KPMG Mid-Market
Specialized professionals for mid-sized companies, KPMG LLP
Insight
Most companies struggle with digital transformation, but these three steps help mid-market companies succeed where others have failed.
Your organization might need to shake up the status quo if it wants to survive in today’s digital world. As CEOs seek new avenues for growth by building customer loyalty, organizations need to radically transform to deliver the intentional and connected experiences technology-savvy customers desire.
“When you want to drive significant performance improvement and increase profitability as much as five percent, you need to disrupt yourself – and that often means changing the organization dramatically.”
Scott Rankin, Principal, Consumer and Retail Strategy Practice Leader, KPMG US
— From Chief Executive, Funding Digital Transformation, August 14, 2019.
This type of transformation is particularly hard on mid-market companies with tighter budgets and tighter teams. Asking already overtasked employees to take on additional responsibilities creates a recipe for disaster with divided priorities and commitments. Instead, a dedicated team with CEO support and senior executive management creates opportunities without disrupting the core business.
To create this team and engage the entire organization in digital transformation, mid-sized companies should consider completing the following:
Step 1 — uncover customers’ priorities
Before any company can transform to meet the needs and wants of their customers, the organization needs to know what those actually are. Customers’ values and wants change frequently and rapidly, and by collecting customer insights and analysis from competitive offerings, organizations discover how to best meet their customers’ desires—whether it be lower prices or faster delivery. Knowing what customers actually want helps an organization to deliver.
Step 2 — finding the funding
Mid-sized companies generally lack the sufficient reserves to fund digital transformation. However, many organizations drive incremental profit from their business to invest in new initiatives through these five actions:
- Optimize organizational spans and layers. Examining your org chart may reveal redundancies and overlapping responsibilities, both in lower ranks and the executive level.
- Lower cost of goods. Now’s the time to speak with your manufacturer to explain your plan. If they can’t help to lower your costs, then you can no longer afford to sell their product.
- Reduce indirect spend. Explore reducing the number of suppliers you’re using. If you use five, consider using two and ask your current suppliers to give their best pricing. While a few pennies may sound small, they can add up quickly to increase your savings dramatically.
- Improve warehouse and distribution efficiency. Bring customers into the transformation by explaining how you’re working toward better efficiency, for your business and theirs. Making small changes, such as dropping two pallets every other day rather a daily delivery of one pallet—can help reduce fuel costs and save time.
- Improve pricing practices. Putting controls, guardrails and measurement around selling processes helps to prevent extraordinary discounting and produce more profitable wins.
Step 3 — partner up
Changing the status quo can be painful, especially if it requires letting go of loyal employees who have been with the company for years or firing customers whom you believed essential to your profitability. Cuts should be made with precision, and mid-sized companies find success when they have a trusted partner to help them. A partner can identify where change needs to be made, where resources are most effective, and how to hold people accountable in a proactive way.
While most companies fail in their digital transformation efforts, you can succeed and create a strong, competitive operating model to deliver value now and in the future with the right team of experienced professionals who understand your struggles and your business.
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