2023 Mid-market technology trends report

Convergence topples industry walls and powers

growth ambitions for midsize private companies
2023 Mid-market technology trends report | Convergence topples industry walls and powers growth ambitions for midsize private companies

Table of contents

Introduction ............................................................................... 1

About the survey ....................................................................... 2

Section 1: A foundation for growth......................................... 3

Section 2: Industry convergence: Opportunities

for growth and transformation................................................ 6

A special message—Industry convergence:

Practical outcomes and responsible growth........................... 9

Section 3: AI adoption
and implementation.................................................................10

Section 4: Executable strategies for consideration..............13

A special message—CISO perspective:

Adapting cyber priorities to evolving threats,
new risks, and organizational changes .................................14

Conclusion..................................................................................15

Get in touch................................................................................16
 2023 Mid-market technology trends report |
 Convergence topples industry walls and powers growth ambitions for midsize private companies

Introduction

In Washington state, orchardists are testing a 14-foot-tall robot with

mechanical arms that's capable of picking the ripest apples from
the tree. The robotic picker might one day help alleviate human
labor shortages for the painstaking agricultural work. Through
this mode of automation, researchers see ways to create more
sustainable systems in farming, to feed livestock, milk cows, or
navigate greenhouses under human supervision.1 This type of
precision farming is possible because of the convergence between
the high-tech industry and agriculture using technologies such as
Wolfe Tone the Internet of Things, artificial intelligence (AI), robotics, and big
data—allowing workers to optimize the growth, harvesting, and
distribution of agricultural products.2

The rise of industry convergence—as well as The leaders who participated in our survey
the blurring of boundaries within sectors— represent predominantly privately held
is one of the key trends uncovered in this companies with annual revenue between
year’s survey of private and family-owned $250 million and $1 billion. Many of these
companies. An analysis of this year’s survey, enterprises are seeking greater returns on
our ninth assessment of the technology their technology investments and appear
priorities, investments, and challenges to be stretching their innovation muscles:
facing America’s middle market, offers a Seven out of ten respondents (70%) report
strong assessment that these companies that they have or are in the process of
are not only prioritizing technology developing assets that can be leveraged
investments that reduce time to value but and monetized outside of their own
Chris Jackson
also seeing value and innovating at a pace business for additional growth or
we haven’t historically seen in prior surveys. expansion. Many of these companies
appear to be seeking growth outside of their
traditional sector boundaries or investing
to help defend against other organizations
encroaching into their sectors.

Wolfe Tone Chris Jackson Ryan Jones

Vice Chair, US and Global Deloitte Private Deloitte Consulting
Deloitte Private Leader Technology leader Private Equity leader,
Ryan Jones and Former Technology
Sector leader

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2023 Mid-market technology trends report | Convergence topples industry walls and powers growth ambitions for midsize private companies

About the survey

Balancing act: Emerging opportunities and familiar challenges

Enterprises across this slice of the commercial landscape are seizing on the potential of AI to transform network operations, increase
efficiencies, and improve customer service.

In addition to navigating increasingly blurred sector boundaries, mid-market companies are confronting headwinds affecting a broad swath of
businesses, including evolving cyberthreats, changing talent configurations, and the impact of generative AI. Unlike prior surveys, this year’s
results suggest mid-market companies are doubling down on their technology investments—and proactively investing to stay ahead of these
challenges. Many of their investment priorities over time appear to be paying off, with three in four respondents reporting they have high or
very high confidence in their cybersecurity capabilities, for instance. From a human capital perspective, respondents indicated that they are
prioritizing hiring based on skills versus degrees. Furthermore, company leaders say they are leveraging talent from their ecosystem partners
and/or service providers.

To better understand what drives success more fully for these companies—and, in turn, their appetite for technology investments—we
reviewed the survey results for companies that believe they have been most successful in achieving their tech objectives. Then, we tracked
the respondents who anticipated achieving the highest return on investment (ROI) on their recent technology investments.

In these pages, we explore how private and family-owned companies continue to unleash their full potential for growth in an era where
disruption happens in real time.

