In a survey of 1,200 UK mid-market companies by YouGov and KPMG Enterprise, the firm’s ‘Digital to the Core’ report found that nearly 20% of respondents said transforming the customer experience was their primary motivation in investing in digital initiatives. This answer was given against a context in which 72% classed digital as an important priority generally and 68% of respondents said they planned to increase spending on digital over the next two years, with more than one-third (35%) expecting to increase spending by more than 10%.
That said, caution is still the watchword for many mid-tier companies. Only 14% of respondents describe themselves as digital pioneers who “strive to stay at the cutting edge”, while 32% said they would prefer to wait and see if a new technology was proven to work before investing.
This ‘wait and see’ approach was particularly pronounced in certain sectors. While IT & telecommunications sector, media organisations and finance and accounting companies are placing a high priority on digital for the future, organisations in the manufacturing and construction sectors are much less likely to view digital as a strategic priority.
Nathan Beaver, Customer & Growth Director at KPMG Enterprise, said: “What we are seeing here could be a real tipping point in the adoption of digital technologies by mid-tier companies. While some sectors – notably construction and manufacturing – remain to be convinced, most of the other economic areas we surveyed see digital as a transforming force in their businesses. This is particularly true in understanding and being able to leverage customer behaviour.”
He added, “However, those who are adopting the ‘wait and see’ approach are playing a risky game. While there is nothing inherently wrong in waiting for technology to be proven, there is a danger that such an approach could give rise to a ‘two-tier digital economy’ where some mid-tier organisations end up falling behind and being overtaken by those more innovative businesses.”
Using even quite simple technology, companies can collect and segment customer information to enable them to tailor their approach. One such example is Oasis Healthcare, which has a network of 320 practices and 1,300 dentists across the UK. Oasis used customer data to launch online booking and can now track customer activity in real-time – allowing the company to see which services most interest them and where.
The report found that the main things holding mid-tier companies back from adopting new technology were implementation issues (21%) and lack of an organisation-wide strategy and vision (19%).
Nathan Beaver added: “Mid-tier companies need to understand that they do not need to do everything straight away. This is about being agile by breaking down projects into bite-sized initiatives that can be delivered at speed. That way they can keep up-to-date without the risk of being overtaken by the speed of innovation in the digital environment.”
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.
Katy Broomhead, KPMG Press Office
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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 article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.