Middle Market Enterprises Prioritize Tech Investments
Tech planning, investment and implementation are top of mind for efficiency and growth
November 3, 2021 4 min read
Across the middle market, companies are prioritizing technology investments spanning artificial intelligence, eCommerce, data and data analytics, cloud migration and payments technology. These investments are helping companies become more efficient, competitive and positioned for sustainable growth.
Capital One and Morning Consult recently surveyed 400 financial decision-makers from middle market companies in more than 15 different industries to uncover their outlook and attitude about technology shifts and investments. Respondents overwhelmingly replied that their companies demonstrate a tech-forward mindset, but one-fifth also said integrating new technologies is the top challenge that keeps them up at night.
A New Wave of Technology Challenges For the Middle Market
Middle market enterprises acknowledged that investing in new technologies is crucial to business growth. Technology can help them overcome critical challenges like resource issues and increasing costs. It contributes to customer retention, business innovation and employee retention. The survey found:
- 95% of respondents said their companies are implementing technology that makes processes and operations more efficient
- 92% of respondents said their workforce has the skills and resources to maximize the benefits of new tech and processes.
- Financial decision-makers also identified skills gaps in management and leadership (32%), data analytics (31%), machine learning (31%), cloud computing (30%), and data science (30%).
- 91% of respondents said their companies are implementing technologies to allow employees to work more efficiently in a remote or hybrid environment.
Technology Investments Drive ROI
Middle market business leaders know that technology investments have the capacity to drive increased return on investment. When technology is applied effectively, it can enhance process efficiency, lower costs, improve customer experience and deliver insight for better decision-making.
In looking at current technology investment priorities, respondents reported up to five areas where they’re investing most heavily:
- 30% selected cybersecurity
- 28% selected data and data analytics
- 26% selected eCommerce
- 24% selected cloud migration
- 24% selected artificial intelligence
- 22% selected payment technology
When asked to select the top drivers of anticipated ROI in the next 1 to 3 years, many executives responded that their technology investments would hit the mark:
- 27% selected AI as a top anticipated driver of ROI
- 24% selected cybersecurity, payments technology, and data and data analytics
8 Best Practices for Technology Implementation
Wherever you are on your digital transformation journey, the purpose of implementing technology should always be to solve a business problem. Smart technology investments will help businesses achieve competitive advantage and increase organizational value. Digital transformation starts with a sound plan that will ease enterprise-wide adoption and align the investment with the vision and objectives of the organization. Consider these 8 strategic practices:
- Understand existing processes and workflows. Identify the challenges and areas of opportunity that you want the technology applied to.
- Ensure strategic alignment with business goals. Align IT strategies with your enterprise business goals. Understand both the value of the new technology and the expectations of it to support specific business goals.
- Investigate technology options to find the right solution. Prioritize challenges and opportunities and determine how the new technology investment will solve or unlock them.
- Know the risks associated with each technology solution and identify risk mitigation strategies. Clearly define risks that could prevent the investment from achieving its objectives. Consider the probabilities of those risks occurring, the consequences and their criticality and develop mitigation strategies for risk events.
- Identify hard and soft costs. Think about all the costs associated with the technology investment beyond the purchase price. Understand the extra costs that typically accompany tech investment: service agreements, subscriptions fees, salaries for new IT employees, training expenses, and additional legal, compliance and marketing costs.
- Determine a change management plan among employees and customers. This plan details how to introduce new technology to employees and customers. Set clear expectations for both stakeholder groups, explain benefits and provide training.
- Define success metrics. Identify how the technology investment should increase operational, delivery and service efficiency; how it should impact organizational functions; and metrics comparing investment cost to savings and revenue growth.
- Prepare to adapt. New technologies typically mean new processes and procedures, which can be difficult to adopt. Ensure stakeholders engage throughout the process, provide training and communicate about how the new technology will provide a competitive advantage.
As the digital economy escalates, it becomes more important to gain a deep understanding of customers and markets. That insight can help leaders visualize and pursue a strategic growth strategy.
The Capital One survey was conducted by Morning Consult among 400 U.S. middle market financial decision-makers representing companies with total annual revenues of $20 million to $500 million. The survey was conducted from an online panel from September 1 – September 9, 2021. The margin of error is +/-5%.
For Informational Purposes Only
The information contained herein is shared for educational purposes only and it does not provide a comprehensive list of considerations or best practices. This information does not represent any opinion, guidance or recommendation, whether formal or informal, of Capital One, National Association, or any of its officers, directors, employees, advisors, attorneys, consultants, affiliates or subsidiaries (collectively, “Capital One”). Nothing contained herein shall give rise to, or be construed to give rise to, any obligations or liability whatsoever on the part of Capital One.
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