essential component mainstream companies — firms that have +353 1 792 7521
of big-data success. And here, companies built and cultivated their management
darren.oneill@pwc.com
21 | 22nd Annual Global CEO Survey - Irish AnalysisThree data 1 Build your data foundation
& analytics When you are using data to drive organisational
growth, there’s no room for error. You need to
priorities you develop a data framework, build the strategy,
cannot afford optimise your infrastructure, processes and
systems, and create the right culture internally to
to ignore become a data-driven organisation.
2 Apply advanced analytics
You have the right data architecture and can rely
on your data quality. Now what do you do with
it? That’s where predictive analytics comes in. It
uses your data to give you the potential to act, not
react. Now you can start filtering the signal from
the noise and look ahead with confidence.
3 Improve business performance
Use new data-based insights to pinpoint
opportunities in your industry to work smarter,
focus and prioritise. Then make change stick, by
delivering data and performance measures to the
right people at the right time - and set up the right
incentives for people to act on them.
22 | 22nd Annual Global CEO Survey - Irish Analysis4 Activating the
AI revolution
Artificial Intelligence is set to be a catalyst
for transformation across all areas of
business. However, without clean, relevant
The survey suggests that more Irish
businesses could be using AI to drive the
operational efficiencies they seek internally
and correctly labelled data, organisations and to unlock growth. But first they must
cannot push forward their efforts on AI. The understand what AI is, and how it can be
majority of Irish CEOs believe that AI will applied. AI is likely to be one of the biggest
significantly change how they do business transformational opportunities for Irish
in the future, but 51% have no plans at business in the next decade and those
present to pursue AI initiatives. organisations who do not adapt to it will
likely be left behind.
64%
of Irish CEOs believe AI
will significantly change
the way they do business
23 | 22nd Annual Global CEO Survey - Irish AnalysisFeeding the AI machine Exhibit 12:
Many Irish CEOs believe AI will the potential of AI. A way to Irish CEOs are lagging
have a larger impact than the resolve them is needed to
internet revolution. But in spite maximise the potential of AI. behind global CEOs when
of this belief, they are lagging
behind their global counterparts It is striking how far behind the it comes to AI planning
in terms of their acceptance and curve Irish CEOs are in terms
preparation for the changes it of planning for the coming AI
will bring. 64% of Irish CEOs revolution. Just less than half Question:
believe that Artificial Intelligence have plans to pursue AI initiatives,
(AI) will significantly change the but over three-quarters of CEOs Regarding AI initiatives, please select the statement
way they do business in the globally intend to investigate that best applies to your organisation?
next five years, but global CEOs the potential of AI. Just one in
feel even stronger, with 85% of five have dipped a toe into AI
them expecting the commercial for limited uses only, compared
landscape to change as a result to a third of global respondents. Ireland Global
of AI. However, the information Meanwhile, very few have
and talent gaps that CEOs face implemented AI on a wider scale,
We have no plans to pursue any 51%
referred to earlier are critical with only 2% in Ireland and 6%
AI initiatives at the moment 23%
barriers to successfully exploiting internationally.
We have plans to start introducing 27%
AI initiatives in our organisation in
the next 3 years 35%
We have introduced AI initiatives 19%
in our business, but only for
51%
limited uses 33%
AI initiatives are present on a wide 2%
scale basis in our organisation 6%
AI initiatives are fundamental to 2%
of Irish CEOs have no plans to pursue our organisation’s operations
any AI initiatives at the moment 3%
24 | 22nd Annual Global CEO Survey - Irish AnalysisCEOs are divided as to whether AI will displace more jobs than it creates CEOs at home and abroad are divided on the benefits of AI and how it will impact the workforces of the future. Although 62% believe AI is good for society, 48% of Irish business leaders believe that AI will displace more jobs than it creates in the long run. With such significant societal implications, it is not surprising that 69% of Irish respondents think that Government should play a critical and integral role in the development and deployment of AI. In spite of that, we see that an onus lies on businesses themselves to start to prepare themselves to have the staff and data they need to maximise the potential of AI for the benefit of their future growth. 69% of Irish CEOs think that the government should play a critical role in the development of AI 25 | 22nd Annual Global CEO Survey - Irish Analysis
Insight
The 48 billion Euro question: Can you trust your AI?
While the majority of Irish business leaders We asked CEOs a variety of other questions Views are more mixed, especially in Ireland,
feel that AI is good for society, much of the on AI and the following were the answers: on other questions about AI’s reach and
media coverage on AI focuses on the jobs consequences. Just over a third of Irish
Ireland Global
that will be made redundant. AI’s potential, business leaders agree that AI will eliminate
however, is far too great to ignore. PwC AI-based decisions need to be human bias or become as smart as humans.
