Middle-market companies invest in technology to improve agility and resilience
As a hedge against technology-driven competitors, and to improve their agility and resilience against risks that could negatively impact their growth plans, almost all middle-market companies (97%) indicate that they are planning a significant investment in technology in the year ahead. Investment spend appears to be split between acquisition and in-house development however when it comes to artificial intelligence (AI), the emphasis is now definitely on the latter.
Two years ago, when we asked survey respondents about their intended use of AI, 74% said they would never adopt it. One year later, 73% expected to deploy it within two years and now, in our most recent survey, more than 70% say they are planning to develop and deploy AI in-house.
Part of the push towards in-house AI development may be the need to come up with bespoke solutions that integrate with legacy systems. However, middle-market companies also see in-house AI as a means of gaining competitive advantage.
The emphasis of this technology development is spread equally across multiple priorities — creating new products and services, improving internal efficiencies, enhancing the customer experience and bolstering data access and analysis — the one area that stands out is risk reduction (including cybersecurity). In 2018, only 7% of middle-market executives said they would be investing in technology that reduced risks. This year, the percentage has more than doubled, with 19% now looking to invest in technologies that can help them manage and mitigate their cyber risks.
Middle-market executives turn to M&A to tackle disruption and accelerate growth
For many middle-market executives, M&A appears to be a means to acquire capabilities, tackle disruption and exploit fast-growth opportunities. 47% of middle-market executives say they expect their companies to pursue M&A over the next 12 months, with 90% anticipating that the M&A market will improve during the same time frame.