Millennial question worries tech CEOs, despite bullish growth expectations

26 July 2018

A lack of understanding regarding the ‘needs’ of Millennial consumers is one of the top concerns among CEOs in the technology industry. While tech leaders are bullish about their profitability in the short-term, and are confident that AI will not deplete the workforce, an inability to engage with consumers born after 1980 could be compounding problems relating to rising geopolitical tension, and cybersecurity threats.

KPMG’s global Technology Industry CEO Outlook is an annual report which seeks to provide insights into the opportunities and challenges which businesses in the sector face. The 2018 study saw a sample of KPMG’s 1,000 strong Global CEO Outlook survey quizzed on the areas they were most confident and most concerned about, revealing that, in the short-term at least, the technology industry considers itself to be in rude health.

Of the 104 tech CEOs polled, a majority expect to see their company enjoy top-line revenue growth exceed 2% in the next three years. All those questioned expected to see some level of growth, according to KPMG, and while a large number (48%) confined these estimations to between 0.1% and 1.99% per year, a larger 49% said they expected this figure to rest between 2% and 4.99%, and the remainder anticipate growth to top 5% annually. This suggests that tech CEOs are firmer believers in a bright future than their cross-industry counterparts, with 52% expecting growth of more than 2%, compared to 44% of KPMG’s broader pan-market sample.

Prospects for topline revenue growth per year over the next three years

These bullish forecasts from tech CEOs are mirrored by a confidence that headcounts across the sector will grow. Only 13% of respondents said their headcount was likely to remain the same, while a collective 44% of CEOs were categorised as being likely see an increase of staff numbers between 6% and 25%. Again, this compared favourably with cross-industry CEOs, just 37% of whom expect to see headcount growth of more than 6%.

Partially this may be because of the technology industry’s heavy ties to the increasingly prevalent trend for Artificial Intelligence. In line with a recent PwC report, which estimated that AI will create a slim net increase in jobs, KPMG found that 60% of CEOs in tech estimate a boost to employment in the sector, rather than a decimation. As a result, over half of those polled said they were already using AI to automate particular processes. Executives seem to feel they can keep and even increase their headcount, while putting their talent pool toward more constructive, value adding tasks, boosting revenues while improving on efficiency and productivity thanks to the heavy lifting done by AI.

This is not a long-term project, either, with some 41% expecting to see a "significant" return on their investment in AI in the next three to five years. When asked what they think will be the biggest benefits AI will offer their companies, the most popular answers the tech CEOs gave were that it would improve the experience they offer customers (42%), better their ability to manage risks (40%), improve their ability to control their data (39%), boost their revenue growth (38%), better their ability to analyse data (37%), and give a jolt to their productivity (37%).

What do you expect will be the biggest benefits delivered to your organisation

Cliff Justice, a Principal at KPMG US specialising in Innovation & Enterprise Solutions, explained, “By augmenting human decisions, these technologies enable employees to devote more time to higher-value activities and offer profound impacts on how they serve customers and develop products and services. Artificial intelligence and machine learning represent transformational changes that will help companies create more innovation and opportunity.”

However, the respondents also cited a number of key issues facing them in the coming years. In many ways, the things that worry the tech sector are the same as any other. A crunching end to the globalisation project has seen Brexit and the Presidency of Donald Trump usher in a new era of protectionism and talk of trade wars, with cross-border trade now threatened by potentially colossal import/export tariffs, as a number of key economic players attempt to emulate an “America First” mentality.

As a result, 54% of CEOs in tech say a return to territorialism, including the US’ renegotiation of NAFTA and the UK’s withdrawal from the EU present the greatest threat to their organisation’s growth. This is followed by cybersecurity at 45%, which – following a 2017 riddled with stories of top technological and cyber-orientated organisations being stricken by hacks – probably comes as little surprise. However, underwriting these other fears is a concern that technology companies are failing to reach out to Millennials.

The Millennial question

While Millennials include the first generation of “technology natives”, and would therefore would likely be assumed as a key staple of any technology company’s consumer base, tech CEOs stated that they see a multitude of difficulties in trying to reach the generation born between 1980 and 2000. With the developed world currently experiencing a rapidly ageing population, particularly in the consumer economies of the UK, Western Europe and the US, a failure to court this generation of consumer, as trade from the likes of the baby boomers disappears in the next decade, could be a huge problem for even the largest market incumbents.

When asked what their biggest challenges are in reaching these younger consumers, 53% gave the top answer of finding it tough to compete for Millennials' attention against other online sites and services. Certainly, a glut of applications and platforms has meant that the places where Millennials may engage with products is diverse, and permeated by huge levels of competition. Meanwhile, around 44% said they were having trouble meeting Millennials' expectations that they offer an on-demand service – something which is also redrawing the lines of the sports broadcasting industry – and about 43% said they were having difficulties adapting their sales and distribution model for the younger set, while 42% said they were struggling to reposition their brands for them.

