In 2021, BDO conducted a large-scale survey of business leaders and executives to understand how medium-sized enterprises are prioritizing their digital strategy and modernization budgets.
Across over 1,000 respondents, our Midmarket Outlook Report uncovered that almost two-thirds (64%) of medium-sized enterprises plan to increase their spending on digital initiatives over the next year. This figure rises to 77% for companies that have developed and implemented, or completed, a high-priority digital project.
Our research revealed that leaders across all major Canadian industries are putting investment in digital priorities high on the agenda. On the flip side, we see that firms who aren't adequately prioritizing technology modernization find themselves at a competitive disadvantage relative to their peers. But how much is the right amount to invest?
How much should my company be spending on digital initiatives?
When properly vetted and applied, the benefits of digital tools and platforms can drive a major competitive edge for businesses in any sector. According to Gartner, organizations that have increased their funding of digital innovation are 2.7 times more likely to be a top performer than a trailing one. However, despite what may feel like enormous investments devoted to digital technology and modernization, businesses may be underestimating how high the competitive bar for digital investment has become.
According to research from Statista, the benchmark spend on business technology in Canada was between 3% and 7% of top-line revenue in 2021. Small and mid-sized enterprises are on the higher end of the range, with $100 million to $250 million-revenue firms spending approximately 6.2% of their revenue on business technology.
This spend is expected to increase over the next five years as digital technologies continue to redefine competitiveness across the market. Individual organizations' success will come to depend more than ever on having the right strategic plans in place to recognize and capitalize on potential technological advantages, and ultimately to keep up with high-investment competitors.