Mid-market segment: Looking to bounce back after a Crisis

The mid-market sector was the hardest hit during the pandemic. These midsize businesses had to improvise with limited resources and compete against larger players with operational and financial flexibility. Sharply aware of the consequences of being left behind in the digital race, these businesses are now embracing technology to rethink strategies, enhance customer experiences, utilize employee skills more efficiently, and ensure business continuity and growth even in a crisis.Ìý

This was among the multiple insights provided by anÌýÌý³Ù³ó²¹³ÙÌýaimed to understand the state of mid-market enterprises in India after the Covid-19 second wave. The study covered over 350 mid-market enterprises across industries such as chemicals, industrial manufacturing, life sciences (including pharma and pharma manufacturing), professional services (including IT/IT-enabled Services), retail and consumer packaged goods and EC&O (engineering, construction, and operations). Annual revenues for these companies ranged from INR 500 crore to INR 2,000 crore. Half of the respondents were C-level executives, with the rest holding positions such as Director and above in their organizations.

As per the survey,Ìý

• Around 74% of the mid-market enterprises surveyed will move more applications to the cloud.
• A massive 68% of the firms expect to either retain or increase their IT spending in 2022, driven by the need to adopt digital technologies.
• This digital vision is consequently fuelling enthusiasm and hopes of a strong recovery. By the end of 2021, around 75% of the mid-market businesses surveyed expect their operations to be back to pre-pandemic levels.

Clearly, mid-market segment companies are planning to be strong contenders in their industries in the post-pandemic world. For this, they require a level of digital resilience that allows them to proactively fend off dangers and disruptions more effectively than their competitors.

Digital Resiliency: Driving the Indian mid-market sector forward

Digital resilience is the ability of a company to quickly adapt to business turmoil by using digital skills to drive recovery, growth and profitability, even during changing situations.Ìý

While mid-market enterprises focus on optimizing their operational performance in the short term, CEOs point out that revenue diversification and IT infrastructure renewal remain their top digital priorities in the long term. This can be achieved by prioritizing all dimensions of digital resiliency such as operational, workforce and customer, brand and reputation, leadership and organization, and financial resiliency.

• Operational Resiliency:ÌýImproving operational efficiency is a major short-term business goal for most C-level executives. One way to achieve this is by adopting an ERP system that offers end-to-end visibility into operations across different departments. Around 58% of mid-market enterprises have such an ERP system now.
  Apart from an ERP system, there is also a need forÌýdigital transformation for businessÌýin areas such as customer services, supply chain functions and backend processes to achieve higher productivity levels and minimize the possibility of errors.Ìý
• Workforce Resiliency:ÌýEnterprises have realized the benefits of a motivated workforce, with good employees being one of the best strategies to increase growth and scale operations. Employers are becoming more engaged and assuming greater responsibility for their employees’ safety and emotional and physical wellbeing. When not physically together, workforce engagement requires more thoughtful design, practice, and measurement. Consequently, almost 50% of enterprises are considering an integrated approach towards workforce resiliency, compared to just 36% in the pre-pandemic era.Ìý
• Customer Resiliency:ÌýWith digital transformation, any mid-market organization can provide seamless and enjoyable customer journeys across channels. As the customer experience becomes a vital indicator of organizational health, around 40% of enterprises are adopting an end-to-end approach to manage customer journeys. Hi-tech platforms, CRM systems, chatbots and AR-VR rich media are set to become an important part of thisÌýdigital transformation strategy.
• Financial Resiliency:ÌýHaving sophisticated systems and robust processes that provide timely insights is critical for building financial resilience in mid-market enterprises. The IDC Infobrief commissioned by 51·çÁ÷shows that 58% of the Indian mid-market enterprises have introduced scorecards, visualization and simulations to generate detailed financial analysis reports. These help minimize future bottlenecks by providing the base required to make data-driven forecasts.Ìý
• Leadership Resiliency:ÌýA truly forward-looking company needs to build resiliency at the top. In the face of dynamic market conditions and volatile situations, an enterprise should be able to alter processes and methods and retain employee and customer trust. A whopping 83% of enterprises are focusing on resiliency objectives like business continuity.
• Brand and Reputation Resiliency:ÌýAn expanding threat surface and the increasing number of attacks on mid-market enterprises makes cybersecurity a top consideration for this segment. Around 74% of enterprises will either spend more or retain their current spend on IT security and related issues.Ìý

The road to Digital Resiliency: What mid-market enterprises need to do?