Ireland estimated in 2017 that Irish GDP explainable in order to be trusted Whether AI will displace more jobs than it
could be 11.6% higher in 2030 as a result creates is a matter of continuing debate.
of AI – the equivalent of an additional 85% PwC’s 2018 analysis of OECD data covering
€48 billion. 84% 200,000 jobs in 29 countries ‘Will robots
really steal our jobs? An international
This makes AI one of the biggest AI will eliminate human bias such as analysis of the potential long term impact of
commercial opportunity for Ireland in today’s gender bias automation’ breaks AI’s job displacement
fast-changing economy. The adoption of effect into three waves: algorithmic (until
39%
‘no-human-in-the-loop’ technologies (those early 2020s), augmentation (to late 2020s),
technologies that remove humans from the 48%
and autonomy to mid-2030s). The first wave
process and decision making) will mean that will impact relatively few jobs – perhaps 3%.
some jobs will inevitably become redundant, AI will become as smart as humans
By the mid-2030s, however, up to 30% of
but others will be created by the shifts in 37% jobs could be automated – mostly those
productivity and greater consumer demand. 45% involving clerical and manual tasks.
The analysis concluded that it is likely that
the effect on jobs in Ireland in the long term CEOs overwhelmingly agree that AI-based
will at least be neutral, if not net positive. decisions need to be explainable in order to
David Lee
be trusted. Opening the algorithmic ‘black
box’ is critical to AI going mainstream as the Technology Consulting Leader
+353 1 792 6455
complexity and impact of its decisions grow david.thomas.lee@pwc.com
(e.g. medical diagnosis, self-driving cars).
26 | 22nd Annual Global CEO Survey - Irish AnalysisSix AI 1 Organise for return on investment 4 Locate and label to teach the machines
priorities you AI has the potential to enhance decision-making AI can help companies manage risk, make better
and provide forward-looking intelligence for decisions, improve document classification,
cannot afford people in every department and function in your automate customer operations and more. But,
to ignore business. Begin by creating an AI governance first, label, standardise and integrate data to
model that enables you to create quick wins, while inform your AI. Only then can it find patterns in the
also providing reusable tools on which other AI present and provide insight into the future.
initiatives can build.
Monetise AI through personalisation and
2 Teach AI specialists to work together 5 higher quality
AI is still so complex that even trained business Boosting the top and bottom lines with AI is not
specialists can make mistakes. Develop the right a distant dream. AI’s power can help businesses
mix of users, developers and data scientists – and create and market high-quality, personalised and
give them the tools, training and incentives to help data-driven products and services. Companies
them work collaboratively. can use AI to help with strategy, invent new
business models and eventually transform their
3 Make AI responsible in all its dimensions organisations.
Customers, employees, Boards, regulators and
corporate partners are asking the same question: 6 Combine AI with analytics, the IoT, and more
Can we trust AI? To answer that affirmatively, AI’s power grows when it is integrated with other
assign accountability to ensure that the fairness, technologies, including analytics, the Internet
robustness, security and governance of your AI of Things, blockchain, and eventually, quantum
strategy is watertight. computing.
27 | 22nd Annual Global CEO Survey - Irish Analysis5 Solving the
skills shortage
The shortage of key skills has become more acute in Ireland in
recent years compared to that experienced globally. Irish CEOs think
that hiring people is becoming more difficult. They feel it is driving
up people costs more than expected, and impacting quality and
innovation. There are no quick fixes to closing the skills gap, though
retraining and upskilling is a potential solution. We see organisations
not doing enough to prepare their people for the future of work and
the disruptive impact of new technologies. The adoption of a culture
of adaptability and lifelong learning is crucial to spreading the benefits
of technological change and making organisations truly fit for growth.
33%
of Irish CEOs say they are
missing growth targets due to the
lack of availability of key skills
28 | 22nd Annual Global CEO Survey - Irish AnalysisExhibit 13: Question:
The deficit in supply Which of the following
75%
is the primary reason
of skilled workers is a why it has become more
difficult to hire workers?
particular pain point,
of Irish CEOs said that hiring
people is becoming more difficult
impeding organisations
compared to 62% globally
growth prospects
The skills challenge is at an all-time To build your emerging technology Ireland Global
high in Ireland. It is increasing people capabilities, PwC has developed six
costs and hindering quality and workforce priorities for 2019 (refer to
customer experience. page 32). 48%
Deficit in supply
of skilled workers
The skills challenge is a key factor Three-quarters of Ireland’s CEOs 50%
stalling progress with emerging stated that, in general, it has become
technologies, but solving it is not just more difficult to hire people in their 21%
Compensation
a matter of hiring or developing IT industry. It is much more acute expectations
9%
specialists and data scientists. compared to the experience globally.
It is equally important to view the The primary reason given is due to a Growth rate in
19%
exploration and adoption of emerging deficit of skilled workers, followed by the industry
8%
technology as a mainstream activity compensation expectations and the
of the organisation. If emerging growth rate in the industry.
technology is considered as just a Skills requirements 6%
in our industry
side project of IT, it is unlikely to have have changed 19%
any lasting impact on the organisation
as a whole.