Survey methodology

From May 4–24, 2023, a Deloitte survey of private and mid-market companies was conducted by a market research firm. The survey
examined technology trends taking place in this market segment to determine the role that technology plays and how it influences business
decisions. The 500 survey respondents represented companies with annual revenues ranging from $250 million to a little more than $1
billion. Firms with revenue between $250 million and $499.9 million in annual revenue comprised 10% of the sample; firms with at least $500
million to $749.9 million in annual revenue comprised 30% of the sample; firms between $750 and $1 billion in annual revenue comprised
30% of the sample; and firms more than $1 billion in annual revenue comprised 30% of the sample this year. Half of the respondents were
C-suite executives, while the remainder were non-C-suite decision-makers. Eighty percent of the respondents represented companies that
are privately held, while the rest were publicly traded firms. Among industries, 39% were from technology, media, and telecommunications
companies; 22% were from financial services companies; 21% represented consumer and industrial products companies; and the remaining
respondents were divided among energy and resources companies, and life sciences and health care (LSHC) companies. Some percentages
in the charts throughout this report may not add up to 100% due to rounding or for questions where survey participants had the option to
choose multiple responses.

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 2023 Mid-market technology trends report |
 Convergence topples industry walls and powers growth ambitions for midsize private companies

Section 1: A foundation for growth

Investment, spending, and new opportunities

If budgets are reflections of a company’s ambitions, private

Spotlight:
enterprises surveyed are conveying a strong desire to innovate at How companies and industries
the edges. This year’s survey reveals that overall technology
spending is at its highest level since 2019, perhaps making up for
are investing
lost ground during the pandemic. Further, of those businesses that
reported spending more than 5% of their revenue on technology, In the health care industry, AI could streamline and
90% also reported an increase in their technology spending automate the often costly and time-consuming
compared to last year. process of appealing denied insurance claims. In
2021, more than 48 million claims were denied,
The leading areas of technology investment span a range of business
representing about 17% of all claims. AI’s ability to
needs as companies adapt to new innovations. In our prior survey in
automate this resource-intensive process could
2021, just 12% of respondents predicted AI would have a significant
impact on their business within a year. In the current survey, AI has potentially yield significant savings for hospitals
leaped ahead of other technologies as 40% of respondents call it the and other health care providers while freeing
top tech investment priority. For many of these organizations, workers to focus on higher-value tasks.3
AI can provide value in the automation of repetitive processes,
working to create demonstrable value and savings for organizations. Security, risk, and threat monitoring come in at
a close second among the top targets for tech
investment. Cloud infrastructure and customer
resource management (CRM) investments round
out the top four areas of investment over the
past year.

This year’s results also suggest how company

ownership and industry can influence technology
investment decisions. For instance, while just over
a quarter of family-owned businesses (27%) say
they invested in AI over the past year, around half
of private equity-owned businesses (49%) say they
have pursued the technology.

More than any other sector, respondents in the

energy, resources, and industrial (ER&I) industry
report a focus on metaverse technology. As a
practical application, ER&I companies can tap
the metaverse for virtual reality and augmented
reality-enabled immersive employee training,
and externally, for virtual storefronts to promote
sustainable efforts.4

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2023 Mid-market technology trends report | Convergence topples industry walls and powers growth ambitions for midsize private companies

Calculating technology ROI

This year, we measured a range of factors

to quantify more precisely how technology
investments are translating into the ability to
successfully achieve technology objectives.
Several factors inform our analysis, including
whether the quality of data is sufficient
for the application of AI to the business;
talent capabilities; the respondents’ vendor
and partner networks; and the ability to
expand outside of the company’s industry
and sector. We used these inputs to assess
ROI on tech investments as measured by
revenue increases for these companies.

The businesses reporting the highest ROI on

their tech objectives report being more than
twice as likely to strongly agree that their
data was sufficient for the application of AI.
Respondents at the upper end of revenue
growth report they are more likely to
increase their technology spending by more
than 20% compared to the previous year. “Especially for companies with active AI initiatives, there’s
Correspondingly, businesses at this end of
the spectrum are almost one-and-a-half a growing level of confidence in these investments as the
times more likely to have seen an increase in businesses harness, monetize, and generate revenue
revenue of 20% or more.
from selling data and tech-enabled services.”
Our assessment also reveals that a mature
Khalid Kark, CIO research director, Deloitte LLP
cyber posture can be a critical investment.
Security, risk, and threat monitoring
software—such as risk quantification tools
Notably, respondents with active AI “Companies have matured across their
that compare the costs, benefits, and ROI
solutions are about two-and-a-half times as cyber capabilities as they’ve outsourced
of cyber investments5—are the technology
investments respondents ranked as most likely to have very high confidence in their the most complex parts of their cyber
likely to have a high or very high return cybersecurity capabilities compared to functions, added additional protections,
on investment. Meanwhile, AI was the businesses not using or exploring AI at all and leveraged investments in cloud and
technology investment that was most likely (32% vs. 11%). other digital infrastructure,” says Criss
to have a very high ROI. Bradbury, Markets, Offerings, and Alliances
Still, relatively few C-suite executives appear leader, Deloitte LLP. “As more organizations
Evolving posture toward cyber risk to be comfortable with the state of their embrace AI, I expect even more urgency to
cybersecurity efforts (12% report very high embrace security, ensure compliance, and
The leaders we surveyed this year appear confidence) compared to leaders outside enable customer trust.”
to be seeing the results of a sustained and of the C-suite (22%). This could suggest
maturing focus on data security. Three in that technology leaders have been actively
four respondents indicate high or very high pushing for investments to meet the array of
confidence in their business’s cybersecurity emerging threats because of their familiarity
capabilities. Consider that in our 2018 with the domain—and they are putting
survey, fewer than half of respondents (48%) these solutions into action.
said they had governance structures in place
concerning information security threats.6

