More Middle Market Companies Are Digitizing Back Office and Customer-Facing Operations

While upgrading legacy systems can be costly and cumbersome, a growing number of middle-market companies are nevertheless investing to digitize both their back office and customer-facing operations.

In fact, 42% of companies anticipate increasing or ‘significantly’ increasing digitization spending on business analytics and strategy development, according to a survey by the National Center for the Middle Market and Magento. Another 39% expect to increase their digitization budget for innovation projects. Currently, 70% of digitization spending is directed internally.

The survey showed that the majority of middle-market firms are deploying digital tools and processes not only to facilitate and streamline back-office operations, but also to transform their entire businesses.

“42% of companies anticipate increasing or ‘significantly’ increasing digitization spending on business analytics and strategy development.”

“Beyond digitizing individual activities, these companies envision larger-scale organizational change that affects everything from operational excellence to corporate culture, interactions with customers, and how value is created and captured,” the report’s authors wrote.

The survey also found that middle-market companies enjoy a return on investment of nearly 28% on their digitization projects. However, while many companies have had success with individual projects, they are not satisfied with digitization practices at the organizational level. Their self-assessed “Digital Grade Point Average” is 2.8 on a scale of 0-4, the equivalent of a C+.

IBM in their study, “The Customer Activated Enterprise,” advises that middle-market companies must engage with their customers on an integrated digital and physical level. The study concludes that middle-market companies can apply insights from customer interactions gleaned from social media to transform their ongoing business operations, particularly if they employ a strategy that cuts across a number of potentially separated silos, including IT, marketing, supply chain management, sales and the C-Suite.

“There’s no one-size-fits-all model for a digital-physical channel alignment,” the authors wrote. “However, both the digital and the physical must be utilized—without digital engagement on a broad scale, middle market companies will lack the scale of engagement to understand what their customers need.”

But middle-market firms must approach digitization smartly, Fluent chief executive Ryan Schulke, wrote in a MediaPost op ed. “Digital plans done resourcefully will result in high value.. With so many dollars being invested into digital, free tests and discount pricing are commonplace. The investment by middle-market manufacturers and emerging brands must go toward developing programs that seek to achieve specific goals—and they must commit the resources to test a variety of executions to achieve those goals.”


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