Inside the Midmarket: A 2009 Perspective

Transcription

1 IBM Worldwide Study July 2009 Inside the Midmarket: A 2009 Perspective An environment like no other

2 About the study Inside the Midmarket: A 2009 Perspective was commissioned by IBM and conducted independently by the Opinion Research Corporation. The survey of 1,879 business and information technology decision makers at midsize businesses ( employees) was conducted across banking, retail, healthcare, consumer products, manufacturing and other industries and spanned 17 countries including the U.S., U.K., Germany, France, China, India, Brazil, Japan, Canada, Italy, Russia, Malaysia, Benelux, Australia and Mexico. The study was conducted between the dates of April 13, 2009 and May 20, The magnitude of change that is affecting industries today is unprecedented. Difficult economic conditions, a broader set of business imperatives, and evolving technology requirements are presenting midsize companies with as many threats as opportunities. At the same time, fundamental shifts are taking place in the way people everywhere live, work and interact. It s becoming increasingly clear that innovative, forward thinking organizations can do more than survive in this environment, they can thrive. Midsize companies have been the engines of economic growth fueling a smarter planet for a long time. To continue that path to success, midsize businesses must embrace new and better ways of doing business. This is a smarter world, one where midsize companies can take a fresh look at ways to make far better use of the information and resources available to them. Midmarket companies look to IT vendors for more than just a transactional relationship. They require expertise to become smarter and gain greater insight. Findings from a recent study show that midsize companies are looking to do just that. In fact, well over half of the survey respondents say they need a technology partner who can help them work smarter, build an infrastructure to support their growing business, and identify ways to use the information they have to make better business decisions. A significant number are focused on corporate social responsibility and in need of guidance around energy, environment and sustainability issues. These are not simple projects. These

3 are significant initiatives, ones that can be game-changing for businesses with the vision to apply new approaches and harness the power of an increasingly smaller, flatter and smarter planet. Strategic Focus The study reveals distinct mindsets that are actively shaping the business strategy and related IT priorities at midsize companies. Leaders of these organizations are being counted on to find new growth opportunities and deliver innovation to support the accelerating rate of change. At the same time, they must improve efficiency and manage an effective, secure and resilient IT infrastructure to ensure the organization s survival and success. As might be expected, the survey shows these parallel forces are shaping the mindset of midsize businesses around the world. Half of midmarket companies are in a cost-cutting mindset; other half are focused on customers, innovation and growth. Roughly half (53%) of surveyed companies are concentrating their efforts on increasing efficiency and lowering costs strategic imperatives that can be supported by virtualization, energy efficiency, process optimization, IT standardization and other initiatives focused on reducing complexity and expense. The other half (47%) have an innovation mindset with their primary focus on finding new sources of growth, transformation for competitive advantage, and strengthening customer relationships.

4 Expanders: Of those Innovators, 25% are looking specifically for opportunities to be bullish in the marketplace by expanding into new markets and taking share from competitors. Among these strategic expanders, 63% are partnering or would like to partner with companies who provide high quality IT infrastructure solutions for their expansion projects. Transformers: Another 11% are using the current environment as a window of opportunity to innovate their business models and drive transformation initiatives. This suggests a strategic focus on identifying breakthrough innovations and developing new sources of competitive advantage to be fully prepared for the economic recovery. Advocates: The remaining 11% are focusing on becoming more customer centric to strengthen relationships, improve service and enhance the overall customer experience, while leveraging social media and Web 2.0 technologies to boost customer loyalty. Midsize companies typically are not lacking in information about their customers and their buying trends, however, they often struggle with yielding meaningful insights from that plethora of data. No one mindset is superior to another. Corporate culture, available resources and business environment each play a major role in influencing which approach is most appropriate for a company, by industry or country. However, each presents different challenges requiring careful planning and execution to ensure a successful outcome. Common business challenges With non-stop change as the new normal, organizations today are actively searching for innovative ways to improve efficiency, create value and spur growth. Globally, improving efficiency and productivity, improving customer focus and sharpening business agility are called out as the top business challenges for midsize businesses. Improving efficiency - Given the majority of companies have a mindset of improving productivity and driving cost reductions, it s no surprise that 83% of midsize companies say improving efficiency is a key priority, while 80% cite increasing employee productivity as a critical challenge. From a geographic

5 perspective, these priorities are particularly high in the United States, where close to 9 out of 10 surveyed report improving efficiency, reducing costs and increasing employee productivity as their top business priorities. Focusing on customers - Enhancing customer service and prospecting for new customers are also high on the priority list. Midsize companies can differentiate against larger rivals by creating a highly personalized and responsive environment to meet the growing expectations of today s consumer. In Italy, for example, 79% of companies say that going after new customers is a critical priority, while 76% of midsize companies in Mexico say that finding new ways to reach customers more easily tops their list. Web 2.0 and social media are well positioned to help midsize firms expand and strengthen their customer relationships. Most critical business challenges

6 Top five most critical business challenges Sharpening business agility and intelligence - A third set of business priorities centers around improving business agility and decision making. Over 70% of respondents globally identify improved decision making and improving collaboration across employees, partners and suppliers as critical areas to improving their overall business performance. In fact, 73% of Malaysian companies think better predicting market trends is a critical challenge. Business intelligence, analytics and predictive capabilities will likely emerge as a way to capitalize on new and upcoming opportunities. Among midsize companies that are focused on spending reductions, 86% identify improving efficiency as a critical business issue. Alternatively, 78% of companies focused on business growth and entering new markets cite customer prospecting as a critical priority. Interestingly, 90% of companies that are focusing on selling more to existing customers identify cutting cost as a critical business issue, followed closely by improving service and pursuing new customers. This suggests that midsize companies are working to strike the right balance between enhanced operational efficiency and the need for growth and differentiation.

