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PwC Global CEO Survey: 2013 Key Findings in the Technology Industry

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This report is a summary of our key findings in the technology sector, based on interviews with 154 technology CEOs in 38 countries, as well as an in-depth interview with Stephen A. Elop, CEO of …

This report is a summary of our key findings in the technology sector, based on interviews with 154 technology CEOs in 38 countries, as well as an in-depth interview with Stephen A. Elop, CEO of Nokia. To see the full results of the 16th Annual Global Survey, please visit www.pwc.com/ceosurvey.

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  • 1. Dealing with Disruption:16th Annual GlobalCEO SurveyKey findings in theTechnology industrywww.pwc.com/ceosurveyJanuary 2013
  • 2. WelcomeFar-reaching changes are taking place, and they’re taking place faster than ever. In thisnew era of ‘stable instability’, risks that once seemed improbable and even remote havebecome the norm and for CEOs across the world, ‘expect the unexpected’ has become themantra. The only solution is to build organizations that can thrive amidst disorder:organizations that are agile and adaptable, able to cope with disruption and emergestronger than before.We polled 1,330 CEOs in 68 countries, and talked face-to-face with another 33 CEOs, inour 16th Annual Global CEO Survey, to find out how they’re creating resilientPwCour 16th Annual Global CEO Survey, to find out how they’re creating resilientorganizations that can flourish under stress. Dealing with disruption shows that CEOsare focusing on a few carefully selected initiatives to stimulate organic growth; exploringnew ways to attract and keep customers; and balancing efficiency with agility. And tosucceed in these three goals, CEOs are recognizing the role that trust plays, and thatthey’ll have to work hard to repair the bridges between business and society.This report is a summary of our key findings in the technology sector, based on interviewswith 154 technology CEOs in 38 countries, as well as an in-depth interview with StephenA. Elop, CEO of Nokia. To see the full results of the 16th Annual Global Survey, pleasevisit www.pwc.com/ceosurvey.2January 201316th Annual Global CEO Survey – Key findings in the technology industry
  • 3. Technology sector sample demographics29%16%8%10%Revenue32%39%Geography37%8%8%5%15%SubsectorPwC36%$0 to $100M$101 to $999M$1 to $10BOver $10BNot stated29%AmericasEuropeAfrica, Asia, Middle East, AustraliaJanuary 201316th Annual Global CEO Survey – Key findings in the technology industry326%8%Computers & NetworkingSoftware/Information TechnologySemiconductorElectronics Manufacturing/DistributorsInternetOther
  • 4. ContentsPageIntroduction 5CEO confidence 7What worries CEOs the most 9How are CEOs responding?PwC• Customer focus 15• Prioritising innovation 18• Global expansion 204January 201316th Annual Global CEO Survey – Key findings in the technology industry
  • 5. IntroductionPwC 5January 201316th Annual Global CEO Survey – Key findings in the technology industry
  • 6. IntroductionTechnology CEOs are a lot like their peers across industries. They’re slightly less confidentthis year about the economic outlook.But there are some key differences too. Competition and industry disruption are more of aconcern due to the fast speed of technological change. At the same time, 58% oftechnology CEOs (an increase of 6% from the prior year) are concerned about governmentover-regulation.PwCover-regulation.Technology CEOs are actively engaged in multiple actions to better prepare theirorganisations to deal with these challenges. They’re focused on customer growth,innovation and new products and services.Let’s take a look at how.6January 201316th Annual Global CEO Survey – Key findings in the technology industry
  • 7. The disruptive decadePwCof technology CEOs are confident theycan raise revenues over the coming year,compared to the total sample at 81%.Even more technology CEOs (96%) areoptimistic about increasing revenue overthe next three years, compared to thetotal sample at 90%.7January 201316th Annual Global CEO Survey – Key findings in the technology industry
