Mid-market firms need deeper insights to ride the storm
9 July 2020
Darren Birt, operations director at FHL Cloud Solutions, describes how the UK's mid market companies are failing to take full advantage of best practice on modernisation and digital transformation.
As UK companies try to plot a path through the easing of lock-down, end of furlough and possible autumn recession, how do their owners and senior management go about adapting and transforming their operations in trying times?
While media attention is focusing on larger organisations’ efforts to reorganise their operations as lock-down restrictions are eased, many smaller organisations also face huge pressure to adapt or transform their operations in the current economic situation.
Take the UK’s 36,000 mid-range organisations, which contribute approximately £4 billion to UK GDP; they have been one of the UK economy’s quiet success stories but how do such prosperous but unsung organisations go about modernising their business operations?
To understand mid-market companies’ thinking, cloud services provider FHL carried out a survey of 250 UK mid-market organisations and their attitude to change such as process improvement, their use of ERP and business systems and wider digital transformation.
The analysis suggests that these mid-market companies will need to improve their operational visibility, planning and decision-making, if they are to adapt operations to the economic conditions.
The research found that only one in seven (13%) of these businesses had followed best practice by reviewing and challenging core business processes before adopting new ERP and business systems. Fewer than half (48%) of the companies in the research had made serious efforts to challenge their current ways of working.
Survey responses also showed that modernising business operations remained a challenge for businesses from the planning stages to programme execution. More than half of these companies (56%) still struggle to identify and improve core processes at each stage of digital transformation projects.
These findings indicate that mid-market organisations’ existing processes and systems are often disjointed and inefficient. These companies could be considering strategies such as automation and adopting cloud-based technologies in the future. In addition, the survey suggests that company leaders could be making do with incomplete information for decision-making, without ever getting the insights they need from their ERP, planning, management and reporting systems.
Some companies’ habitual approaches to planning could also leave them slow to adapt. More than two thirds (67%) of respondents are tied into strategic planning cycles of three years or more, suggesting they are likely to be challenged by the current demands of short-term re-planning and decision making.
Many UK mid-market businesses are trying to adapt their organisation or find new markets. However they often don’t have the necessary business visibility due to outdated systems and they lack the necessary data due to inefficient corporate planning and reporting tools. They therefore struggle to draw up definitive change management plans for times like these.
Significantly, there are clear differences in emphasis among owners and senior management on whether technology-based transformations had made their business nimbler, with 77% of directors saying so, but only 48% of senior managers agreeing. This indicates there may be a gap between plans to adapt operations and successful execution in some organisations.
In addition, only 43% of organisations had leadership teams that were actively driving transformation of the business, indicating a potential lack of readiness at the top to successfully recast the business in extreme conditions.
Scope for advice on transformation
Many mid-market businesses are not seeking advice from expert third parties to help them marry up transformation plans with changing business priorities.
65% of organisations rely on some form of external partnership to help manage their business transformation. Surprisingly though, only 32% said they bring in business consultants to develop their early stage plans. And fewer than one in four (23%) interviewees engaged with technology partners at the planning stage. Are mid-market businesses missing the opportunity to gain new perspectives from business consultancy and technology experts - and so more thoroughly plan and de-risk their digital transformation programmes?
These findings also raise the prospect that many mid-market companies place too much reliance on new software platforms alone being the answer to their complex operational challenges. Business owners contemplating modernisation are not fully considering the amount of preparation, planning and effort needed to successfully implement new software as well as manage the degree of business change required to ensure adoption and deliver the desired return on investment.
Deeper insights into digitalisation
In general, the FHL research shows that a solid core of UK mid-market organisations is adopting best practice to modernise for the future: completing detailed planning and process improvements needed to deploy smarter, cloud-based ERP, business and finance systems.
These flexible systems will help give mid-market companies faster and deeper business insights and help them develop the plans they need to adapt to challenging trading conditions or implement longer-term recovery plans.
Darren Birt is operations director at FHL Cloud Solutions which delivers competitive advantage for businesses through the use of technology and collaborative partnerships in the UK and overseas.
Main image courtesy of iStockPhoto.com