7 Using technology to gain insights and grow business If there s one area where there is no shortage in today s environment, it s data. Data is exploding, everywhere. The problem for many businesses is that their data is in varying formats and locations. It s nearly to impossible to draw Top ten technology solution priorities for improved business performance and efficiency meaningful conclusions when information is so scattered. Transforming data into insightful and actionable intelligence can help companies make better, sharper, timelier business decisions. Information is a strategic asset if it can be harnessed and analyzed. Given that growing dependence on reliable and useful information, it s no surprise that information management is cited as both a critical IT and business priority for the majority of companies surveyed. Security management also continues to be a fundamental IT priority. The increasing pace of global connectivity improves access to information and collaboration, but also brings additional IT security risks and exposure to data loss and theft. Despite pressure to reduce cost, midmarket companies continue to invest in information security to better understand, monitor, assess and respond to external and internal threats in near-real time. Another key driver

8 Top three most critical IT areas for midsize companies to improve business performance and efficiency of security spending is the growing need for companies to meet compliance requirements. The research revealed similar IT priorities for both growth and mature markets. Close to 90% of Chinese midsize companies indicate that information management is vital to improving business performance, while close to 85% of companies in Brazil and the U.S. call out IT infrastructure improvements and reliability and availability as critical areas. The economic effect The study shows that the current economic environment is influencing organizations and their IT budgets in different ways. Nearly 40% of midsize

9 Changes in the economy are affecting IT investment priorities across industries. companies report that although their IT budgets have not changed, their priorities have shifted; 37% indicate their IT budget has decreased as a result of the recent economic changes, while 14% stated their IT budget actually increased. The study also reveals that companies in growth market countries are twice as likely as those in mature market countries to expect an increase in IT budget for the upcoming year. In fact, 62% of those interviewed in China say they expect their IT budget to increase in 2009 versus last year. The current economic situation is impacting industries in different ways. For example, 49% of healthcare companies report that their IT budgets will stay the same but be re-prioritized as a result of the economy. In the banking industry, 23% of those interviewed expect their IT budget will actually increase over last year. Barriers to implementation Though midsize companies clearly want to adopt new, innovative business

10 strategies and make the changes required to improve their performance, they still face substantial challenges to executing against those goals. Not surprising, the number one barrier identified across all industries surveyed is cost and limited budget. The other most frequently cited barriers are concerns regarding implementation, such as possible business disruption, inability to implement and lack of required in-house skills to support initiatives. Another critical obstacle to implementation is the challenge or inability to demonstrate a shortterm ROI on projects, which has become a requisite for proceeding with IT and business process improvements. Biggest barriers to addressing critical IT areas During these tough economic times, midsize companies are looking to IT providers and consultants to deliver value, competitive advantage and ROI. In fact, 70% of those surveyed indicate that they prefer to partner with an IT company who has expertise in their business to help them work smarter, while 67% of the companies look for partners that can provide the highest quality IT infrastructure solutions.

11 Growing and innovating in today s environment is dependent on successfully managing, improving or, in many cases, transforming core business operations. Most midsize companies recognize that a go-it-alone strategy may hinder their chances for success, particularly in today s increasingly interconnected, intelligent and instrumented world. That s why so many of them are looking for strategic IT partners who can help them realize their vision. Despite the current economy and myriad of barriers facing midsize companies, the majority still are proceeding with critical IT plans to improve their infrastructures, work smarter and make better use of information. For Top IT project implementation worldwide example, 75% of those surveyed have either started or are currently planning upgrades to their IT infrastructures for improved reliability. More than half report that they intend to implement or have established goals for Knowledge management solutions to better mine and share organizational intelligence as a source of competitive advantage. As expected, the importance of these projects is closely related to the strength of respective IT budgets. Countries and industries with stable IT budgets are placing stronger emphasis on strategic projects than those who are seeing their budgets reduced. Midsize companies that have developed a clear vision, and begun to act against it, may very well be positioning themselves more favorably for the economic rebound.

12 Top Business and IT priorities across industries; $$$ symbols indicates the degree to which IT budgets have been cut. The challenge of a smarter planet Even in today s unsettled global economy, midsize companies continue to innovate and grow through technology investments. This is especially true in growth markets where IT budgets have been left largely intact. While the greatest numbers of businesses want to maximize their infrastructure, they are demanding more than just an increase in efficiency. They want solutions that can help their organizations work smarter. By using information, relationships and technology in new ways to create greater value and efficiencies, organizations can improve the way they manage and run their own business. These organizations can gain a competitive advantage, even in a challenging environment. Smart midsize companies are thinking about new ways to use their resources to create sustainable business value. They are investing in their future making the changes and taking the risks to survive and thrive.

13 Copyright IBM Corporation 2009 IBM General Business Route 100 Somers, NY U.S.A. Produced in the United States of America June 2009 All Rights Reserved IBM, the IBM logo, and ibm.com are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both. If these and other IBM trademarked terms are marked on their first occurrence in this information with a trademark symbol ( or TM), these symbols indicate U.S. registered or common law trademarks owned by IBM at the time this information was published. Such trademarks may also be registered or common law trademarks in other countries. A current list of IBM trademarks is available on the Web at Copyright and trademark information at ibm.com/legal/copytrade.shtml SMW03025