  • 8. Employment growthIn line with their peers across industries, 44% of Technology CEOs expect to increaseheadcount, and just 16% expect to decrease headcount in contrast to 23% across allindustries.303540Q: What do you expect to happen to headcount in your company globally over the next 12 months?PwC3 2 11 35 12 13 194514 28 22 12 11051015202530Decreased bymore than 8%Decreased by5-8%Decreased byless than 5%Stayed thesameIncreased byless than 5%Increased by5-8%Increased bymore than 8%Technology Total sampleBase: All respondents (Total sample, 1,330; Sector, 154)Source: PwC 16th Annual Global CEO Survey 20138January 201316th Annual Global CEO Survey – Key findings in the technology industry
  • 9. What worries CEOs the most?“The global economic outlook for 2013 and for the next three yearsseems very uncertain to me. Countries would seem to fall into twocategories. The first category concerns mature markets. The US hasan advantage over Europe in that the US economy seems more flexibleand more able to regenerate and kick-start itself. Europe, however, hasa more rigid structure. The second category concerns new economies,PwC 9January 201316th Annual Global CEO Survey – Key findings in the technology industrya more rigid structure. The second category concerns new economies,which have brighter prospects.”Jean-Pascal Tricoire, President and CEOSchneider Electric SA, France
  • 10. Technology CEOs continue to battle withpolitical threats against growth...62%87%58%PwC2012 Technology: 60%2013 Total Sample: 71%are concerned aboutgovernmentresponse to fiscaldeficit & debtburden10January 201316th Annual Global CEO Survey – Key findings in the technology industryare concerned aboutover-regulation2012 Technology: 46%2013 Total Sample: 69%58%are concerned aboutprotectionisttendencies ofnational government2012 Technology: 39%2013 Total Sample: 51%45%
  • 11. ...and economic threats against growth59%87%PwCare concerned aboutlack of stability incapital markets2012Technology: 58%2013 Total Sample: 61%are concerned aboutvolatile economicgrowth2012 Technology: 83%2013 Total Sample: 81%59%11January 201316th Annual Global CEO Survey – Key findings in the technology industryare concerned aboutexchange ratevolatility2012Technology: 57%2013 Total Sample: 54%52%
  • 12. Business threats against growthDisruptions caused by technological changes, new market entrants and shifting consumerspending and behaviour top the list of market threats to growth.4042625848575864New market entrantsSpeed of technological changeIncreasing tax burdenAvailability of key skillsQ: How concerned, if at all, are you about:PwC3735355234394940283138394046470% 10% 20% 30% 40% 50% 60% 70%Lack of trustInadequacy of basic infrastructureSecurity of supply chainEnergy & raw materials costsIP and customer data protectionInability to finance growthShift in consumer spending and behavioursTechnology Total sampleBase: All respondents (Total sample, 1,330; Sector, 154)Note: Respondents who stated ‘extremely’ or ‘somewhat’Source: PwC 16th Annual Global CEO Survey 2013concerned.Source: PwC 16th Annual Global CEO Survey 201312January 201316th Annual Global CEO Survey – Key findings in the technology industry
  • 13. So what are technology CEOs doing?PwC 13January 201316th Annual Global CEO Survey – Key findings in the technology industry
  • 14. Change of strategyPwCof technology CEOs expect to changecompany strategy over the coming year,compared to the total sample at 68%.14January 201316th Annual Global CEO Survey – Key findings in the technology industry
  • 15. Customer growth and investing in R&D andinnovation remain top priorities3849325136384861Enhancing customer serviceImproving operational effectivenessR&D and InnovationGrowing your customer baseQ: What are your top 3 investment priorities for 2013?PwC919262733383112530310% 10% 20% 30% 40% 50% 60% 70%Securing raw materials or componentsManufacturing capacityImplementing new technologyFilling talent gapsNew M&A/joint ventures/strategic alliancesEnhancing customer serviceTechnology Total SampleBase: All respondents (Total sample, 1,330; Sector, 154)Source: PwC 16th Annual Global CEO Survey 201315January 201316th Annual Global CEO Survey – Key findings in the technology industry