India’s mid-market segment can become the engine of growth if digital resiliency is adopted to compete with big businesses. While digitalization is not a permanent cure for all the problems that affect business in today’s economy, it is a foolproof solution that can help a mid-market enterprise compete and win in the new normal.Ìý

Despite this knowledge, many enterprises hesitate to fully embrace digitalization and digital transformation because of resource crunch and the absence of a clear roadmap. Here are some practical ways a mid-market enterprise can create a thriving environment for digital resilience.Ìý

• While midsize companies appreciate the role that technology plays in digital resilience, most are still hesitant in making it an integral part of their day-to-day operations. To overcome this,ÌýtechnologyÌýdiscussions need to be moved to the conference room and every department needs to accelerate its journey on the digital path.
  Ìý
• Change management is a vital aspect of building digital resiliency. Change readiness is determined by a company’s culture, dedication, and ability to achieve and maintain the goal. In a time of competing priorities, systemizing a change management approach is more important than ever for organizational agility.
  Ìý
• It’s critical to prioritize and create conditions that support experimentation after opening corporate culture to innovation and creativity. Build agile teams that collaborate across organizational boundaries on a daily basis to foster new thinking through shared knowledge and openness. Acquire the ability to make swift decisions. Rapidly adapting to business shocks is the key to digital resilience.Ìý
• Lack of operational automation is one of the main reasons Indian midsize companies are still struggling. Fluctuating market demand and any adverse situation can be handled efficiently withÌýautomationÌýand adopting data-driven strategies.
• Shifting toÌýcloud–basedÌýbusiness applications increases the ability to adapt to business disruptions, allows scalability and flexibility and provides a seamless user experience. Mid-market enterprises have identified the integration of new-age technology, enhanced business agility and innovation, a competitive edge and improved time to market as some of the other top drivers behind cloud adoption in the IDC Infobrief.
• Integrating systems that enableÌýmulti-channelÌýengagementÌýand manage end-to-end customer journeys plays a key role in customer acquisition and retention. These systems, if managed smartly, can effectively contribute to an organization’s capability of outliving its competition. Make integrated multi-channel marketing and sales a priority and find the correct combination of online and offline marketing, sales, and service. Create a user-friendly website and leverage different digital customer experience and analytics solutions.
• With remote and hybrid cloud models becoming increasingly popular, the need for a secure cloud architecture has become pronounced. Organizations need to leverageÌýrisk managementÌýservices to safeguard their operations and be prepared for contingencies.Ìý
• Employee engagement and motivation are vital factors to ensure the success of a digital resiliency strategy. CEOs should focus on providing necessaryÌýknowledgeÌýresourcesÌýand conduct continuous learning programs to enable their employees to work efficiently.Ìý

In conclusion

The opportunities for mid-market firms are boundless; however, they must take advantage of today’s booming economy to revamp their operations for long-term viability. For this, their capacity to predict risks, increase efficiencies and undertake change is crucial. A way to do this is by embracing digitalization and building Digital Resiliency. To find out how to kickstart your journey to becoming digitally resilient,ÌýÌýon ‘State of Mid-Market Enterprises in India, a Perspective on Digital Resiliency’.

ÌýAll of the above data points are derived from ‘IDC InfoBrief commissioned by SAP, The State of Midmarket Enterprises in India, A Perspective on Digital Resiliency, December 2021, Doc.#AP241284IB

The post Why is Digital Resiliency Necessary for Mid-Market Businesses to Survive Disruptions? appeared first on 51·çÁ÷India News Center.

In India, mid-market enterprises were the hardest hit by the pandemic, especially the second wave. While large organizations had the financial and operational wherewithal to surmount challenges, the mid-market segment continued to struggle because of limited resources and smaller scale of business.

All this clearly highlighted how vital digital resilience is to weather shocks, and its importance in getting organizations up and running as soon as possible after unforeseen disruptions. For the particularly vulnerable mid-market segment, digital resilience helps mitigate risks and ensure business continuity – both during disruptions and otherwise, in a digital-first era.

AnÌýÌýaims to understand the state of the mid-market segment in the aftermath of the second wave of COVID-19 and the approach of these enterprises towards digital resiliency.

The comprehensive study included six key industries in the mid-market segment. These were chemicals, industrial manufacturing, life sciences (including pharma and pharma manufacturing), professional services (including IT/IT-enabled Services), retail and consumer packaged goods, and EC&O (engineering, construction, and operations).

These enterprises reported annual revenues in the range of INR 500 crore–INR 2,000 crore. Among the respondents, more than half were C-level executives; the remaining occupy roles such as Director and above in their organization.

