US Businesses Reap the Benefits of Digital Transformation, But Challenges Persist

A new report from KPMG reveals that digital transformations are finally gaining momentum, with nearly 90% of US companies reporting improved performance and profitability from their tech investments. This is a significant leap from last year, where only 45% of businesses were seeing tangible benefits. As artificial intelligence (AI), enhanced data analytics, and third-party technology providers continue to drive these transformations, companies are not only optimizing their internal processes but are also investing in technology that helps them manage risks, meet regulatory requirements, and stay competitive.

However, while digital transformation is producing positive results, many organizations still struggle to keep pace with the complexity of an ever-evolving tech landscape. For businesses that rely on compliance, risk management, and governance, the implications of this transformation are profound, particularly when it comes to how technology solutions like GRC (governance, risk, and compliance) software, regtech, and IRM (integrated risk management) tools fit into the broader transformation picture.

Driving Value with Data, AI, & Third-Party Support

The KPMG report highlights the increasing importance of AI and data analytics in delivering real business value. AI’s rapid adoption is not just about automating processes or enhancing operational efficiency—it’s enabling more accurate decision-making, improving risk detection, and fostering innovation in ways that were once unthinkable. Nearly 75% of companies say they are generating value from AI, and the top areas of focus include operational efficiency, pattern detection, and product innovation.

For GRC software providers, this trend underscores a major opportunity: the integration of AI-driven analytics and machine learning into their platforms. As organizations focus on improving their risk management and compliance processes, AI and data insights can enable better risk prediction, more proactive decision-making, and more effective management of evolving regulatory landscapes.

For example, AI can be used to scan vast amounts of unstructured data to identify potential compliance issues, helping companies stay ahead of emerging risks or regulatory changes. As businesses ramp up their reliance on these technologies, the demand for GRC software that can integrate AI for enhanced risk monitoring and reporting will only increase.

The Growing Role of Third-Party Risk Management

As companies continue to embrace digital transformation, they are increasingly relying on third-party providers for cutting-edge technology and expertise. The reliance on these external partners means that managing third-party risk is becoming a top priority for organizations. The KPMG survey found that businesses that partner with leading-edge solutions providers are seeing significant improvements in areas such as AI adoption, cybersecurity, and data analytics.

Third-party risk management solutions are critical in helping businesses evaluate, monitor, and mitigate risks associated with external partnerships. With the growing integration of external vendors into core business functions, companies need to ensure that their third-party risk management systems are robust enough to handle the complexity of modern supply chains and partnerships.

In addition to operational risks, third-party risk solutions must also address data privacy and cybersecurity concerns. As businesses turn to cloud-based solutions and outsourced services, they must ensure that their third-party vendors comply with regulations such as GDPR, CCPA, and other privacy laws, particularly as the risks associated with data breaches and compliance failures continue to rise.

ESG: A Growing Concern & Opportunity

As businesses continue to focus on digital transformation, they are also aligning their tech investments with sustainability and social responsibility goals. In fact, 70% of respondents in the KPMG survey said they are ensuring their tech investments support their Environmental, Social, and Governance (ESG) objectives. This growing emphasis on ESG is changing the way businesses think about their technology and risk management strategies.

GRC software providers have a unique opportunity to integrate ESG metrics into their solutions, enabling businesses to track and report on their sustainability efforts with greater ease and accuracy. As companies strive to meet regulatory requirements around ESG disclosures and environmental reporting, integrated risk management (IRM) tools that offer visibility into ESG-related risks will be key to ensuring that companies stay compliant while advancing their sustainability goals.

For example, ESG-focused GRC platforms can help businesses assess environmental risks, track carbon footprints, or measure supply chain sustainability. With investors and regulators placing increasing pressure on companies to demonstrate their commitment to ESG principles, software that helps businesses report on and manage ESG risks will become increasingly important in the coming years.

IT Security and Privacy: A Critical Focus

Data security remains one of the top priorities and risks for organizations, as highlighted by the KPMG report. With AI and digital transformation opening up new avenues for innovation, they also introduce new vulnerabilities. Companies that are not able to keep up with the growing complexity of their digital ecosystems risk exposing themselves to cyberattacks and data breaches, which could undermine their hard-earned transformation progress.

This is where advanced GRC and IT security software solutions come into play. As more businesses rely on AI, cloud services, and third-party solutions, they need comprehensive cybersecurity and privacy tools that not only protect against cyber threats but also ensure compliance with privacy regulations like GDPR, CCPA, and others.

Risk and compliance solutions that offer real-time monitoring, automated compliance checks, and AI-driven threat detection will be in high demand. Additionally, as organizations face growing scrutiny over data privacy practices, companies will turn to regtech solutions that can automate compliance reporting and help them stay aligned with complex privacy regulations across different jurisdictions.

Sustaining Momentum

While the optimism around digital transformation is palpable, many organizations still face significant challenges. The KPMG report highlights that, despite the progress, businesses continue to grapple with issues such as market competition, regulatory changes, and a rapidly evolving technology landscape. To sustain momentum, companies must continue to focus on strategic areas like AI, third-party risk management, and ESG.

For GRC and other similar solution providers, this is a critical moment. Organizations will need more sophisticated tools to manage emerging risks, navigate regulatory complexities, and demonstrate their commitment to sustainability and ethical business practices. The digital transformation landscape is evolving quickly, and the solutions that can integrate AI, leverage advanced analytics, and support regulatory compliance across multiple domains—risk, privacy, ESG, and IT security—will be best positioned to meet the growing needs of businesses.

As organizations continue their digital transformation journeys, those that can effectively manage risk, stay compliant with evolving regulations, and leverage technology to drive both performance and profitability will be the ones that thrive in an increasingly complex and competitive environment.

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