RSM US Special Report Details Digital Transformation Progress, Opportunities in Middle Market

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Oct 05, 2023, 16:13 ET

CHICAGO , Oct. 5, 2023 /PRNewswire/ -- Digital transformation can affect all aspects of a business, and middle market firms are taking it seriously, according to the RSM US Middle Market Business Index (MMBI) Digital Transformation Special Report, presented by RSM US LLP ("RSM") in partnership with the U.S. Chamber of Commerce. In the second quarter of 2023, 77% of surveyed executives said they plan to increase their IT budgets in 2024, and 74% stated digital transformation was the most important area or among the most important areas of investment for their companies.

When asked about their main reason for investing more in digital transformation and IT, 25% of executives said to drive business productivity. Twenty-two percent of respondents said improving the customer experience was an important reason for investing in digital transformation and 19% said enabling employees to be as connected and engaged as possible was primary.

"Digital transformation has the power to reshape mindsets and strategies to create lasting improvements in an organization," said David Hickethier, principal of the human-centered design practice at RSM US LLP. "We think it's vital that businesses first understand the challenges and opportunities from an employee perspective. Ultimately, digital transformation's impact on the employee experience is what drives a successful customer experience."

Cybersecurity a Key Motivation for Digital Transformation Efforts
Cybersecurity dominates the landscape of digital transformation, and an overwhelming 88% of survey respondents said they currently employ cybersecurity or data security in their businesses or plan to do so within the next 12 months. Thirty-two percent said cybersecurity concerns present a challenge to achieving their digital transformation goals.

The report notes that corporate leaders are nervous about their company's vulnerabilities, and as a result, some organizations are fortifying their digital infrastructure rather than investing in new technologies. Establishing or maintaining effective cybersecurity is a powerful reason for companies to invest in digital transformation, and this is underscored by the 65% of respondents who said increased concern over cybersecurity was the top motivation for changing their IT budgets.

Complexity, Tight Labor Market Raise Challenges
Digital transformation is a complex and ongoing process, and 11% of executives said they have no formalized digital strategy at all. Insufficient executive team support was cited as an obstacle to achieving digital transformation goals by 23% of respondents.

The survey results also imply a tight labor market is hindering progress, as 29% of respondents said the shortage of skilled IT personnel is a main issue when it comes to fulfilling their digital transformation plans.

"An option for companies with staffing needs is to consider hiring a managed service provider to handle their IT functions," said Matt Kenney, business applications service line leader with RSM US LLP. "Outsourcing the effort of becoming digital can help companies focus on their business. They may want the benefits of digital transformation, but they might not want to go through implementing and running a new system. A provider can handle the operation of the system, so the company doesn't have to take that on."

The survey data that informs this index reading was gathered from 404 respondents between April 3 and April 24, 2023.

About the RSM US Middle Market Business Index
RSM US LLP and the U.S. Chamber of Commerce have partnered to present the RSM US Middle Market Business Index (MMBI). It is based on research of middle market firms conducted by Harris Poll, which began in the first quarter of 2015. The survey is conducted four times a year, in the first month of each quarter: January, April, July and October. The survey panel consists of approximately 1,500 middle market executives and is designed to accurately reflect conditions in the middle market.

Built in collaboration with Moody's Analytics, the MMBI is borne out of the subset of questions in the survey that asks respondents to report the change in a variety of indicators. Respondents are asked a total of 20 questions patterned after those in other qualitative business surveys, such as those from the Institute of Supply Management and National Federation of Independent Businesses.

The 20 questions relate to changes in various measures of their business, such as revenues, profits, capital expenditures, hiring, employee compensation, prices paid, prices received and inventories. There are also questions that pertain to the economy and outlook, as well as to credit availability and borrowing. For 10 of the questions, respondents are asked to report the change from the previous quarter; for the other 10 they are asked to state the likely direction of these same indicators six months ahead.

The responses to each question are reported as diffusion indexes. The MMBI is a composite index computed as an equal weighted sum of the diffusion indexes for 10 survey questions plus 100 to keep the MMBI from becoming negative. A reading above 100 for the MMBI indicates that the middle market is generally expanding; below 100 indicates that it is generally contracting. The distance from 100 is indicative of the strength of the expansion or contraction.

About The U.S. Chamber of Commerce
The U.S. Chamber of Commerce is the world's largest business organization representing companies of all sizes across every sector of the economy. Members range from the small businesses and local chambers of commerce that line the Main Streets of America to leading industry associations and large corporations.

They all share one thing: They count on the U.S. Chamber to be their voice in Washington, across the country, and around the world. For more than 100 years, we have advocated for pro-business policies that help businesses create jobs and grow our economy.

About RSM US LLP
RSM is the leading provider of professional services to the middle market. The clients we serve are the engine of global commerce and economic growth, and we are focused on developing leading professionals and services to meet their evolving needs in today's ever-changing business landscape. Our purpose is to instill confidence in a world of change, empowering our clients and people to realize their full potential.

RSM US LLP is the U.S. member of RSM International, a global network of independent assurance, tax and consulting firms with 57,000 people in 120 countries. For more information, visit rsmus.com, like us on Facebook, follow us on Twitter and/or connect with us on LinkedIn.

SOURCE RSM US LLP