When it comes to digitalization, there really is no choice.

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Digital Transformation is a no longer a choice; it’s a necessity

Since 2019, the Center has been researching topics related to technology and digitalization among middle market businesses to understand if the trend is a “big-business” play, or not. We created a framework to help mid-size leaders identify their own digital readiness and see how transformational technologies accelerate growth across different areas of the business. In addition, we’ve explored specific topics such as advanced manufacturing, cybersecurity, and talent management. Universally, the most digitally mature companies outperform their counterparts across critical business metrics.

When the pandemic began in March 2020, we started asking leaders about consequences to various business activities. The single function experiencing POSITIVE impact has been digital transformation. COVID-19 has been a catalyst for accelerating digital adoption and integration and has reinforced the data and qualitative evidence collected by the Center over the years. The message is clearer than ever: When it comes to digitalization, there really is no choice.

To that end, the Q2 2021 MMI reveals that 90% of middle market companies are currently undertaking some activity to digitize their business. Current IT spending is allocated across a range of objectives with the most likely areas for investment focusing on efficiency and costs (11% of spend), growing revenue and connecting with customers, creating new business models, and mitigating risk (cybersecurity, for example, represents 10% of spend).

Recovering businesses (those growing revenue 10% or more in the last 12 months) report investment in technology as a major capital spending target with 18% of companies saying they would invest in this area. Nearly 60% of mid-size companies also report having some form of ERP system in place to help manage the business, with another 20% saying they plan to implement such a s system within the next few years if not sooner. Finally, accounting software and digital payment solutions are the most cited working capital tools in use or planned for implementation. The biggest deterrents to any of these plans are costs/budget, time, and having the right talent in place to fully leverage the technologies.

Most middle market companies are curious about which pandemic-related changes are temporary and which are here to stay. We’ve seen a significant “return to the workplace” over the past six months as well as a lagging return to business travel and conferences/tradeshows. However, digital changes—including the use of videoconferencing technology and the investment in proper cybersecurity protection to support remote work— will remain. These digital changes have helped connect colleagues and customers in efficient and secure ways and will continue to do so even as in-person collaboration resumes. As legendary football coach Woody Hayes used to say, “It’s all about people” …..if that’s true, then meeting customers where they’re at and doing so in safe ways will go a long way toward driving future middle market success.