Top executives at mid-market companies increasingly see technology as a strategic asset that can drive competitive advantage and are taking a more active role in technology decisions, according to a new report from Deloitte.
The report, “Disruption in the mid-market: How technology is fueling growth,” found 48 percent of mid-market executives surveyed by Deloitte indicate that their company’s leadership views technology as a “critical” differentiator and key to growth, compared to 41 percent who said the same last year.
Sixty-two percent of mid-market executives polled by Deloitte said their company’s C-suite leaders have “some” level of involvement in the adoption of next generation technologies, nearly half (46 percent) say C-suite is “actively engaged,” and a growing percentage (33 percent, compared with 20 percent in 2014) say their leadership is “leading the charge.”
The annual report focused this year on topics such as the impact of cloud computing, data analytics and cyber security.
“We are seeing a much more significant involvement by senior business leadership in actually setting the technology direction as a way to execute on their strategies,” said Stephen Keathley, national technology leader of Deloitte Growth Enterprise Services and deputy CIO for Deloitte’s U.S. firm. “Not only CEOs, but chief marketing officers and chief financial officers as well are getting engaged in this topic in a much more significant way than they were doing even a year ago.”
The growing involvement by the C-suite also is bringing along with it a renewed focus on return on investments, with 40 percent of mid-market executives—compared to 34 percent a year ago—saying their company almost always does a post-implementation evaluation to measure successes.
More than two-thirds (67 percent) of executives said their company’s technology spending is higher than last year, compared to 58 percent who said the same in 2014. In addition, there has been a significant increase (to 30 percent from 19 percent in 2014) in the number of mid-market executives who say their technology spend is more than 5 percent of revenue.
Among the new technologies, analytics (47 percent) and cloud applications (43 percent) are seen as having the highest potential to produce the greatest productivity gains. Many mid-market companies are speeding up their adoption of these technologies. Those that are currently in the process of deploying cloud-based technologies have gone up from 34 percent last year to 42 percent in 2015. Eighty percent of mid-market companies said they use business analytics, compared to 65 percent who said the same last year.
According to the report, security is one of the main obstacles to the adoption of new technologies. Thirty-five percent of mid-market executives cite data integrity and reliability, and another 33 percent cite confidence in information security as the top issue impacting the pace of adoption of cloud-based services.
Information security is cited as the No. 1 technology-related trend that will have the biggest impact on business in the next 12 months. But despite these concerns around security, only half of mid-market executives surveyed say they have the most up to date and robust security measures in place.
“Certain things like the cloud present a perceived additional risk around cybersecurity, but they also bring to the table enhanced ways to defend against attacks and vulnerabilities,” said Keathley. “When you go out to the cloud you’re leaving your four walls, which intuitively makes people nervous.”
However, he pointed out that the larger cloud technology vendors are able to put in place better cyber defenses than most mid-market companies.
“When you look at integrating the cloud into on-premise solutions, which is one of the issues that came up as being a challenge to cloud computing, you also have to think about that from your cybersecurity profile,” said Keathley. “It does change your profile. You have to factor that into your overall cyber defense posture. I think a lot of the middle-market companies are starting to become more and more aware of these issues. If you look at the data, the awareness of the risk and the opportunities is starting to grow, but they’re still playing catch-up in terms of actually implementing it. They are investing heavily in this area, and I think they will catch up rapidly because they all see the opportunity to use things like cloud and advanced analytics to extend their enterprises in ways that would be way too expensive to do using traditional on-premise technologies.”
Virtually every aspect of a company is technology enabled, he noted, including marketing and customer engagement, leading top executives to take command of technology.
“Because it’s becoming such a C suite issue and because the technologies have become so pervasive in everything we do, they have truly become a driver of both revenue and competitive advantage, as well as operational efficiencies,” said Keathley. “We’ve talked about this for years. There have always been good examples of this. I’ve been in this business for 25 years, and technology is finally having the impact we’ve been saying it’s going to have for the last 25 years. The future is now. We’re seeing the mid-market particularly ramp up because the mid-market has been starting to see the potential for these emerging technologies to give them the same capabilities as their larger competitors without the capital outlay.”