Aug 01, 2017

Strategic Tech Investments Driving Growth in the Mid-Market

A recent report by Deloitte entitled “America’s economic engine – Breaking the Cycle”, which polled mid-market and private companies, found that executives are  focused on increasing their productivity in 2017. One method they’re planning to pursue is engaging in deal activity, exploring public offerings and mergers and acquisitions. However, this is only one strategy these executives are considering for growth.

The survey also found that technology investment is also key to growth and innovation, especially as we grow more connected in the current global economy. Respondents planned on developing new products and services in 2017 as a central component of their growth strategy. Additionally, upgrading existing systems and implementing new systems were neck-in-neck for the top spot of investment priorities, both with the goal to increase productivity and customer engagement.

Technology has continued to lead capital expenditure for the middle market and is perceived by executives to have the greatest potential for increased productivity. Moreover, 85% of mid-market companies are leveraging emerging digital technologies to transform their organizations and to drive strategic business goals. The survey found that more companies are using technology as a means to increase profitability and productivity while meeting the needs of both the workforce and the customer.

 “Technology is becoming more of a differentiator in the middle market. At a strategic level, technology is helping smaller, growing companies scale faster and increase their valuations” ~Harvey Michaels, Principal at Deloitte Consulting LLP.

Survey Question: Rank in order of importance your management’s top three strategic priorities for next 12 months [top selection shown]

Source: Deloitte

According to SWC Technology Partners, there are 4 predominant ways in which middle market companies are successfully using technology for growth:

  1. Ensuring that CTOs have a seat at the leadership table
  2. Migrating to the cloud for agility, scale and economics
  3. Making data-based decisions about growth
  4. Building IT teams that provide the range of expertise required in today’s market

Other highlights from Deloitte’s survey include:

  • Companies viewed 2017 in a positive light, with approximately 60% expressing cautious optimism and 24% saying they were “highly optimistic” about their business outlook
  • The mid-market companies’ view of technology is increasingly enthusiastic with 41% of respondents saying their leadership views technology as a “critical differentiator and key to growth” and another 38% view it as a “strategic investment.”
  • Many companies are expressing a healthy appetite for innovation and embracing change with 36% of respondents dedicating at least half of their IT budgets to implementation of new systems versus maintenance of existing systems.
  • Cloud-based solutions, data analytics and business intelligence solutions continue to provide “large corporation solutions” to mid-market enterprises in terms of operational capabilities, overall productivity and competitive insights.

The survey findings also reveal some of the challenges that mid-market executives face. Here are some of the top few:

  • Many executives, particularly in smaller firms, say it’s difficult to keep up with the latest technology innovations.
  • Two-thirds of respondents say that an international orientation is important for their firms
  • Approximately one-third of respondents have “mature” systems to govern IT processes at their firm, while 16% say they have no formal IT governance in place
  • Mid-market companies share broader market concerns about information security with 40% believing that their companies lack the right infrastructure or resources to maintain an effective cybersecurity program.

“In the long-run, productivity gains are mostly generated through innovations in technology and in the way that businesses manage people and technology” ~ Ira Kalish, Chief Global Economist at Deloitte Touche Tohmatsu Limited