Contact us anytime to know more — Amit A., Founder & COO CISIN
Middle-market companies seeking to remain competitive in today's digital environment must embrace digital transformation.
Adopting appropriate technology will improve business performance and help the organization expand. Digital transformation empowers organizations to adopt digital tools efficiently while creating work strategies that increase profitability.
The digital journey can keep your team ahead of competitors in your marketplace.
Experts recently noted the rapid expansion of businesses investing in digital transformation strategies. Here are some numbers to keep in mind:
- Direct digital transformation investments have experienced steady and rapid growth over time, reaching a 16.5% compound annual rate between 2022-2024, an increase of one percentage point over what IDC predicted would occur between 2020-2023.
- IDC predicts direct investments to reach $5.4 trillion between 2020-2023, representing an increase of approx $0.9 trillion since this time frame began.
Research Director for Worldwide Digital Transformation Strategies, reports: "For the first time, we are now seeing that most enterprises (53%), which represents an improvement of 42% from just two years ago, now possess an enterprise wide digital transformation strategy."
The Digital Transformation Is Different In The Middle
The National Center for the Middle Market tracks technology adoption among mid-size businesses. Their efforts began even prior to 2019's flu pandemic; mid-size companies with annual revenues between $10 Million and $1 Billion represent roughly one-third of U.S.
Private Sector GDP and employment numbers, respectively, although technology investments may differ between industries or middle-market firms significantly when considering moving toward the digital future. Regardless, mid market leaders often face similar hurdles when trying to navigate this path toward digital transformation.
Resources, capital, people, and time remain of primary importance when considering digital transformation initiatives for mid-sized companies.
Where digital transformation efforts in larger enterprises often include dedicated teams or departments overseeing them strategically compared with the middle market's more limited resources; small businesses typically don't need such platforms and don't possess them either; trendier tools and systems may prove too costly or outmoded in meeting current business requirements.
Five Keys To Planning Successful Change
With technological change being at such an increasingly fast pace in modern businesses, how should middle-market leaders navigate the technological transition? According to our research, our findings indicate that whether or not your organization has already begun moving more digital, these considerations must always be kept in mind for optimal fit and ROI.
- Platform: Are You Investing in Something New or Expanding an Existing System? In either instance, realizing maximum return will depend upon allocating more budget for innovation, business analytics, and strategic technology development than for day-to-day operational management of your company.
- Budget: With limited investment resources and rising interest rates making accessing capital difficult, are budgets allocated correctly? Depending on the systems involved, return on investment could take longer depending on its speed; consider what tradeoffs may need to be made to prioritize security & efficiency over productivity or analytics as you form your strategy for making decisions & investments.
- Processes: Will this investment meet both customer and supplier requirements? One major benefit is end-to-end supply chain visibility and connectivity, particularly important if your downstream and upstream partners follow differing practices; selecting only on price/ provider may not be optimal in these instances; consider what may need changing by outlining key functions first.
- People: Does the company you work for employ digitally-skilled workers capable of not only implementing but also supporting and operating technology? According to experts Middle Market Indicator data, over 90% of companies reported having digital skills gaps; implementation partners or consultants may help bridge those gaps temporarily; however, long-term talent strategies must also be considered when filling them.
- Risk Management: With new technologies come new risks. Are you aware of which ones could most eminently threaten the digital assets in your possession and have security measures in place to guard against them? A trusted partner is an invaluable asset when identifying blind spots or new threats that might emerge.
Why Is Digital Transformation Important For Mid-Size Businesses?
Many mid-size businesses continue to invest in digital transformation projects even during the COVID-19 Pandemic; investing in digital strategies enabled their company to adapt more quickly than before to new conditions such as remote working.
Companies that invested during COVID-19 were especially beneficial.
Digital transformation goes beyond technology; it helps organizations make better decisions using data-driven insights from customers, marketing efforts, and operations.
Digital transformation improves all areas of a business including marketing campaigns that resonate more strongly, customer service interactions, and operations processes.
Customers expect seamless interactions between your company and them and expect seamless experiences if any issues arise; bad experiences could cost your customer's business to another provider if any friction arises between interactions; digital transformation provides the chance to improve that customer journey by offering tailored service or making information easily searchable; further segment customers for targeted campaigns more likely to resonate.
Mid-market companies seeking to reduce operational expenses will need operational efficiency in place as part of the solution.
By automating processes and making smart decisions using data analysis tools, mid-sized enterprises can enhance efficiency while saving money in the process.
Studies showed that nine out of ten businesses believed they would need to alter their model by 2023 or had done so already or planned on changing within one year.
Sixty-four percent of survey participants believe new digital businesses must be founded, while 21 percent suggested embedding digital technologies within current business models suggesting why using a digital operating system will position your middle market business above competitors over time.
