AI, cost control, and future growth markets emerge as key focus areas for business leaders
Australian business leaders have identified digital transformation and emerging technologies, such as artificial intelligence, as top priorities for 2025 and beyond, according to KPMG’s annual “Keeping Us Up At Night” survey.
The survey, which collected responses from 320 businesses, also highlighted concerns over a slowing economy and the rising cost of living. However, talent acquisition and retention, a top priority in previous years, has dropped significantly down the list.
KPMG Australia chief executive Andrew Yates (pictured above) noted the continued importance of cost management in an inflationary environment.
“Controlling costs still ranks among the top three issues, reflecting the persistent challenge of high core inflation. While interest rate cuts would be welcomed by many, our survey suggests they are unlikely to significantly boost business investment in 2025,” Yates said.
Digital transformation leads priorities
The KPMG report found that digital transformation has risen to the top of business challenges for 2025, up from fourth place in 2024. Over the next three to five years, it is expected to remain a primary focus, with 53% of respondents citing it as their key priority.
Cybersecurity ranked as the second most pressing issue for the coming year, while cost management tied for third place, up from fifth last year. New technologies, including AI, also emerged as a significant challenge, climbing from sixth to joint third on the list. Over the medium term, AI and other advanced technologies are the second most important priority, with 48% of businesses focusing on them for the next three to five years.
Looking further ahead, identifying future growth markets is a growing concern, moving from fifth to third place in long-term priorities (46%).
“Technology, AI, and cybersecurity are increasingly viewed by leaders as interconnected issues,” Yates said. “Preparing for a future skills gap, particularly in data science and technology, is also a major concern.
“We’re seeing positive returns on AI investment across industries, which is critical for driving productivity and sustainable growth in a challenging economic environment. Businesses are starting to report tangible benefits from these technologies.”
KPMG chief economist Brendan Rynne added that industries investing heavily in technology tend to achieve better productivity outcomes and higher wage growth.
“When productivity improves, it can quickly impact government revenues, which is vital given the state of the economy,” Rynne said.
Stakeholder expectations and ESG on the rise
This year’s survey introduced stakeholder and regulatory expectations as a new priority, ranking sixth on the list. KPMG’s global research has identified this issue as a growing challenge for executives and boards.
“The rise of ESG (environmental, social, and governance concerns) continues to weigh heavily on leaders,” Yates said. “A quarter of CEOs in KPMG’s International CEO Outlook believe failing to meet ESG expectations could jeopardise their role. This issue will only grow in significance.”
Talent concerns decline
Talent acquisition and retention, a top concern in 2023, dropped to eighth place this year. Yates attributed the decline to higher migration levels and the lingering effects of pandemic-era staffing strategies.
“While unemployment remains low, the influx of migration over the past two years has eased pressure on staffing,” he said. “However, there is still a notable skills gap in technology-focused roles.”
Housing and societal issues gain attention
In the broader societal context, housing availability and affordability emerged as a top concern, rising from fifth place last year.
“Our respondents recognise that the housing crisis is different this time, requiring a comprehensive reassessment of the housing system,” Rynne said. “Addressing this will demand collaboration between all levels of government, developers, the construction industry, and the wider community.”
Growth outlook
Despite economic challenges, 46% of business leaders are focusing on identifying new markets for growth over the next three to five years, a notable increase from 29% last year.
“While cost control remains the immediate priority, there’s a clear shift towards long-term growth planning,” Rynne said. “We expect gradual economic improvement in the second half of 2025, and businesses are positioning themselves to seize new opportunities as conditions stabilise.”
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