Next level digital business transformation

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In the rapidly evolving landscape of digital solutions, businesses are transitioning from technology adoption to strategic digital business transformation. This strategic approach involves identifying and implementing technologies that effectively address complex business challenges, ultimately fostering growth and long-term success.

Despite the strides made by many companies in embracing digital business transformation (DBT), there remains a significant opportunity gap, especially among middle-market companies with annual revenues ranging from $500 million to $3 billion. The latest survey, conducted by Mazars in collaboration with a leading market-research consultancy, unveils critical insights into the DBT adoption status and digital priorities within this crucial segment of the US economy. 

Part 1 - DBT efforts are inconsistent and siloed

Over 40% of middle-market organizations have yet to commence their DBT journey, potentially jeopardizing their competitive edge. However, a nuanced perspective reveals ongoing digital projects within these organizations that lack a cohesive, transformational strategy.

Survey data snapshot

• 59% have initiated digital transformation.
• 35% plan to start in the future.
• 6% have no plans for digital transformation.

Spending challenges: More than 40% express concerns about excessive spending on DBT initiatives, highlighting the need for a strategic spending approach.

Survey data snapshot

• 49% believe they have spent enough.
• 40% feel they have spent too much.
• 9% acknowledge insufficient spending.
• 1% are unsure about spending adequacy.

Crafting a strategic approach: Key actions

1. Take a longer-term view: Successful DBT requires aligning business and digital strategies over a three-to-five-year horizon, ensuring that every digital project supports future objectives.

2. Draw a roadmap to ROI: Recognize that positive ROI takes time, emphasizing the need for a strategic plan that extends beyond immediate gains. Harmonize essential projects for holistic impact.

3. Lay the proper foundation: Prioritize focus areas aligned with future DBT investments, with enterprise applications, data services, infrastructure, and cloud modernization leading the way.

Survey Data Snapshot - Future focus areas

• Enterprise applications (e.g., ERP): 19%
• Data services (e.g., analytics): 17%
• Infrastructure modernization: 15%
• Cloud modernization: 14%
• Virtual reality or augmented reality: 12%
• AI or machine learning: 11%
• Robotics and/or automation: 11%

4. Prioritize to Revolutionize: Align strategic DBT initiatives with projects that yield quick wins and substantial enhancements, ensuring a focus on high-impact improvements.

Part 2 - The IT function is driving DBT, but for how long?

DBT drivers and improved business functions showcase a balanced distribution of priorities, highlighting the varying maturity levels among middle-market companies.

Survey data snapshot - DBT drivers
Q: What, if anything, was the primary driver of your digital transformation initiatives?

• Technology modernization: 24%
• Improved customer experiences: 21%
• Data analytics and reporting improvement: 20% 
• Streamlined processes: 18%
• New technologies and software (e.g., AI): 17%

Survey Data Snapshot - Business Functions Improvement
Q: What business function(s), if any, were you trying to improve with your digital transformation?

• Information technology: 29%
• Sales and marketing: 29%
• Finance: 27%
• Human resources: 23%
• Operations: 22%
• Supply chain: 22%

Part 3 - A pivotal point for middle-market companies

The data underscores the uniqueness of each DBT program, emphasizing the absence of a one-size-fits-all approach. Tailoring programs to the organization's model, available resources, and critical business objectives is paramount for success.

Strategic digital transformation efforts can require significant investments in terms of capital, time, and other limited resources. But if an organization builds using a blueprint designed specifically for where the company is today and where it needs to be tomorrow, the prospects for not only achieving positive ROI but also uncovering new opportunities are almost unlimited.

Part 4 - Industry focus

Continue reading to learn more about our survey findings and insights specific to six vertical markets: consumer goods and retail, financial services, healthcare, life sciences, manufacturing and distribution, and real estate.

Consumer goods and retail

While the survey shows many DBT benefits for consumer goods/retail leaders, there are important gaps to address. For example, 84% of respondents say DBT has helped their inventory stock levels, but 54% admit it has made their inventory forecasts and supply chain processes less accurate.

• Only 10% of leaders in consumer goods say improved customer service was the primary driver behind DBT
• 84% say DBT has not changed the way they interact with customers

Financial services

While most survey participants say technology modernization and streamlining processes are primary drivers of their DBT, this wasn’t as prevalent in financial services. Only 16% of these firms report tech modernization is key, and only 14% report streamlining processes is a goal. Meanwhile, 29% say the primary driver was improved customer experiences.

Financial institutions are increasingly data-centric

• 86% said a data strategy informed how they enhance the customer experience
• 84% say DBT has not changed the way they interact with customers
• 56% consider their data to be a liability

Healthcare

Despite the fact that many healthcare organizations are at the forefront of digital technology, our survey shows this sector is at the bottom of the list of market sectors to report a “high” adoption rate for DBT. In fact, only two-thirds (67%) of healthcare leaders have successfully reached peak adoption.

Healthcare organizations need to rely more on data and patient input

• Only 34% of respondents say they involve patients in planning
• Only 10% say their primary reason for DBT was to drive data analytics & reporting

Life sciences

Life sciences companies show the second-lowest adoption rate among the sectors (69%), behind only healthcare. Similar to healthcare, life sciences generally is considered a highly innovative field, which suggests that respondents maybe have become bogged down in their DBT journeys. It is interesting to note that 20% of leaders identified AI/machine learning as the biggest focus of their future tech investments.

How DBT has affected time to market for new life sciences products?

• 22% report “significant” improvements in time to market
• 10% say it has increased timelines

Manufacturing & distribution

ERP integration opportunities: Discrete manufacturing lags in integrating ERP financials with programmable logic controllers, presenting an opportunity. Most respondents (68%) say they have done this in process manufacturing. Yet only 20% have done so in discrete manufacturing and only 12% state they have integrated ERP financials with both.

Where manufacturing companies are applying DBT insights

• Digital twins: 75%
• IOT solutions: 40%

Real estate

Real estate leaders prioritize data analytics, yet 29% do not plan increased DBT investment, potentially hampering customer-centric tools like virtual tours.

Real estate firms focused on data, but not planning to invest more in DBT

• 29% say data analytics and/or reporting improvement were primary drivers for DBT
• 29% say they will invest more in DBT in the next year

Designing your unique DBT journey

In conclusion, the journey of digital business transformation is not a one-size-fits-all endeavor. Middle-market companies must craft unique, tailored strategies considering their current state, future objectives, and available resources. By leveraging insights from this survey, businesses can navigate the DBT landscape strategically, ensuring a transformative and profitable journey.

For a detailed exploration of survey findings and insights specific to consumer goods and retail, financial services, healthcare, life sciences, manufacturing and distribution, and real estate, continue reading the full report here.

We look at digital transformation in a holistic manner starting first with business transformation as the overarching foundation for transformation, and technology as the enabler.

Michael Fried Principal, MTC Practice Leader

Research methodology

This research was conducted via an online survey in January 2024 on behalf of Mazars in the US by Opinion Matters, an independent market research consultancy. The audience included 500 business leaders in US firms with annual revenue between $500 million and $5 billion in six sectors: healthcare, life sciences, manufacturing & distribution, financial services, and real estate. Opinion Matters is a member of the British Polling Council and abides by, and employs members of, the Market Research Society (MRS). All survey panelists are double opted in, in line with the MRS code of conduct and ESOMAR standards. The margin of error for this data is +/- 4.31%

The information provided here is for general guidance only, and does not constitute the provision of tax advice, accounting services, investment advice, legal advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisers.