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Insightful research, flexible data, and deep analysis by a global SMB IT Market Research and Industry Analyst organization dedicated to tracking the Future of SMBs and Channels.

Techaisle midmarket study shows cloud maturity does not always equal high digitization

Techaisle’s US midmarket digital transformation trends study shows that maturity of cloud adoption does not equate to high digitization of the business. Study data shows that only half of the 47% of mature midmarket cloud adopters are holistic adopters of digitalization. It is true that these firms believe in cloud and its effect on digitization but they also believe that true digital transformation requires advanced adoption of multiple technology solutions. Data also shows that the midmarket firms that have a siloed strategy of digital transformation are intermediate adopters of cloud, mostly driven by non-IT business units which need cloud to further their business objectives.

However, it is also clear from data that the Holistic segment includes a disproportionate number of mature cloud adopters, and mature cloud adopters in turn are much more likely to be Holistic in their approach to digitalization than firms in the intermediate category. A smaller (7% of total) third group of midmarket businesses, ‘born in the cloud’ (i.e., have all IT resident in the cloud) largely echo the patterns of the mature cloud users.

From a digitalization product/service marketer’s perspective, this is an important finding: it shows that those who can identify mature cloud adopters are likely to find greater receptivity to their messages and offerings than those that engage equally with the similarly-populous group of intermediate (in terms of cloud adoption) midmarket businesses.

High adoption of diverse technology solutions determines digitalization success

Even considering planned adoption, Siloed midmarket digital segment is likely to remain far behind the Holistic midmarket digital segment. The Siloed segment even lags being in the technology areas which midmarket firms see having the most impact in their business for the next 5 years.

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Techaisle midmarket survey reveals holistic digital transformation strategy yields better business outcomes

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.

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Techaisle study reveals four midmarket segments by digital transformation strategy and vast untapped potential

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.

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SMB market is not a monolith – 32 percent are in Advanced IT sophistication segment

  • ‘The’ IT market is comprised of many segments: large enterprises act at a different pace than SMBs.
  • The ‘run rate’ revenue in the IT industry is attributable to products that are mature, accessible to buyers in all segments.
  • In many cases, the IT industry focuses on new product categories (e.g., IoT) appealing to sophisticated buyers as growth drivers.
  • For the most part, adoption begins in large accounts, and ‘filters down’ into SMBs over time.
  • Techaisle research demonstrates that the SMB market is not a monolith – and provides the insight needed to understand advanced IT adopters within the SMB community. And trend analysis serves as an important illustration of the impact that IT’s relentless progress has on different buying segments within SMBs

IT products are often described as having ‘a market’ – but ‘the’ IT market is comprised of many segments, each of which has its own approach to IT adoption. Some industry sectors (e.g., aerospace) tend to move faster than others (e.g., retail); large enterprises tend to adopt technology earlier than SMBs; and different countries and regions invest in new technologies at different rates.

Unless/until they are supplanted by new solutions, mature IT products (e.g., printers, desktop computers) are acquired at about the same rate by all buyers: large enterprises, SMBs, and various industries all have well-defined needs and acquisition patterns for these technologies. These technologies generate the majority of ‘run rate’ revenue in the IT industry.

When IT industry growth opportunities are discussed, the focus often turns to earlier-stage technologies – witness current enthusiasm over IoT, analytics/Big Data and cloud. Sellers of these technologies tend to focus on advanced segments (large accounts, particularly in leading-edge industries). SMBs are generally viewed as a secondary market. 

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