If there is one prevailing feature that consistently identifies the so-called medium business, it is a struggle for identity.
Sitting in the vast middle ground between multi-billion pound, publicly listed behemoths and nimble, enterprising start-ups, mid-sized businesses often find their requirements and concerns overlooked or under-served. The very actors whose attention and support is instrumental in nurturing growth-hungry businesses – namely, government agencies, policymakers, capital investors, service providers and product designers – rarely direct significant attention to the specific activities and needs of the medium business community.
As Jyoti Banerjee, director of the M Institute, the information source and support mechanism for leaders of mid-sized organisations, observes: The marketplace – and government – usually clubs medium organisations with small organisations under the SME [small and mid-sized enterprise] label. This identification of medium enterprises with small enterprises is fundamentally mistaken.”
Such myopia does not help mid-sized businesses with the formidable challenges they already face in today’s highly competitive and ever-diverse business environment.
Speaking at the recent IT for the M Business conference in London, Paul Druckman, chairman of the M Institute, argued that it is about time industry and the government sat up and took notice of this neglected sector. And there is good reason for them to do so.
First, he explained, medium businesses – those with annual revenues of anything between £10 million and £250 million – account, on average, for 20% of UK corporate profit, and employ 30% of the UK workforce. Yet that contribution is coming from a group of companies that amounts to just 6% of the total number of businesses in the UK. Moreover, annual growth at medium businesses is running at 8% – significantly higher than at the two ends of the corporate spectrum. When viewed in comparison to the UK GDP rate of growth, which has hovered around the 3.3% mark throughout 2007, “this [medium business] growth rate is very important”, said Druckman.
Dramatic changes in the global business landscape and the UK workforce are compounding the challenges mid-sized companies face, Banerjee told delegates at the jointly hosted Information Age and M Institute event: “The pace of change is so fast now, it doesn’t matter if you are large or medium you have to run fast.”
A growing scarcity of resources – particularly in terms of skills and energy – will intensify the competitive environment for the M business, and could seriously restrict the future growth, he warned. But medium businesses do not have the luxuries offered to their larger rivals. They need to “get it right the first time; there just aren’t the resources to have a second go”, he said.
Nowhere is this imperative to ‘get it right’ the first time more pertinent than in the area of information technology. Not only does IT offer mid-sized business the efficiencies to operate in a global marketplace, but it enables them to “punch above their weight” when battling with high-end competitors.
The question is: are today’s technologies fit for that purpose. “Traditionally, IT has had a bias towards enterprise solutions at one end, and ‘shrink-wrapped’ at the other end,” observed Druckman. “M businesses have specific IT needs: they need flexibility and customisability but in a different way to the enterprise. They also require deep functionality and scalability.” And, of course, they are not willing to spend anything like as much on IT.
As several major technology giants, including Microsoft, SAP and Oracle, join traditional mid-market players such as IFS, Infor and Sage in sharpening their focus on the mid-market, many of these different needs are now being met.
As such, the M business finds itself facing as many opportunities as challenges: the environment in which it is forced to compete grows tougher than ever, but the tools it can use grow sharper and more effective. Harnessing these technologies, says Banerjee, will prove critical to the future success – and the increased visibility – of M businesses.