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 2023 Mid-market technology trends report |
 Convergence topples industry walls and powers growth ambitions for midsize private companies

The report also

highlights a shift
to skills-based
organizations, with
forward-thinking
organizations
altering their focus
from jobs and job
titles to acquiring
specific skills.7
In our technology survey, almost a quarter
of the respondents report the use of skill-
based hiring versus degree-based hiring.
Talent strategy: A tech workforce revolution
Roughly the same share says they are using
talent and skills from ecosystem partners
Addressing the workforce crunch for jobs that require skills such as engineering and
and/or service providers as their approach
data science is another evergreen topic among private company technology executives.
to develop tech talent.
Compared to the prior 12 months, almost half of the respondents surveyed (49%)
indicate no change in their ability to retain their top technology talent. Over a quarter of
“It’s critical for leaders to convene a broad
respondents report that it has been easier to retain key technology talent compared to the
ecosystem of partners who can help
past 12 months.
navigate the speed of change and the
complexity that comes with converging
Nonetheless, one-third of businesses at the lower range of our ROI measurement for tech
technologies and industries,” says Ryan
investments say they are facing more difficulties in retaining their top tech talent compared
Jones, Deloitte Consulting Private Equity
to 12 months ago.
leader, and Former Technology Sector leader.

There is additional evidence that the nature of jobs is changing. Deloitte’s 2023 Global Human
While respondents in our survey express
Capital Trends report describes an increase in the share of workers who say they already have
an interest in acquiring skills through
switched, or are likely to switch, employment models throughout their careers—from full-
external means, they appear to be pulling
time jobs to opportunities like freelancing and gig work.
back dramatically in their own efforts to
impart these skills to their teams. In our
2018 survey, 61% of respondents said that
reskilling employees to realize the greatest
benefit from technology was the top focus
area for maintaining their workforce through
technology. This year, just 19% say upskilling
or retraining existing talent is their primary
method to developing technology talent.

According to Jones: “Rapidly emerging

technology and changing job roles have
created a reliance on tech providers that
have deep engineering skills.”
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2023 Mid-market technology trends report | Convergence topples industry walls and powers growth ambitions for midsize private companies

Section 2: Industry convergence:

Opportunities for growth
and transformation

Crossing traditional business boundaries the toughest threats. When asked which industries outside
of their industry would pose a threat to their current position in
With new technologies disrupting business models at every turn, the marketplace in the near future, respondents across most
convergence across industries seems inevitable. Whether it’s industries said those threats would arise from companies within
investing in current capabilities, acquiring a leading-edge startup, their own sectors.
or finding new uses for existing assets, private and family-owned
companies have an array of approaches at their disposal to seek For instance, among respondents from consumer products
new opportunities as industry and sector lines converge.8 companies, financial services firms, and TMT companies,
respondents reported that adjacent businesses within those
Perceptions about the competition make up just one part of the industries pose the biggest threats in the near future.
convergence story: In our survey, half of the total respondents
(51%) see a high or very high threat to their current position in the Nonetheless, respondents are overwhelmingly confident that they
marketplace from businesses outside of their sector. have the tools in place to move into adjacent industries. More than
two-thirds of respondents (70%) believe their business has an asset
The reality may be slightly different in practice, however. An that could potentially be monetized outside of their sector. Among
industry-by-industry view shows that as companies simultaneously respondents reporting the highest ROI on their tech investments,
defend their turf, they see companies within the same sectors as the share jumps to 81% with an asset ready for an adjacent market.

