Technology is evolving and rapidly changing how manufacturing and distribution companies do business. Artificial intelligence (AI) has grabbed the attention of company leaders and cybersecurity concerns are driving investments in technology, according to data from an April 2023 RSM survey.

Tech Trends in Manufacturing & Distribution

Companies will continue to take digital transformation seriously; however, the impact and results will vary by company. Based on survey data, we see that companies are investing more in information technology (IT) and interest in AI is growing.

Digital transformation is defined as the use of technology to change how a company operates and delivers value to its stakeholders. It relies on a comprehensive, strategic approach to adopting technology solutions. The business focus of digital transformation is to improve efficiency, increase productivity, and enhance employee satisfaction. The transformation can affect all areas of a business, from its products and services to its customer interactions and operations.

Challenges & Opportunities in Digital Transformation

The survey found that the middle market is highly focused on this digital transformation.

  • 75% of the survey respondents noted that they had plans to increase IT budgets in the upcoming year.
  • 74% mentioned that digital transformation was the most important area of investment for their company.
  • 25% of all respondents noted that their main driver for investing more in digital transformation and IT was to increase business productivity.

However, many companies investing in this area struggle to create a well-defined strategy. Creating a clear and formalized digital strategy allows companies to experience positive results from this transformation more quickly.

Another component of the digital transformation is AI. AI offers promising features like data analysis, financial budgeting, and forecasting. The survey found that the middle market has been slow to incorporate generative AI tools or platforms as only 20% of survey respondents reported that they were planning to use AI within the next year. AI incorporation could lead to various benefits for a middle-market company, such as automated processes and increased efficiency. However, there are still concerns to consider, like the security and privacy of data.

Measuring Success & Addressing Concerns

Measuring digital transformation progress can be a tall task. The survey found that:

  • 38% of respondents believe they have already achieved their digital transformation goals.
  • Roughly 41% believe they are still far off from reaching their goals.

Going forward, companies should remember that the digital transformation process is ever-evolving. It is important to continually assess your needs to ensure your strategies are still supporting your goals.

Finally, cybersecurity remains a top concern. Over 88% of survey respondents reported that they employ a cybersecurity/data security group in their business or plan to do so within the next twelve months. Increased cybersecurity concerns were the top motivation for changing IT budgets in the upcoming year.

To read more about the survey, click here.