Partner Article

Mid-market “digital reactionaries” risk growth

Mid-market “digital reactionaries“ risk growth

12 November 2015

As the impact of digital technology on businesses gathers pace, KPMG Enterprise warns that the cautious approach of mid-market companies risks their competitive position.

The professional services firm’s report, Digital to the Core, found that while most mid-market companies are investing in digital, the majority are adopting a tentative strategy.

Seven in ten mid-tier executives plan to increase their investment but only one in six are a “digital pioneer.” Nearly three-quarters are content to follow, described by KPMG as “Reactionaries” or “Sceptics.”

14% identified as Digital Pioneers: we strive to stay at the cutting edge of new digital technologies

32% identified as Digital Adopters: we wait until new digital technology is well established, but then move quickly to adopt

23% identified as Digital Reactionaries: we are playing catch up on digital

17% identified as Digital Sceptics: we evaluate digital innovations cautiously, and would prefer to move slowly but make the right investments

Nathan Beaver, Customer & Growth director at KPMG Enterprise, said:

“There is nothing inherently wrong in waiting for technology to be proven but, in the fast-paced world of digital, this can leave companies on the back foot, raising concerns about future competitiveness.”

“While we urge this critical part of the economy to harness the power of digital to transform productivity and accelerate their growth, we understand the challenge involved in the fundamental rethinking of operating principles, customer experience and business model involved.”

The KPMG Enterprise survey found six key barriers to the delivery of digital change, led by technology implementation issues.

21% cited implementation challenges in delivering and embedding new technologies 19% cited lack of an organisation-wide digital strategy and vision 14% cited limited understanding of digital opportunities and new technologies 14% cited lack of investment 10% cited lack of top table commitment 9% cited difficulty attracting staff with digital skills

Commenting, Nathan Beaver says:

“The complexity involved in rolling out a digital project is sure to throw up significant implementation challenges. An end-to-end solution for servicing customers over digital channels will involve existing and new technologies and platforms, and all of them have to work in harmony.

“The resources to tackle this are more constrained for mid-tiers than for the corporate giants. But combining new technologies with agile development models can make it faster, cheaper and less risky for mid-tiers to roll out their digital services and platforms, so such barriers are not insurmountable.”

KPMG advises mid-tier companies to focus on three key digital objectives:

Pick up the pace to avoid being left behind by the digital revolution and challenged by new, or yet to be formed, digital disruptors.

Harness digital to deliver more customer value by building greater insights across the channels to market in order to develop more relevant, innovative products and services.

Adopt an agile strategy to digital that takes advantage of the speed of digital change unconstrained by the traditional waterfall model of project and change delivery.

Nathan Beaver concludes:

“Digital is here to stay. The pace will only accelerate and intensify as new technologies come online and digital disruptors encroach on industries. Businesses must innovate or risk being left behind.

“Given UK Trade and Investment estimates that the country’s mid-tier companies account for about a third of private sector output and more than one in three UK jobs, it is vital that these businesses exploit technology in order to compete successfully.

“The UK’s mid-tier companies have the potential to be world-beaters in the digital arena. Many of them have specialised products or services that can be brought to global markets thanks to the power and reach of today’s customer channels. By putting digital at the core of their strategies, businesses can target new growth opportunities and get closer to their customers.”

-Ends-

Media Enquiries:

Alison Anderson, KPMG Corporate Communications

T: 0113 254 2980 E: alison.anderson@kpmg.co.uk

Notes to Editors:

At KPMG, we believe it is critical to give the UK’s mid-tier companies a voice on digital issues. That’s why we have undertaken one of the largest surveys of mid-tier firms ever conducted on a digital theme. In total, our survey reached over 1,200 mid-tier companies in the UK. In this report, we define mid-tier as companies with annual revenues of between £50m and £1bn. These included large domestic, fast-growth and entrepreneurial and privately owned businesses.

With YouGov, we probed the views of 600 of these UK organisations. At the same time, KPMG went on the road, running the same survey with a range of UK organisations at a series of events across the country, pushing the total respondents to over 1,200. Respondents were senior executives and finance directors from a wide range of sectors, including finance, IT & telecommunications, manufacturing, construction, retail, transportation, medical & health, and education

About KPMG

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff. The UK firm recorded a turnover of £1.9 billion in the year ended September 2014. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 162,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

This was posted in Bdaily's Members' News section by KPMG .