  • 16. Changes ahead for technologycompaniesPwCof technology CEOs anticipate changesin their customer growth, retention, andloyalty strategies.16January 201316th Annual Global CEO Survey – Key findings in the technology industry
  • 17. Increasing engagement and social mediaIn line with CEOs from other industries, 90% of technology CEOs are focused on strength-ening relationships with customers and clients by increasing engagement. In pursuit of newcustomers, 84% of technology CEOs are enhancing their focus on social media.Q: To what extent are you strengthening your engagement program with the following stakeholders?777889808490Employees (including trade unions & work council)Users of social mediaCustomer and clientsPwCBase: All respondents (Total sample, 1,330; Sector, 154)Note: This question was asked only to those who stated the above stakeholders have influence their strategy. Respondents who stated ‘some change’ or ‘major change’ areshown aboveSource: PwC 16th Annual Global CEO Survey 2013’ concerned.Source: PwC 16th Annual Global CEO Survey 2013 17January 201316th Annual Global CEO Survey – Key findings in the technology industry64686763787763656667760% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%The mediaProviders of capitalGovernment regulatorsIndustry competitors and peersSupply chain partnersTechnology Total Sample
  • 18. Focusing on developing new products or servicesNew entrants are more of a concern fortechnology CEOs than the total sample.“On a micro level, the biggest threat for us is always the next disruption around thecorner. Clearly we’re trying to disrupt our competitors, and they’re trying to disrupt us.So we are constantly assessing, preparing and trying to out innovate--but that’s thenature of our competitive and exciting industry.”Stephen A. Elop of Nokia Corporation40%Growth Opportunity: New products andservicesPwCtechnology CEOs than the total sample.Thus, they are focused on constantlyfinding ways to differentiate their productsby providing unique customer experiences.New products or services are viewed as themain opportunity for growth by 37% oftechnology CEOs versus 25% of the broadersample of all CEOs.18January 201316th Annual Global CEO Survey – Key findings in the technology industry39% 37%28% 25%0%10%20%30%2012 2013Technology Total SampleQ: Which one of these potential opportunities for business growth do you see as the main opportunity to grow your business in the next 12 months?Base: All respondents (Total sample, 1,330; Sector, 154)Source: PwC 16th Annual Global CEO Survey 2013concerned.Source: PwC 16th Annual Global CEO Survey 2013
  • 19. Targeting pockets of opportunityWe have one of the most geographically balanced business bases in thesector. In uncertain times like these, this balanced geographicaldiversification enables us to keep the company’s performance on aneven keel and take advantage of growth avenues, wherever they may be.PwC 19January 201316th Annual Global CEO Survey – Key findings in the technology industryeven keel and take advantage of growth avenues, wherever they may be.Jean-Pascal Tricoire, President and CEOSchneider Electric SA, France
  • 20. Global operations expansionTechnology CEOs continue to view Latin America as the key region for expanding theiroperations, followed by South-East Asia and North America.7462838168707683AfricaNorth AmericaSouth-East AsiaLatin AmericaQ: In 2013 do you expect your key operations in these regions to decline, stay the same or grow?PwC33585777708074373846636364680% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Western EuropeAustraliaCentral and Eastern Europe/Central AsiaEast AsiaMiddle EastSouth AsiaAfricaTechnology Total SampleBase: All respondents (Total sample, 1,330; Sector, 154)Note: Respondents who stated ‘grow’’ coSource: PwC 16th Annual Global CEO Survey 2013ncerned.Source: PwC 16th Annual Global CEO Survey 201320January 201316th Annual Global CEO Survey – Key findings in the technology industry
