Digital transformation, and use of emerging technologies like AI are the key issues Australian business leaders will focus on during 2025 and beyond, according to KPMG’s annual Keeping Us Up At Night survey.

Concerns over the slowing economy, and cost of living are also prominent, the survey of 320 businesses found, but talent, recruiting and retaining staff, has dropped down the list of top priorities.

The study found that digital transformation and optimisation have moved up from 4th in 2024 to top the list of biggest issues facing businesses over the year. Similarly, it rose from 4th to first in their priorities over the next 3-5 years, with 53% of respondents nominating it.

Talent fell to 8th place in the list – down from joint top last year and a clear first place in 2023.

KPMG Australia CEO Andrew Yates said in a press release, “It is interesting to see recruitment and retention of talent sliding down the list, given that unemployment is still at historically low levels.  The large increase in migration during the last two years will have played a part in businesses feeling they can meet their staffing needs, and there may be some continuing hangover from the Covid era where many businesses took on additional staff and have kept them. But the lack of skills in key areas of technology is still a clear concern.”

Cyber issues (42%) were the second-top challenge for the next 12 months, while controlling costs in an inflationary environment was joint third (39%), up from 5th last year. 

Joint third priority for 2025 was dealing with new technologies, including AI, up from 6th last year. This was also a strong second (48%) in the list of top challenges over the next 3-5 years, while identifying future market segments for growth was third biggest priority, looking ahead (46%). This issue saw a notable rise from 5th last year. Digital transformation and optimisation and extracting organisational value from it was the top challenge (53%) in the next 3-5 years ahead.

Overall, the top three issues for the next 3-5 years – digital, new technologies, and future growth sectors – were significantly ahead of any other challenges nominated. The 4^th biggest was 10% behind.   

Yates added, “We were not surprised that controlling costs in an inflationary environment still ranks in the top 3 issues. The high core inflation is also making any immediate interest rate cuts less likely which will be a frustration for many business leaders. Having said that, survey respondents did not indicate rate cuts would see a significant increase in their business investment in 2025.” 

Yates said, “Technology, AI and Cyber were the issues of most relevance to our business leaders, who are increasingly joining these together as a single critical and interconnected issue. Leaders are also concerned about meeting associated demands into the future, with preparing for a future skills gap in areas such as technology and data science also joint-top of the wider societal challenges impacting business.”

Another issue which has risen in importance is dealing with stakeholder expectations, including regulators. This challenge, new to this year’s survey, came 6th in the list of priorities and reinforced other recent KPMG Australian and global research, which has identified this as a growing challenge both for executive management and board directors.