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January 26, 2011 – Increased risk, cost and need for new skills are the greatest challenges presented by complexity, according to new research from KPMG International, a network of firms providing audit, tax and advisory services.

More than 90 percent of 1,400 senior executives in 22 countries say their organization's success depends on managing complex business issues, primarily the regulatory landscape and information management. But less than half believe the actions they are taking to manage complexity have been very effective, according to KPMG’s results.

The KPMG study revealed that 70 percent of executives believe increasing complexity – caused by regulatory compliance, information management, government oversight, changing operating models, speed of innovation, tax policy and other factors – is among their company's biggest challenges. Three quarters of the respondents say complexity has increased for their organizations over the past two years, and a majority expect things to become even more complicated in the coming two years, according to KPMG’s findings.

The most effective actions taken according to the research have been improving information management, business reorganization, investing in new countries or geographies, and conducting mergers or acquisitions, but still, fewer than half of executives say these actions have been very effective, according to KPMG’s study.

The KPMG global study found that at least seven out of 10 executives believe complexity can create new opportunities for their businesses, including gaining competitive advantage, creating better strategies, expanding into new markets and improving efficiencies.

"Business needs the ability to manage simply, continually streamline, not create internal bureaucracy, and be good at executing," said Alan Buckle, Global Head of Advisory for KPMG's network of firms, in an announcement.  "We find that organizations are most successful when they keep their business models simple and don't create more complexity of their own with the actions they are taking."

"The need for new skills is a key challenge of complexity – identified by more than three-quarters of executives surveyed by KPMG," says KPMG Principal Greg Bell, the firm’s Global Services Leader, Information Protection. "Not surprisingly, the need for new skills most impacts the technology sector – where more than 80 percent say it’s a top challenge."

Valerie Valentine is senior editor for Information Management. You can follow her on Twitter at @va1va1entine or via email at valerie.valentine@sourcemedia.com.