Which of the following are the biggest challenges for your organisation

In general, however, many firms note that they are simply having a tough time distinguishing the needs of Millennials from other consumers. 40% noted struggling to understand how the younger generation's needs differed from those of older customers. One of the themes which such companies might do well to note is that Millennials’ needs might not explicitly differ from their precursors, but their consumer power might, causing their spending habits to differ. According to recent figures from UK-based think tank Resolution Foundation, Millennials in high-income countries make on average 4% less than people in Generation X did when they were the same age. Britain particularly showed the biggest income drop among Millennials, which when adjusted for inflation saw pay fall 13% from the previous generation.

While the e-commerce boom is partially cited as responsible for the downfall of UK technology retailer Maplin, a decline in disposable income among younger consumers can also be seen at play in a broader consumer crunch across the UK. UK smart-phone maker WileyFox was similarly hit by this before its collapse, suggesting that a crowded market and declining pay for Millennials could see a decline in their spending hit the tech sector in the longer term.

According to Anson Bailey, Head of Consumer and Retail Asia Pacific for KPMG, these pressures are meaning that Millennials are more cost-conscious, and subsequently less trusting of brands when spending money. Bailey concluded, “This generation knows what they want and they want the product now. Millennials research the products they want and the price points. They don’t trust brands so much, but they do trust their fellow consumers and what their key opinion leaders are saying. If they have issues with a product or service, they expect the issue to be resolved in real time.”


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How First Consulting generates more insight using fewer reports

08 March 2019

Organisations are continuously investing in more advanced data collection and manipulation methods to enable smarter and more informed business decisions. In order to maximise their business value, companies understand the growing need for performance related insights from their data. First Consulting, a consultancy firm specialised in business change, has helped many clients in the utilities sector to deliver effective change through improved use of their data.

Most utilities firms are structured in such a way that every business unit has a team of analysts who are responsible for providing relevant data insights to their business colleagues. The business analysis teams form the link between business decision making and IT by translating business requests into meaningful actions and delivering information via reports.

Typically, the business user will receive a unique report for each information request, with each new report requiring individual, tailored support from the analyst team. This limits the productivity of the analyst teams and minimises their ability to address new data requests. The growing demand for information puts additional pressure on these teams, as a significant amount of time is required simply to gather and update the required data. This has caused reporting portfolios to expand dramatically. However, due to the analysts’ already stretched capacity, reports do not always deliver the most vital information and documentation is often incomplete.

Redesigning information delivery

At First Consulting, business consultants work in close collaboration with their clients to improve the mechanism for the delivery of information and analysis in response to business requests. The improved structure focuses on providing information per role type, rather than per request. As such, one dashboard is designed for each organisational role type, with all the relevant information presented in a single overview. This allows all individuals of a given role type to open a single dashboard and view what they need, as opposed to collating a large range of disparate links and unique reports which, previously, were all required to enable business decision making.

Moving from unique reports for each request, to reusing KPIs in a select group of dashboards

By implementing this new way of working, clients are able to reduce the reporting portfolio from over 100 reports to fewer than 20 dashboards (see figure above). In addition, the capacity for data maintenance can be reduced significantly by using modular KPIs, allowing for the re-use of data across multiple dashboards.

Changing while everyday work continues

In order to deliver effective change, it is essential that day-to-day processes remain unaffected whilst transitioning to a new reporting landscape. First Consulting achieves this by embedding business consultants within the client’s analysis team to gain feedback and determine exactly what visuals are necessary within the dashboards. This focuses effort on the outcome (such as what should be presented in the final dashboard) and allows a broad range of requirements to be considered in the business context and combined, where appropriate.

Key users and stakeholders are involved from the outset to help define what makes a high-quality dashboard. Adopting this approach helps the team to produce an optimal output that contains the key business information for the appropriate roles in an easy-to-use format.

Once it is clear what should be included in the final dashboard and how this should be presented, the team works according to the priorities set out by the product owner. This ensures that analysts work on the requirements which deliver the most value and which form the most coherent dashboards.

Main results

The advantages of implementing straightforward, no-nonsense solutions using fewer reports are particularly noticeable for the business and for the analyst teams:

  • Making adjustments is easier and maintaining and updating data costs less time
  • Management information is displayed in one location and is displayed according to defined standards, facilitating decision making
  • There is greater capacity within the business for complex analysis and project support

First Consulting combines process, technology, and implementation consulting to deliver impactful and value-adding solutions. The firm has more than 200 consultants based in the UK and the Netherlands.