Middle Market Technology: The Power Of Technology
Unsung heroes of our economy are middle-market businesses. Critical for national supply chain stability, they act as intermediaries between smaller mom-and-pop shops and enterprise-level players, thus providing more flexibility, agility, and opportunity than either extreme.
The middle market is an expansive sector whose definition remains murky; organizations with revenues between $10M and $1B fall within its purview, though their exact presence varies across industries and the economy in general.
Experts found that mid-market organizations account for one-third of private sector GDP and employment, as well as creating over 30 million new jobs since the past year.
Although mid-market companies were hit hard by the pandemic and its aftermath, many found ways to adapt. Leading technology adoption, these organizations may face a shortage of skills or workforce requirements.
Increased Investment In Tech
Increased Investment in Tech mes No company hesitated to adopt technology prior to COVID-19's implementation; any hesitation has likely passed now that midmarket workers were forced to work remotely due to mandatory lockdowns; delivery became automatic contactless delivery and many companies faced the decision between going digital or ceasing operations.
Capital One recently conducted a report which demonstrated mid-market companies' optimism regarding their future prospects due to technology adoption's dramatic acceleration.
Eighty-six percent of business leaders plan on growing their companies after March 2022, while only two plan on downsizing.
Digital transformation is integral to their strategies. For businesses to maximize growth and reap its rewards, the latest technologies in software industry and automated processes must be adopted into operations; to this end, mid-market firms are increasing technological investments significantly.
Capital One Middle Market Strategic Investments Survey showed that one-quarter of mid-market executives plan on spending at least $550k over one to three years for investments in areas like eCommerce and data analytics, as well as cybersecurity and artificial intelligence, in order to expand digitally while creating an impressive online presence and protecting customer and company information through these IT investments.
By prioritizing IT areas like these, it will allow these businesses to increase digital while building strong online presences while protecting vital details about both customers and company information.
Companies appear confident they will fully leverage technology and processes, yet 20% of respondents noted technology integration as their greatest challenge, more so even than cash flow, inflation, or taxes.
Leaders can overcome this obstacle through strategic implementation. Middle market business owners and leaders should start by outlining all necessary requirements capital requirements included for installing and maintaining this technology in their organizations, then identify any skills gaps among their workforce (financial decision-makers identified gaps related to management/leadership (32%), data analytics (31%), machine learning (31%) and cloud computing (30%) as potential obstacles.
Investment in training is necessary for the successful adoption and use of AI, data security, and other tech. Leaders shouldn't force everyone to become coders; rather, they should provide opportunities for education, development, and training opportunities for everyone in their organization.
Innovation should never slow, and businesses that proactively leverage technology will remain agile and competitive.
Middle markets play a pivotal role in driving economic development across countries; therefore, they should incorporate technological solutions in order to remain cost competitive while receiving maximum returns on their investments.
Read More: The 6 Technologies That Will Be Used In 2023
What Are The Main Areas & Steps To Focus On For Digital Transformation In Mid-Market Businesses?
#1. Begin With A Digital Transformation Blueprint
Many organizations believe they can implement new digital systems without prior planning; this approach almost always proves disastrous.
Digital Transformation Blueprints can serve as the perfect roadmap to success for businesses looking to implement digital technology within their systems.
Understanding your business requirements, then finding any existing gaps that prevent effective functioning will enable you to design steps that address them and achieve results more smoothly than before.
Our experts at CISIN specialize in crafting detailed plans for technology implementation. Contact now so they can help with your digital transformation.
#2. You Need To Know What Your Customers Want
Customers in the middle market often have different needs compared to small or enterprise customers; taking time to gain in-depth knowledge of each customer can increase efficiency and help resolve problems faster.
#3. What Technology Does Your Mid-Sized Business Need?
It can be challenging to determine exactly what technology your mid-market business requires when there are so many available systems and options to select.
Recognizing and understanding what technology pain points your medium-sized business is experiencing can help identify solutions that suit you and your team better. By understanding what's not working, you may discover more efficient systems.
Once you know exactly what it is that you want, creating an implementation plan for any new technology is necessary.
Spending money on something no one uses could prove costly if your goal is growth rather than stagnation; be wary about adopting every new technological solution as not all are suitable to your company size, pain points, or employees.
#4. Monitor How To Track, Analyze And Validate These Digital Transformation Initiatives
Implementing your digital transformation strategy involves setting a baseline. Take stock of the goals and direction your business is heading in before creating SMART goals based on that baseline; that way, they are realistic yet still challenging enough.
Your digital transformation efforts cannot transform your medium-sized company overnight; their progress must be evaluated over time and constantly evaluated; otherwise, consider other initiatives.
#5. Capital
Mid-sized companies have historically found it challenging to secure outside investment from lenders and venture capital firms, according to an article by experts: Whether seeking debt, equity investments or company exit strategies, mid-sized enterprises tend to go unnoticed."
Technology in the Mid-Market Report states that middle-market companies spent significantly more money on technology.
