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The Mid-Market Advantage: A Q&A With Deloitte’s Steve Keathley

Middle market companies are leading the pack in leveraging the latest technology trends.

FEI Daily spoke with Steve Keathley, Deputy CIO at Deloitte Services and National Technology Leader at Deloitte Growth Enterprise Services on Deloitte's annual 2016 Mid-Market Tech Report.

FEI Daily: What were the key findings?

Steve Keathley: This is the fourth year of this survey and we've started to track trends over time. First of all, the investments that little market companies have been making over the last few years appear to be paying off. We're seeing them really embrace a lot of new technologies and up their investment levels. I think as a result of the payoffs, we're seeing the technology leaders within middle market companies gain a better seat at the table. They are much more likely to be involved in some of the major decisions because these technologies are driving transformations within the organizations and have operational impacts. The final thing would be the whole topic around cybersecurity. We saw some interesting shifts this year. I think that the focus historically this has been around external threats and some of the technical aspects of it, I think we're starting to see maturation in their attitudes. They're starting to realize that their cyber-prevention measures involve more than just technology. There are external threats, but there are also people process aspects that have to be dealt with.

I think the real news here is that what we're seeing is the investments in technology that the middle market has made. They've gone after some new, improved technologies that weren't necessarily proven, but they were able to get real value out of those. As a result we're starting to see them more willing to invest.

FEI Daily: How are the CIO and CTO roles changing?

Steve Keathley: I think they're becoming more strategic. CIOs and CTOs have clamored for a seat at the table for a long time, in particular within the middle market.

The investment in new technology, particularly cloud, has significant operational impacts on the business. Business leaders are starting to become more engaged in that conversation and the discourse between technology leaders and financial and operational leaders is becoming much more strategic, much more operationally focused.

FEI Daily: What are the technology trends emerging in the middle market?

Steve Keathley: One that we started tracking a couple of years ago was the shift to the cloud. Middle market companies in particular have been able to embrace this because they typically have more focused operations than the larger competitors with more diverse operations. So they're able to very quickly go in, adopt the capabilities that a cloud solution is providing, and get value from that.

That's led to some other things. A lot of the cloud platforms are starting to have advanced analytics. That gives access to analytic capabilities they might not have gotten to as quickly on their own.

Augmented virtual reality is another area we're starting to see people take more and more advantage of.  And, finally, the internet of things. There are so many internet-enabled devices out in the marketplace right now, it's becoming easier and easier to take advantage of that. Companies are finding really interesting and unique ways to bring that into their operations and to improve their relationships with their customers.

FEI Daily: Can you explain the term internet of things?

Steve Keathley: The way I think about it is, if you think about your cell phone and fitness trackers and wearables, things like Google Glass. They all have RFID chips in them and all of those things are now internet accessible. And they can be tracked or acted upon in some way. The data all of those devices are giving out are being collected and used in order to provide operational efficiencies or customer insights.

FEI Daily: How are these trends influencing business decisions?

Steve Keathley: Let's think about augmented or virtual reality. There are a lot of examples for the ways companies are using that. For example, drone technology is a form of augmented or virtual reality. If you've been in a central business district recently where there's been a lot of construction going on, several times throughout the day you'll see drones flying around those construction sites. That's not curious bystanders wanting to look at the building. Architects and engineers are using drone technology to actually survey the property, to inspect things, to bring other people into that process virtually that never would have in the past. It’s creating a lot of efficiency. There's a number of examples like that where people are finding creative ways to use this technology.

FEI Daily: How are companies discovering and exploring emerging technologies?

Steve Keathley: There's an incredible amount of information out there on this on the web. I find that CIOs are working more and more with each other and discussing issues at conferences. They're discussing what other companies are doing and how to leverage it. Obviously, the technology providers that are providing solutions are making sure that companies are getting the messaging.

At the end of the day, they're hearing what their competitors are doing, they're seeing where other people are having successes. It's easier and cheaper than ever to tap into pilots for a lot of this stuff. I think a lot of these little market companies are being very creative in piloting new ideas. They're finding success, and then they're continuing that investment. Success breeds more success and they're getting more and more competent.

FEI Daily: How are mid-market companies keeping up with their larger counterparts when it comes to the latest technological innovations?

Steve Keathley: I think they have an advantage because they are smaller and more nimble. And as I mentioned, the ability to quickly and cheaply access this technology is much greater than it ever has been in the past. I think middle market companies are doing an excellent job of leading in some of this leveraging the new technologies to even get a leg up on some of their larger competitors. It's a pretty exciting time to be in the middle market right now.

FEI Daily: How are leaders facing concerns around data security?

Steve Keathley: This is something that nobody can ignore even if they want to. There's not a week that goes by that there isn't a story about a breach or a data loss. I think the good news for the middle market is that their ability to leverage technology and different cyber security strategies has never been better.

One of the things that we've seen is a lot of the larger cloud providers investing a tremendous amount of money in the technology aspects of cyber security, much more so than even some large firms can afford to invest. And for them it's a critical business issue. If there's a breach in their systems it can affect all their clients and not just one. The reputational risk for them is huge, and as a result they invest a significant amount of resources in cyber security. Middle market firms are finding they can take advantage of that.

But that isn’t the whole thing. What middle market companies are realizing is that it's more than just the firewalls, and the different types of access security that they had to put in place. There's also a people dimension to it. The biggest threat that most companies face is a people threat. It's people not understanding what a phishing scheme is, and how to respond to it.

Internal controls play a role: appropriate segregation of duties, that sort of thing. All companies can address it in some way. The other part of it is education and awareness. There's a tremendous amount of material out there in the public domain that could help middle market companies provide the appropriate education awareness.

FEI Daily: What are the top technology priorities for executives for the coming year?

Steve Keathley: I think we will continue to see them focus on leveraging these new technologies. Not only for operational efficiencies, but for improved customer engagement. One of the interesting stories of the year has been Pokémon Go. It's interesting on a number of levels. If you think about the technology involved in this, and you think about applying that technology (augmented reality) to, say, the consumer shopping experience. Or any type of application that requires information about a physical environment that you're in. The implications are pretty significant for technology like that. I think we're going to see more and more of a convergence between internet of things and virtual hubs of reality in a variety of fields. I think it will be interesting to see how the trends play out in that space as we go forward.