  • 21. China still in the lead when it comes to newrevenue opportunities20253035Q: Which countries, excluding the country in which you are based, do you consider most important foryour overall growth prospects in 2013?PwC31 23 15 12 10 8 7 6 5 527 25 19 10 14 8 6 6 4 505101520China US Brazil Germany India Russia Indonesia UK Canada JapanTechnology Total SampleBase: All respondents (Total sample, 1,330; Sector, 154)Source: PwC 16th Annual Global CEO Survey 201321January 201316th Annual Global CEO Survey – Key findings in the technology industry
  • 22. What’s nextDeciding which processes and capabilities need to be global, regional and local isn’t just about takingadvantage of growth opportunities; it’s also about developing the flexibility to survive disruptions,wherever they may surface. That’s not an easy balance to strike. We’ve distilled five key questionsfrom the feedback CEOs have given us in this year’s CEO Survey:• Organizations are increasingly aware that opportunities in growth markets are highly nuanced. Howdo you evaluate the opportunities offered in these diverse and diverging markets, both newer andmore established?• How can you use digital channels to better communicate with your customers, co-create products,capture customer insights, increase loyalty and measure your impact in all of these areas?PwC 22capture customer insights, increase loyalty and measure your impact in all of these areas?• How can you innovate more effectively and efficiently – and focus more on the customer in yourinnovation strategy and processes?• To take advantage of new opportunities before competitors do, how can you create the right degree offlexibility in your organizational structure and processes, which allows you to quickly deployresources across your organization to where they’re most needed?• How can you create networks of formal and informal trusted relationships which go beyondcontractual terms to target a shared vision, set of values and objectives?16th Annual Global CEO Survey – Key findings in the technology industry January 2013
  • 23. For more information, please contact:Rod Dring – Australia Werner Ballhaus – Germany Yury Pukha – RussiaT: 61 2 8266 7865E: rod.dring@au.pwc.comT: 49 211 981 5848E: werner.ballhaus@de.pwc.comT: 7 495 223 5177E: yury.pukha@ru.pwc.comEstela Vieira – Brazil Sanjay Dhawan– India Greg Unsworth – SingaporeT: 55 1 3674 3802E: estela.vieira@br.pwc.comT: 91 80 4079 7003E: sanjay.dhawan@in.pwc.comT: 65 6236 3738E: greg.unsworth@sg.pwc.comRaman ChitkaraGlobal Technology LeaderT: 1 408 817 3746E: raman.chitkara@us.pwc.comPwC 23Christopher Dulny– Canada Kenji Katsura– Japan Douglas Mahony – UAET: 1 416 869 2355E: christopher.dulny@ca.pwc.comT: 81 90 5428 7687E: kenji.katsura@jp.pwc.comT: 97 1 43043151E: douglas.mahony@ae.pwc.comJianBin Gao – China Hoonsoo Yoon – Korea Jass Sarai – UKT: 86 21 2323 3362E: gao.jianbin@cn.pwc.comT: 82 2 709 0201E: hoonsoo.yoon@kr.pwc.comT: 44 0 1895 52 2206E: jass.sarai@uk.pwc.comXavier Cauchois – France Ilja Linnemeijer– The Netherlands Tom Archer– UST: 33 1 5657 10 33E: xavier.cauchois@fr.pwc.comT: 31 88 792 4956E: ilja.linnemeijer@nl.pwc.comT: 1 408 817 3836E: thomas.archer@us.pwc.com
  • 24. AcknowledgementsPwC gratefully acknowledges the contribution to the 16th Annual Global CEO Survey: Key findings in the technologyindustry provided by:Stephen A. Elop, President and Chief Executive OfficerNokia Corporation, FinlandJean-Pascal Tricoire, President and Chief Executive OfficerSchneider Electric SA, FranceThis publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the informationcontained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of theinformation contained in this publication, and, to the extent permitted by law, PwC does do not accept or assume any liability, responsibility or duty of care for any consequencesof you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.© 2013 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please seewww.pwc.com/structure for further details.121211-130640-EA-OSDownload the main report, access the results and explore the CEOinterviews from our 16th Annual Global CEO Survey online atwww.pwc.com/ceosurvey.

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