Fourth Industrial Revolution

5 ways to reduce risk while fuelling IT innovation and growth 

App development is currently being democratized – but this brings risk for businesses.

App development is currently being democratized – but this brings risk for businesses. Image: Getty Images

Christian Rast
Global Head of Technology & Knowledge, KPMG
Tom Koehler
Chief Technology Officer, KPMG
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Fourth Industrial Revolution

• New technology allows businesses with little or no coding experience to enter app development.

• This democratization comes with risks in terms of meeting the expected user and legal standards.

• Nuanced innovation management should be put in place to minimize risk.

As we emerge into the new reality of a post-pandemic world, there is growing recognition that digital transformation and adoption can make all the difference between the future and failure of an organization. KPMG’s 2021 CEO Outlook Pulse Survey finds a sizeable majority of leaders have reported acceleration of new digital business models and revenue streams (69%) and development of a seamless digital customer experience (56%). However, we see a widening gap between the increasing demand for rapid innovation and the available talent to meet that demand.

Unlocking new technologies like low-code/no-code is one way that businesses can close the transformation gap. These platforms allow users with little to no previous experience to easily prototype, iterate and customize applications. According to Forrester, software can be developed up to 10 times faster that way.

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This democratization of technology doesn’t come without risks. But worrying about people in your organization going off and building solutions outside the IT function doesn’t need to keep you up at night. Here are five ways you can support agile innovation to fuel your organization’s growth – and still get trustworthy results.

1. Establish effective innovation management

It’s easy to think about innovation as a box that needs to be checked. But innovation today is much more fluid, and the end points keep moving. This makes continuous innovation activities and adjustments essential to an organization’s long-term success.

It’s important to establish a lean but effective approach to innovation management – one that lets you be inspirational and agile in the face of ongoing disruptions without losing sight of potential risks. Such an approach will likely require you to change how you make innovation and investment decisions.

Today, the focus is often on desired business outcomes: A new product or service to boost sales. A more efficient production process or faster service delivery to increase margins. We believe this focus will need to shift to address how we can embed digital trust from the outset, and not bolt it on later.

Your decisions should factor in questions like: Who are your stakeholders, and what are their trustworthiness requirements? (Hint: KPMG’s survey finds that most CEOs today think purpose, not just profit.) What are your metrics of trust, such as the maturity of your privacy framework? And how do you measure and turn them into a competitive advantage?

Developing what we call a digital trust compass will help you identify these drivers of trust and anchor them into the innovation processes. This creates greater alignment between stakeholder expectations, business needs and the deliverables of the IT function.

The market for low-/no-code platforms is rapidly accelerating
The market for low-/no-code platforms is rapidly accelerating Image: Forrester

2. Embrace 'Trust by Design'

In response to the pandemic, many organizations rushed to embrace digital solutions – without fully evaluating them from a risk perspective. Now many are working to address the gaps identified after implementation. This can have significant financial and reputational consequences, particularly if they are forced to roll back changes or rebuild solutions from scratch.

When looking to accelerate innovation, it’s more efficient to build Trust by Design into your innovation management approach from the beginning, rather than relying on less agile governance policies. Trust by Design means embedding a risk-based approach to support rapid innovation, rather than focusing simply on across-the-board compliance with legal standards.

The first step is to understand the purpose of the application and its mission criticality, and then follow with a tailored mapping of controls to the specific risk profile. This approach leads to a more lean and efficient management of both business and functional controls monitoring, without compromising the safety and security of the application.

We recommend establishing a common understanding of end-to-end solutions and the complexity of different delivery models across stakeholders to guide innovation activities. You can also use Trust by Design to help manage risks associated with the empowerment of citizen developers – such as by facilitating easy-to-adopt guardrails and the automation of data governance.

3. Move from 'fit-for-purpose' to 'fit-for-governance'

With the increasing market potential of low-code/no-code platforms, we’ve seen an increase in the number of vendors providing technology solutions. When you’re selecting emerging technologies, it’s important to not only look at whether a solution works well, but if it meets your trustworthiness requirements across the wider value- and supply chains.

In our hyper-connected world, we rarely see stand-alone technology solutions any more, but rather systems of systems interacting in real time. This requires organizations to monitor risks from an end-to-end perspective. Digital trust is not a static item, it’s dynamic and continuously changing, depending on the nature and context of your business. The ability to govern technology comprehensively can help you avoid potential ecosystem risks, while fostering stronger alliances based on shared governance principles.

4. Upskill your organization

With technology fundamentally shifting the operations of organizations, focusing on upskilling individual contributors isn’t enough to fill the transformation gap. To innovate with agility, companies need to find ways to raise the tide and lift the competencies of all people within their organization.

The democratization of technology is only an enabler. To create value for your organization, you also need to democratize the expertise of your people.

This means creating opportunities for learning and knowledge-sharing across your organization – such as building communities of practice, facilitating hands-on experiences for your citizen developers, or providing integrated learning experiences so that your people gain confidence with emerging technologies.

5. Foster a culture of agility

While it’s easy to commit to being agile, it’s much harder to foster a culture where agile innovation truly thrives. To be successful, company leaders must be front and centre of any cultural evolution. They need to both lead by example and give their managers the tools and support needed to foster agile innovation.

Start by adapting your own leadership approach. For example, learn to accept setbacks as a part of the innovation process. This can be far easier to say than do, but by giving your people – and yourself – the freedom to fail, you will be able to foster a culture of fast-forwarding by failing-forward.

Innovation with confidence

In the new reality, innovation is both an endless opportunity and a relentless challenge. While the democratization of technology has the potential to accelerate digital transformation, leaders know that it could also expose them to new risks.


What is the World Economic Forum doing about the Fourth Industrial Revolution?

Remember that your people are your biggest advantage. By rethinking your innovation approach, embracing Trust by Design principles, making technology decisions that are not only fit-for-purpose but fit-for-governance, and working to upskill your entire organization, you can foster a culture of agility and face the future with confidence.

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