Digital investment considered critical to business survival in bleak economic outlook
Over a quarter (28%) of UK middle market businesses now consider digital transformation to be their single most important area of investment, according to RSM UK’s latest ‘The Real Economy’ report. A further 58% of businesses surveyed view digital transformation as among their most important investment priorities. Despite the bleak economic outlook, almost half (49%) of businesses said they are determined to continue with their planned digital investment, while a further quarter (24%) plan to scale it up.
Chris Knowles, chief digital officer at RSM UK said: ‘These latest findings are in stark contrast to business response to previous economic downturns including the 2008 financial crisis, when investment in technology was one of the first things to be cut. It now seems that, for the majority of businesses, investment in digital technology is seen as business essential and not an optional overhead that can be cut when times get tough. Some of this mindset shift may be down to the covid pandemic experience, when all businesses were reliant on digital technology to remain operational.’
The report also found over two thirds (69%) of businesses expect digital investments to become a higher strategic priority over the next three years. Only one in five (19%) businesses plan to reduce or cancel their investment in digital transformation. The areas considered a top priority for investment include digital marketing, (51%) followed by CRM and customer analytics (49%) and data analytics and business intelligence (47%). Artificial intelligence (AI) and machine learning was a lower priority, at 32%.
Chris continued: ‘It is no surprise to see investment in technologies that directly drive revenue growth, such as digital marketing and customer analytics, at the top of the list of digital investment priorities. Over the next five years I would expect to see the number of UK businesses investing in AI increasing across all business types and sectors. We want to see the government prioritising AI in its industrial strategy to create the right conditions for research and investment in AI so that the UK becomes a world leader in the field.’
Encouragingly, almost half (41%) of businesses surveyed said they had substantially achieved their digital transformation goals, while over a third (38%) said they were still some way off this. Almost a third (31%) said that, although they have plenty of digital activities, they didn’t have a formalised digital transformation strategy in place.
Chris concludes: ‘While it’s encouraging to see so many middle market businesses prioritising investment in digital transformation, those that don’t have a clear digital strategy driven from the top are less likely to achieve long term return on investment. A good digital strategy should consider the customer, employees, data security, wider architecture, skills and culture, and above all it should be aligned to the wider business strategy.’