Technology Investments Grow Among Small Businesses: Deloitte

A survey reveals technology investments are playing an increasingly larger role in midmarket companies' bottom line.

Executives at three out of four midmarket companies are maintaining or boosting their long-term investments despite the U.S. economy's less than 1 percent growth rate during the first half of the year, according to a Deloitte survey. The report, "Mid-Market Perspectives: America's Economic Engine - Competing in Uncertain Times," also indicates that a majority of respondents are forecasting growth in revenue (61.2 percent) and profitability (52.6 percent) in the year ahead.

Nearly three quarters (70 percent) of respondents see productivity gains principally from their investments in business process automation, technology and strategic hiring, leaving them optimistic about revenue and profitability growth, according to survey results.

"Major economic events, such as the downgrading of the U.S. debt rating, the European sovereign debt crisis and the volatility in global equity markets, have reduced optimism about the future of the economy among midmarket enterprises," said Tom McGee, national managing partner of Deloitte Growth Enterprise Services. "However, the survey results provide compelling insights into what these executives are thinking and doing to maintain a competitive edge for their companies."

The Deloitte survey also revealed that technology investments are playing an increasingly larger role in midmarket companies' bottom line. Business process automation and technology improvements are the two top contributing factors to the jump in midmarket productivity; new hiring ranked fifth overall. Midmarket executives also said they believe the technology driving increased productivity includes business process automation (52 percent), data analytics and business intelligence (49 percent), and customer relationship management software (30 percent).

"Technology is on the mind of most midmarket executives," said McGee. "While 74 percent of respondents believe globalization is forcing U.S. companies to become more productive to stay competitive, 46 percent of companies are focused on higher value customers and getting more revenue per customer. Technology and applications such as data analytics can help businesses better understand customers, operate more efficiently and set themselves apart from the pack."

Although the survey found 38 percent of companies agree that strategic hiring of new staff with specific skills offers a path to higher productivity, 47 percent of midmarket business leaders say it is difficult finding employees with the skills and education to become productive immediately. Despite the skilled labor conundrum, 44 percent of the respondents indicate that their companies are prepared to increase the size of their U.S. workforce and hire over the next 12 months. 

Deloitte commissioned OnResearch, a market research firm, to conduct the survey from July 19 through Aug. 15, 2011. The study polled 696 executives of U.S. midsize companies about their expectations, experiences and plans around becoming more competitive in today's difficult economy. Respondents were limited to senior executives-with 50 percent being owners, board members or working in the C-suite-at companies with annual revenue of at least $50 million and no more than $1 billion. Two-thirds of the companies responding were privately held, while one-third were public. The private companies were roughly evenly divided between family-owned, closely (non-family) held and venture capital-backed.