The IDC Infobrief commissioned by 51·çÁ÷highlights why it is important for these sectors to undergo digital transformation and achieve digital resiliency to meet future challenges head-on and maintain forward momentum. The study articulates various components of digital resiliency, business, and IT priorities.

What is Digital Resiliency?

It is the ability of an organization to rapidly adapt to business disruptions by leveraging its digital capabilities to not only restore business operations but to capitalize on the changed conditions. By making digital resiliency a key aspect of business strategies, mid-market enterprises can better cope with challenges and gear up for business growth.

Industrial Manufacturing

Globally, COVID-19 created an unprecedented situation for industrial manufacturing with mandated lockdowns. India was no different. The lockdowns resulted in supply chain disruptions and hampered the flow of raw materials,Ìýparts and finished goods. Restrictions on local transportation and the movement of people affected production since many of the enterprises had manual-intensive operations. This resulted in a significant decline in business volumes and profits, with many units winding up operations.

With the revival of the industry, there is now a massive demand for digital transformation of manufacturing. Manufacturers are rapidly moving to public/hybrid cloud- 46% of enterprises will adopt a hybrid cloud strategy. The significant role of technology in the imminent recovery phase is also evident. According to the study, 68% percent of enterprises intend to retain or increase their IT spending in 2022, driven by the need for the adoption of digital technologies. Application upgrades, workload migration to SaaS and automating customer and employee engagement functions are the most prominent focus areas for these mid-market manufacturing organizations.

Chemicals

Breaks in the supply chain and plant shutdowns brought down the demand for both commodity/basic chemicals and specialty chemicals. Reduced cash flow, oversupply and market volatility compounded issues during the pandemic. Now, the industry is investing in technological innovations to tide over this rough patch and build digital resilience.

Increased use of data and digitalization of business processes will be seen in the near future. The study highlights that 74% of enterprises will move more applications to the cloud. The other prominent chemical industry technology trend is centered around risk management, a top business and tech priority for this sector. The study found that 74% percent of enterprises will increase/retain spending on cybersecurity in 2022.

Life sciences

In the initial days of the pandemic, pharmaceutical manufacturing units scrambled to scale up production to meet the needs of the medical industry to tackle the virus. Gaps in the health system became quickly evident as labs shut down and supply chain challenges came to the fore. However, the sector witnessed a sharp recovery; the study found that almost 75% expect to return to pre-pandemic operation levels.

For life sciences, digital transformation opportunities can help solve pressing issues such as eliminating manual processes and maintaining right inventory levels. Accordingly, the top technology priorities for the life sciences industry in the mid-market segment in the coming year are using data to get valuable insights into business operations and moving workloads to SaaS platforms. For such enterprises, a key factor in building digital resilience was moving to the cloud.

Professional services (IT/ITeS)

The pandemic impacted the IT/ITeS industry in different ways. Major end markets such as the UK and USA, and client sectors such as tourism, aviation, banking, and financial services were severely affected. However, the IT/ITeS industry overall performed admirably in the face of great difficulties. Companies responded quickly, evolving their services and business structures to accommodate the changes.

Transitioning to a work-from-home model was the most significant change, which many big enterprises managed smoothly. Even while small- and mid-sized companies struggled with this, the lack of secure privacy systems raised concerns about data privacy in all companies. Consequently, risk management is among the top two business priorities for this sector, with 74% of enterprises set to increase/retain spending on cybersecurity in 2022.

Engineering, construction, and operations

Cyclical downturns are not new for the engineering, construction, and operations industry. However, the pandemic struck a particularly heavy blow. Broken supply chains due to lockdowns and non-availability of skilled labor and raw materials impacted project pipelines. Projects in the residential construction sector were canceled, and commercial and industrial sectors prioritized capital and focused on completing projects rather than investing in new ones.

However, recovery in the sector has picked up with private and government investment. Leveraging digital tools to identify and remedy contractual and operational issues is one of the ways in which enterprises can future-proof themselves. Accordingly, revamping existing IT infrastructure and moving to the cloud are among the top priorities for EC&O businesses. Automation can be a game-changer in this industry, with firms identifying employee and customer-related functions as those needing higher automation.

Retail and consumer packaged goods industry

As customers movedÌýfrom physical shops to ecommerce sites, retailers were faced with the challenge of offering digital engagement and personalized experiences to customers. The digital transformation into a click-and-collect, contactless delivery model created a new data-dependent retail environment. No wonder then, customer analytics, mobile applications, and AR/VR are the top priority for enterprises in terms of customer engagement. And 40% of mid-market enterprises are adopting an end-to-end approach to manage the customer journey across departments based on customer behaviorÌýand are providing personalized offerings post the pandemic.