According to this data, 43 percent of respondents spent over 5 percent of revenue on tech in 2019, as compared with 28 percent who spent this much in the past year.
In 2021 however, budgets had been cut for software in all businesses despite limited capital access; mid-market businesses, in particular, may find budget cuts particularly taxing as their spending cannot keep pace.
As chief strategy officer, they have witnessed how adaptation and change are adapting and changing in order to meet market requirements in 2023 as a software development company.
#6. Culture
Mid-market businesses need an environment distinct from that found at enterprise-level salespeople, high prices, opaque pricing structures, long sales cycles, and rigid approaches to customer engagement and sales.
Software vendors cannot meet every need on the market, so mid-market businesses look for similar-sized and like-minded vendors instead.
Mid-market businesses tend to take a longer-term view by investing in people while remaining lean with thin hierarchies for rapid decision-making; moreover, they tend to operate regionally while supporting social responsibility goals with similar technology suppliers who share similar traits and beliefs among both parties.
#7. Connected Cloud Platforms
Large vendors use connected cloud platforms as a quick fix and profitable strategy to reduce their expensive ERP solutions for midmarket organizations while still adhering to outdated practices like inflexibility, high prices, and extended implementation times.
Imagine an online retailer operating from the United States with 1000 employees selling worldwide. Although their HR needs might seem modest, their sales, accounting, and fulfillment needs could be immense.
Businesses require an adaptable global solution that is intuitive, well-priced, and extensible in order to promote growth and adoption of modern integrated software applications rather than legacy ERP solutions.
Mid Market businesses, in particular, often opt for cloud computing platforms as part of their strategy for driving growth in business operations.
#8. You Can Also Read About The Advantages Of Using
Additionally, discover more of the advantages of employing Businesses that are turning to business intelligence tools in an attempt to leverage growth opportunities as they emerge from pandemic-stricken zones.
Recently, this was too expensive and difficult for mid-market companies to implement and scale. All data being analyzed comes from multiple departments, such as marketing, sales, and invoicing, as well as various software systems.
Instead of investing in multiple systems and spending additional funds to integrate them, MM leaders often opt for cloud suites where all applications and data have already been integrated, supported by a robust business intelligence solution and provide actionable insights allowing them to focus more on growing their businesses than on software management.
Today's mid-market businesses face different software requirements and expectations than even 10 or 15 years ago.
Mid-market firms now serve complex markets which span across borders with limited budgets to create custom solutions for them. Vendors must collaborate more closely to support global economies, while the mid-market businesses through the identification of technologies necessary for sustainable growth.
Digital Transformation Success Stories And Lessons For Mid-Market Businesses
Digital Transformation Success Stories and Lessons for Mid-Market Businesses Mid-sized companies can improve customer service, increase efficiency, and level the playing field by investing in digital transformation strategies.
Utilizing cutting-edge technologies can allow these middle market firms to keep pace with larger firms on the market while staying relevant within it. Learn how CISIN helped these middle-market businesses expand by adopting an effective digital plan.
A middle-market non-profit organization providing medications to uninsured people was having difficulties keeping pace with its rapid expansion, yet its previous system could no longer meet demand.
This case study shows how CISIN assisted this business in achieving maximum potential through digital transformation. Accounting software used by A Company could no longer keep pace with their rapid expansion, so CISIN helped upgrade to an ERP system hosted on the cloud leading to increased productivity and enhanced reporting capabilities as a result of this transformation.
Make Sure It All Ties Back To The Strategy
Reconnect all aspects to strategy Each organization and the implications associated with the five considerations may vary significantly; leaders should step back from the specifics of each middle-market firm and reflect upon broader questions like those below, which relate to strategic concerns such as:
- How far do we want to be leaders in our field in generating business value through digital technologies?
- Which areas of our business do we lead in the industry? Which areas of our business are we behind?
- Is our digital vision clear, comprehensive, widely understood by all employees, customers, and partners, both internally and externally, and used as a guide for strategic decisions?
- Is there a digital strategy in place to increase our revenue, achieve a competitive advantage, and better utilize capital?
Consideration should be given to aligning these underlying premises across your organization for best results. According to Report's The Case for Digital Transformation study, companies self-described as having highly strategic digital transformations grew at much faster rates than their peers, with those boasting annual revenues over $100 Million being further along in their digital transformation than smaller organizations given their size and resources available to them.
Conclusion: Start Your Mid-Size Business Digital Transformation Today
Analog companies face major disadvantages as the digital economy gains ground in terms of efficiency, optimization, and competitiveness.
Large enterprises often struggle with managing technological change and adopting new technologies, while middle-market firms should embrace change with an optimistic and strategic mindset; also being willing to use external resources should they need them. CISIN can offer mid-market businesses in need of digital transformation guidance, an invaluable guide in their digital journey, and also software development services.
