Techaisle Analyst Insights

Midmarket firms that adopt a holistic organization-wide digital transformation strategy are growing at 2.2X vs. Siloed digital transformation strategy. They are also experiencing 2.1X business process cost reduction, 1.9X better customer intimacy and 1.4X improved employee productivity vs. Siloed adopters. Techaisle’s US midmarket digital transformation trends study shows that it pays to have an organization-wide, holistic digital transformation strategy. Survey of 876 US midmarket firms reveals that Holistic adopters are experiencing better business outcomes than Siloed adopters of digital transformation.

We are all responsible for the pace of change – and to ensuring that it benefits rather than threatens our success. Nowhere is this clearer than with digital transformation – the adoption of digital infrastructure as the foundation for digital business processes, which enhance operational efficiency, employee empowerment, product innovation, customer intimacy, competitiveness and profitability throughout the organization. Businesses that embrace digitalization are more agile, more adept at using technology to accelerate cycle time and expand reach, better able to respond to market opportunities and requirements – while those that are left behind face an uncertain future in which one wrong step can lead to diminished business viability.

Holistic, Inclusive, Siloed and In-the-Shadows are the four midmarket segments by digital transformation strategy as revealed in Techaisle’s US midmarket digital transformation trends survey & segmentation data. The segmentation reveals that overall, 41% of the US midmarket firms (100-999 employee size) are firm believers in digital transformation. They are leading digital transformation initiatives. These firms belong to the “Holistic” segment of the four different digital transformation segments. They believe that digital technologies impact every aspect of the business and are a core part of organizational strategy. Interestingly though, within the firms belonging to the holistic segment, digitization of process automation is far from complete. They still have a huge runway in front of them.

For 59% of the midmarket firms, digital transformation initiatives are sporadic and ad hoc or not critical across the entire business. These are the firms that belong to the Inclusive, Siloed and In-the-Shadows segments. They are the laggards in digital transformation journey.

Clearly there is vast untapped potential for firms offering digital transformation services to the midmarket businesses.

The first step in influencing the potential of a technology to impact business outcome is identifying the extent to which technology aligns with or supports executive ‘care-abouts’ of the SMB buyers. Technologies that connect directly to C-level objectives are most likely to obtain support. Techaisle survey data shows that digital transformation is very prominent in executive-oriented IT discussions but influencing the SMB & midmarket IT and non-IT buyer is no cakewalk. Consider these statistics from Techaisle surveys:

• 72% of SMB IT purchases are triggered by an acute business pain point & number of pain points are increasing
• 52% of SMBs are facing 5+ business challenges
• SMB IT Purchase Decision Making Unit (DMU) has grown by 250% over the last decade
• Average of 5.2 decision makers are involved in technology purchase decisions in midmarket firms & 2.1 in small businesses
• 43% of IT buyers are millennials
• SMBs have 7 distinct business processes
• Channel partner is involved at only 50% decision making stage
• 70% of the buyer’s journey is complete before first meaningful contact with a potential supplier
• 17% of SMBs use six or more information sources
• Average channel partner sales cycle is 7.7 weeks

Where, when and who to influence is a key challenge, especially when digital transformation impacts more than one buyer segment and business process.

Techaisle survey shows:

• 73% of US SMBs are using at least one SaaS application, up from 27% in 2011
• 51% of global SMBs begin their cloud journey with SaaS
• Global SMB spend on SaaS in 2018 will be US$40 billion
• Cloud is the agility platform & SaaS is a zero-friction option for automating business processes
• 74% of SMBs achieved increased business agility with connected business processes