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.
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:
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.”
KPMG’s top 10 tips for mid-tier companies investing in digital innovation
Advance digital vision from the board
A senior management figure should advance the digital vision, agenda and required
transformation at board level, collaborating with finance and commercial teams.
Challenge the status quo
Question all elements of the value proposition and operating model. Leaders should then set and communicate ambitious digital targets, from market share growth to efficiency savings.
Everything moves faster in a digital world. Twelve-month product releases and lengthy implementations should be in the past. Agile development breaks projects down into bite-sized initiatives that can be delivered at speed.
Use channels and technologies, such as social media, to gather and analyse it customer information. Insights relating to customer desires and experience can lead to innovative products and services and even help companies to tailor their offerings and anticipate new growth markets.
Tap digital talent
Use the perspective of Generation Y employees (those born between 1982 and 1995). These digital natives can raise the business’ ‘digital IQ’, helping to shape a customer experience than meets new expectations.
Marry existing strengths with digital capabilities rather than creating a new digital business.
Form partnerships and alliances with digital partners or suppliers to build relationships and manage risk.
Create a positive feedback loop with customers, where every interaction creates more information about how to improve the value and relevance of service; essentially involving the end user in planning and development.
Reduce costs in the cloud
Cloud solutions can help reduce the costs and time involved in developing digital solutions.
This can transform innovation and R&D capability and help businesses to meet customer demands.
Alison Anderson, KPMG Corporate Communications
T: 0113 254 2980 E: email@example.com
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
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.