29 | 22nd Annual Global CEO Survey - Irish AnalysisExhibit 5: Ireland Global
The deficit
70%
People costs are 70%
rising more than
in supply of expected 52%
key skills is Quality standards/ 45%
of Irish CEOs said that people costs
are rising more than expected
prompting higher customer
experience are
47%
impacted
compared to 52% globally
people costs
34%
Unable to innovate
effectively
55%
The survey suggests that the lack Question:
of available skills is driving wage
What impact is availability of key
inflation. Rising people costs is 33%
the single greatest consequence skills having on your organisation’s Missing growth
targets
of the skills shortages in Ireland growth prospects? 44%
and is far higher than it is being
experienced globally. In turn, skills
shortages are also impacting 28%
Unable to pursue a
quality/customer experience, market opportunity
innovation and growth targets. 44%
Cancelled or 11%
delayed a key
strategic initiative 22%
30 | 22nd Annual Global CEO Survey - Irish AnalysisInsight
Closing the skills gap
There are no quick fixes when it comes Improved STEM (science, technology, how a working environment that not only
to closing the skills gap. In Ireland, while engineering, maths) skills will be important upskills people for technological change
30% expect to see ‘significant retraining in allowing people to perform the new but at the same time provides a sense of
and upskilling’ as the best answer, a roles and tasks that will arise out of AI purpose and a great people experience.
further 27% will hire from competitors. and robotics, but soft skills like creativity It reveals that organisations are not doing
Another 23% plan to close the gap and empathy will also be important in enough to prepare for the future of work.
through establishing strong links with making people adaptable and employable While the majority of businesses recognise
educational institutions. What is clear is throughout their working lives. Creative which capabilities are important for their
that Government, educational bodies and solutions will address the bottom of the future success, many are failing to take
businesses need to work together to help educational pyramid – repurposing trade the actions needed today to build or even
the workforce adjust to the disruptive and technical schools to equip young introduce them into their organisations.
impact of new technologies. A culture of people for success. As organisations build These actions include using data analytics
adaptability, lifelong and life-wide learning a better workforce strategy for the future, to make workforce decisions and creating a
will be crucial. Artificial intelligence (AI), they will need to rebalance their workforce compelling work experience for employees.
automation, and new ways of working composition, convert traditional jobs into This gap will put them at risk in the future
bring the potential for huge benefits, but more flexible roles and appropriately price when it comes to attracting, developing
they also bring anxiety for employees and the tasks that people perform. and retaining the talent they need
threaten societal disruption. to succeed.
Technology and trends such as rising life
27%
expectancy, social and environmental
pressures and the gig economy are
transforming the world of work. Companies
that understand and act on these Gerard McDonough
workforce changes now will be the ones People & Organisation
that thrive in the future. PwC’s latest Consulting Leader
of Irish CEOs plan to hire from
workforce of the future study (‘Preparing +353 1 792 6170
competitors to plug the skills gap, gerard.mcdonough@pwc.com
compared to just 14% globally for tomorrow’s workforce, today’) highlights
31 | 22nd Annual Global CEO Survey - Irish AnalysisSix workforce 1 Act now 4 Own the automation debate
priorities you This isn’t about some far future of Automation and AI will affect every
work – change is already happening, level of the business and its people.
cannot afford and accelerating. It’s too important an issue to leave
to ignore to IT (or HR) alone. A depth of
2 No regrets and bets understanding and keen insight into
The future isn’t a fixed destination. the changing technology landscape is
Plan for a dynamic rather than a static a must.
future. You’ll need to recognise and
plan for multiple evolving scenarios. 5 People not jobs
Make ‘no regrets’ decisions that will Organisations can’t protect jobs which
work with most scenarios – but you’ll are made redundant by technology
need to make some ‘bets’ too. – but they do have a responsibility to
their people. Protect people not jobs.
3 Make a bigger leap Nurture agility, adaptability and re-
Don’t be constrained by your starting skilling.
point. You might need a more radical
change than just a small step away 6 Build a clear narrative
from where you are today. A third of workers are anxious
about the future and their job due
to automation – an anxiety that kills
confidence and the willingness to
innovate. How your employees feel
affects the business today – so start a
mature conversation about the future.
32 | 22nd Annual Global CEO Survey - Irish AnalysisMethodology Contacts
The survey was carried out in Autumn 2018
amongst leading CEOs with 235 responses in
Ireland and 1,378 globally in 91 countries. Our
global sample is weighted by national GDP to
ensure that CEOs’ views are fairly represented Amy Ball Darren O’Neill
across all major regions. The interviews were
Finance Data & Analytics
also spread across a range of industries. Transformation Leader Consulting Leader
The previous Irish survey was conducted in
+353 1 792 5836 +353 1 792 7521
spring 2017.
amy.ball@pwc.com darren.oneill@pwc.com
David Lee Gerard McDonough
Technology People & Organisation
Consulting Leader Consulting Leader
+353 1 792 6455 +353 1 792 6170
david.thomas.lee@pwc.com gerard.mcdonough@pwc.com
At PwC Ireland we are determined to focus on the
issues affecting Irish business leaders, provide insights
that are valuable and actions that are of practical help.
We’d welcome your feedback on this report.
33 | 22nd Annual Global CEO Survey - Irish Analysis
Take our 1-minute survey34 | 22nd Annual Global CEO Survey - Irish Analysis
© 2019 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 158 countries with over 250,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.ie. 06475
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