Published on the 03/03/2022 | Written by Heather Wright

MYOB says the mid-market is in tech upgrade mode…

They’re buoyant, ambitious and ready to tackle challenges head-on with changes to their business, and technology upgrades including ERP and workforce management software, in the year ahead.

That’s the verdict from the MYOB 2022 Mid-market Snapshot which shows Australian and New Zealand companies have, for the most part, ridden out the past two years well, with nearly two-thirds increasing their year-on-year revenue. And they’ve got a good pipeline of activity lined up for the first quarter.

Despite consumer confidence taking a dive across A/NZ, the mid-market businesses – in this case defined as companies between 20 and 500 FTEs – surveyed were optimistic about the prospects for their local economies, and for their businesses, in the year ahead.

“Businesses that are proactive in resolving these points…will have a better chance of achieving growth.”

Overall, 82 percent of Australian businesses say they’ve got more work or sales in the pipeline compared to last year. In New Zealand, the figure is lower, at 67 percent, dragged down by construction sector, where just 45 percent say they’re expecting more work. Professional services (87 percent), retail (79 percent) and manufacturing (74 percent), are more robust.

Bullish they may be, silly they are not, with businesses well aware of ongoing challenges, and preparing for them.

Topping the list of concerns: Skills shortages. It’s front of mind for 49 percent of Kiwi businesses as the biggest challenge they expect to face in the next twelve months. And while it’s less of an issue in Australia, it’s still the number one concern at 37 percent, just ahead of the risk of business disruption due to further Covid restrictions. 

Supply chain concerns feature high in both countries – third in New Zealand behind implementing new technology to manage the business, and fourth in Australia, behind maintaining a steady revenue. Unsurprisingly, it’s even higher for the manufacturing sector with 66 percent of Kiwi and 45 percent of Australian manufacturers expecting their ability to get goods from overseas will be a particular challenge.

And the changes they plan to make to cope? Investing in more technology to better run or manage their business tops the list for Australia at 37 percent, followed by hiring more full-time staff and investing more in marketing and advertising. 

In New Zealand, hiring more staff is tops (34 percent), followed closely by the flip side of decreasing staff numbers (32 percent), with providing more/new goods or services. Investing in more technology comes in sixth at 27 percent. 

“While most mid-market businesses are feeling incredibly confident, it’s evident that they’re anticipating achieving their key goals won’t be without any headwinds, thanks to the ongoing impacts of the COVID-19 pandemic,” MYOB head of go-to-market, Jo Tozer, says. 

“However, the last two years have shown us that technological solutions can play a critical role in helping businesses manage some of these challenges. On the flipside, without the right systems in place, it will become increasingly difficult for growing firms to capitalise on the changes they’re planning and efficiently manage new customers, onboard new starters or keep ahead of stock levels in their business.”

The planned business changes come with an unsurprising goal of increasing revenue – it’s a key goal for 37 percent of Australian companies and 37 percent of Kiwi – and expanding their business in local markets (35 percent of Aussie companies) or overseas (38 percent of Kiwi companies). Thirty-six percent of Kiwi companies also have an ambition to become number one in their sector or leap their competitors, while 36 percent of Australian companies want to secure more customers.

With that in mind, businesses in both countries are focused on the systems they need to improve customer relations, support and empower their workforce, and streamline compliance and financial oversight. Indeed, IT systems capability is regarded as the biggest influence over whether Australian companies can achieve their business goals this year, and second biggest for New Zealand businesses, behind knowledge and expertise in the areas set for change.

As companies work towards their goals of expansion, acquiring new customers and becoming market leaders, the report suggests technology will play an increasing role as companies turn to modern technology and digital solutions to streamline systems, connect with new customers and increase adaptability, giving them an edge in the face of ongoing challenges. 

For a whopping 60 percent of the Kiwi companies planning tech upgrades, the focus is on ERP, followed by people and workforce management software (54 percent) and accounting and financial management software (41 percent), CRM (31 percent) and payroll software (26 percent).

In Australia, it’s people and workforce management and CRM which are key focuses at 43 percent each, followed by accounting and financial management software (41 percent), ERP (37 percent) and cloud storage (28 percent).

The focus on ERP and CRM, and that single source of truth, is a finding also highlighted by Experian in a recent survey, which found almost half of local businesses plan to upgrade their CRM or ERP ‘soon’.

It’s also a view supported by activity in the local market, says Hayden McCall lead consultant for Software Shortlist.

“There’s been a notable increase in enquiry over the past year, both to us directly and anecdotally from partners. A common theme is that out-of-date ERP or CRM systems are to blame, which is often the case, but an underlying issue is that value chains, and business culture, have not been re-engineered around the value of high-quality data and efficient information flows.

System replacements are seen as one way to reset data quality and start to automate transactions across the business” he says.

But MYOB also sounds a note of caution, warning that local mid-market businesses will also need to head off potential issues, including buy-in to new technology plans, from the outset.

“From previous MYOB studies, we know buy-in and understanding from leadership around changes to operations – like new technology implementation or improving IT capability – can be a struggle, and yet it’s precisely the systems that could help better manage some of their other concerns, eg, resource capacity.

“Businesses that are proactive in resolving these points before their influence becomes a negative one will have a better chance of achieving the growth they’ve set their sights on.”

So gear up for some ‘challenging’ conversations internally…