Optimizing operations have always been a top priority for this industry, with 58% of enterprises having ERP systems providing full visibility of operations across different departments. One-fourth of the enterprises studied also revealed that they planned to introduce automation in their operations and backend processes.

Why Digital Resilience?

All the above industries would have weathered the pandemic effortlessly and turned the disruption into opportunity if they were digitally resilient. The pandemic exposed the weaknesses of manual and paper-based operations. A digital ecosystem can reduce costs, amplify efficiency, promote innovation, and ensure employee and customer engagement, even duringÌýforce majeureÌýevents.

A digitally resilient organization:

• Has tools and systems in place to reduce the risk of losing data
• Actively monitors vulnerabilities and threats to the network, takes steps to contain them
• Has targets and goals for response and defense in case of attacks or crises
• Has best practices to prioritize risks, for change management, and decision-making and financial stewardship
• Can respond quickly to untoward incidents and prevent additional harm\

Enabling Digital ResilienceÌý

As the world moves online, digital resilience is becoming a game-changer for countries and businesses. Drawing valuable lessons from the pandemic, businesses realized that adopting digitalization and building digital resilience will facilitate competitive advantage while delivering value. No wonder then, 74% of mid-market enterprises in India intend to increase or retain their spend on IT security, governance, and risk management in 2022, as compared to 2021.

As businesses embrace digitalization and digital transformation, focus areas such as automation, employee engagement, cloud and cybersecurity are emerging as top priorities for the mid-market segment.

• Automation

Intelligent automation can accelerate digital transformation in an enterprise. A combination of artificial intelligence, machine learning and automation technologies, intelligent automation frees up resources and improves operational and cost efficiencies by automating repetitive manual tasks. It reinvents and simplifies processes, redirects resources to high-value operations and scales up and streamlines decision-making in enterprises. For mid-market enterprises, the focus areas for automation are customer support and service, employee-related functions, customer engagement functions, operational/backend processes and supply chain functions.

• Employee engagement

Employers have been forced to overhaul their workplace strategy to meet the challenges of a dynamic, virtual work environment. A digitally resilient workplace has become the key determinator to the success of organizations. Though digital employee engagement strategy must be tailored to suit the needs of each organization, the fundamentals remain the sameÌý—Ìýbuilding unified digital engagement platforms that allow seamless interaction between employees and the organization. Organizations with smooth digital workforce experience report higher worker engagement, higher productivity, and lower attrition. The SAP-IDC report emphasizes that 50% of mid-market enterprises are adopting dedicated organization-wide technology initiatives to better engage with their employees and enhance their overall work experience, post the pandemic.

• Cloud

Cloud-native applications can help make the technology landscape of an organization more resilient. Moving data to a cloud environment brings down operational costs and frees up software, hardware, and human resources. Cloud collaboration enables teams to work and interact together in real-time, irrespective of geographies and hierarchies. Apart from cutting down on wait time for information and decision-making, this ensures data integrity, cost reduction and easy scalability of services.

• Cybersecurity

In a connected world, systems, devices, networks, data, and programs are under the constant threat of cyberattacks. With the number of data breaches touching higher levels every year, there is a need for an effective cybersecurity strategy that can protect data assets and mitigate the effects of an attack. In terms of cybersecurity, digital resilience refers to an organization’s ability to return to normalcy following an assault. And, while most businesses employ some type of protection, not all businesses are digitally robust. Digital resilience enables recovery and business continuity in the event of a cybersecurity incident.

The IDC Infobrief commissioned by 51·çÁ÷shows that 83% of enterprises are focusing on resiliency objectives like business continuity to ensure operations stay unaffected due to disruptions in the future. A digitally-enabled, unified threat management system can ensure optimum security with layers of protection across the network. The IDC-51·çÁ÷report found that for many mid-market enterprises, securing business and data by improving the security posture was a top business priority in the near future.

Conclusion

Most organizations fail to realize that a major disruptive event leaves an indelible impact on brand value and equity and consumer experience. Digital resilience enables organizations to sail through disruption effortlessly, while ensuring profitability, accountability, employee engagement and customer satisfaction. To find out how to accelerate your journey to becoming digitally resilient and set yourself up for success in the long run,Ìý, ‘The State of Midmarket Enterprises in India: A Perspective on Digital Resiliency’.

All of the above data points are derived from ‘IDC InfoBrief commissioned by SAP, The State of Midmarket Enterprises in India, A Perspective on Digital Resiliency, December 2021, Doc.#AP241284IB

The post Digital Resilience: A Core Strategy for Key Industries in the Mid-Market Segment appeared first on 51·çÁ÷India News Center.