KPMG: 72% UK mid-tier firms await digital success

26 May 2015

Almost three-quarters of UK mid-tier companies are awaiting the success of a digital technology before adopting it, research by KPMG shows. While implementing this approach is not necessary wrong, these companies risk losing out on the ‘digital pioneers’, who aim to stay ahead in the digitalisation. The number one reason to adopt digital is to transform the customer experience, with technology implementation seen as the main barrier to the adoption of digital.

In its recently released ‘Digital to the Core’ report, KPMG researches the digital ambitions and investments of mid-tier companies in the UK, as well as the barriers restricting them from realising their digital potential. The report is based on a survey executed by YouGov and KPMG Enterprise among 1,200 companies from a wide range of sectors, including finance, IT & telecommunications, manufacturing, construction, retail, transportation, medical & health, and education.

Business priority attached to digital

Of the companies surveyed, 72% views digital as important to its business, with 24% making it a high and 19% a very high priority as companies seek to please their customers, empower their people, and work smarter and faster. Less than one in ten (8%) considers digital as a very low and 16% a low priority.

Two-thirds (68%) of companies plans to increase digital spending between 2015 and 2017, with 15% planning to increase with more than 25%, 20% between 11%  and 25% and 33% with 1-10%. Only a small percentage (3%) of companies plans to decrease its digital investment in the coming two years.

Projected increase in digital investment

Although the vast majority plans to increase its investment in digital, most UK mid-tier companies (72%) are playing the ‘wait and see’ game as they prefer to wait until technologies and digital services have been proven to be successful. These companies can be divided into ‘digital adopters’ (32%), who wait until a new digital technology is well established, ‘digital reactionaries’ (23%), who catch up on digital and ‘digital sceptics’ (17%), who evaluate digital innovations cautiously. Only 14% of UK mid-tier companies describe themselves as ‘digital pioneers’, who strive to stay at the cutting edge.

According to Nathan Beaver, Customer & Growth Director at KPMG Enterprise, UK mid-tier companies should be aware of the risks of the ‘wait and see’ approach. “Those who are adopting the ‘wait and see’ approach are playing a risky game. While there is nothing inherently wrong in waiting for technology to be proven, there is a danger that such an approach could give rise to a ‘two-tier digital economy’ where some mid-tier organisations end up falling behind and being overtaken by those more innovative businesses.”

Perception of digital investment approach

The top reason for companies to adopt digital is the ability to transform the customer experience, named by one in five (19%) companies as their top digital priority, followed by expanding to new markets and customers (16%), cross-organisational collaboration (16%) and new ways of working (15%).

Digital priorities

The number one barrier to adopting digital is technology implementation, which is mentioned by 21% of the companies surveyed. Other obstacles are lack of an organisation-wide strategy and vision (19%), limited understanding of digital opportunities (14%), lack of investment (14%), lack of top-level commitment (10%) and difficulty in securing digital skills (9%).

Biggest barriers to implementing digital

Beaver concludes: “Mid-tier companies need to understand that they do not need to do everything straight away. This is about being agile by breaking down projects into bite-sized initiatives that can be delivered at speed. That way they can keep up-to-date without the risk of being overtaken by the speed of innovation in the digital environment.”


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