70% of respondents 1/3 of respondents

believe their business has report spending more
70% an asset that could be
monetized outside
than 5% of revenue on
growth outside their
33%
of their sector industry or sector
Key
44% of respondents
findings
55% of respondents

44% 55%
say boards should
say boards should focus
concentrate on industry
on cybersecurity
convergence

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 2023 Mid-market technology trends report |
 Convergence topples industry walls and powers growth ambitions for midsize private companies

Manifesting ambitions

As we noted in our analysis of tech investment priorities, technology

spending often telegraphs strategic plans and how companies intend
to sustain their growth ambitions: Almost a third of respondents
(32%) report their companies are spending more than 5% of their
revenue on growth outside of their industry or sector. To put that
into perspective, companies with $1 billion in annual revenue report
spending a minimum of $50 million to pursue growth plans outside
of their existing area of business.

As companies focus on ethical and regulatory considerations of

rapidly evolving technologies, this year’s responses suggest where
boards should be prioritizing their energy and time: More than half
of respondents (55%) say boards should focus on cybersecurity and
regulatory matters, while 44% of respondents say they want their
board members to concentrate on industry convergence.9

“Tech is the unifying thread as

the lines between humans and
machines, traditional industries and
their competitors, and customers
and their suppliers continue to
converge," says Brett Davis, principal,
Deloitte Consulting LLP and Global
Assets leader and general manager
of Converge by Deloitte. “That a
significant share of companies are
devoting resources to exploring
growth in industries beyond their
own tells us that employees, leaders,
and boards see opportunity and
value through convergence.”

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2023 Mid-market technology trends report | Convergence topples industry walls and powers growth ambitions for midsize private companies

Where do sectors perceive the biggest threat to their current

position in the marketplace?
Boundaries between sectors are increasingly diminishing, with a majority of mid-
market businesses having their footprints in a different sector within their industry.

These blurred boundaries have led mid-market companies to perceive notable threats from
sectors within the same industry. This speaks to a rise in sector convergence. The exception is
industrial products and construction, which sees the biggest threat from outside its industry—
from technology.

Sector perceived as
Sector
the highest threat

1 Automotive 71% Consumer Products

2 Banking & Capital Markets 48% Insurance

3 Consumer Products 60% Retail, Wholesale & Distribution

4 Energy & Chemicals 57% Power, Utilities & Renewables

5 Health Care 55% Life Sciences

Industrial Products &

6 Construction 40% Technology

7 Insurance 56% Banking & Capital Markets

8 Life Sciences 38% Health Care

9 Mining & Metals 100% Power, Utilities & Renewables

Retail, Wholesale &

10 Distribution
33% Consumer Products

Telecommunications, Media &

11 Technology 75% Entertainment
Telecommunications,
12 Media & Entertainment
24% Technology

Transportation, Hospitality
13 & Services
43% Retail, Wholesale & Distribution

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 2023 Mid-market technology trends report |
 Convergence topples industry walls and powers growth ambitions for midsize private companies

A special message
Industry convergence: Practical
outcomes and responsible growth
By Brett Davis, US Consulting Chief Innovation Officer and
General Manager of Converge by Deloitte

The world is being reshaped and redefined by convergence. helped the company build and launch a digital platform, and
The lines between traditional industries, competitors and even in a highly regulated industry covering multiple jurisdictions
collaborators, and customers and suppliers are becoming and regulations, Deloitte was able to help the client launch the
increasingly blurred. Platforms, partnerships, and products are platform across select markets in just 11 months.
no longer the domain of single industries or adjacent industries.
All of these elements are converging—creating a profound We have also seen an emerging trend in which data assets have
transformation that’s creating new efficiencies, streamlined value across different use cases in adjacent sectors or markets.
processes, and novel opportunities for companies to grow. In the mid-market technology survey, 70% of respondents report
having an asset that can be leveraged for value outside of their
This year’s mid-market technology survey highlights how industry organizations. That’s a remarkable data point, owing to the rapidly
convergence is accelerating—as companies activate cloud, AI, eroding boundaries and barriers for creating cross-industry
5G, mobile, and other technologies that enable movement into solutions. Conversely, the motivations for creating them have
adjacent sectors or transform existing services in new ways. In increased—as companies realize how the data they produce
fact, more than two-thirds of respondents see a high or very high can be repackaged, used to create new value in other markets,
threat to their position in the marketplace from outside of their transformed and aggregated to deliver goods and services in
sector. And nearly a third of businesses are spending more than personalized ways across their supply chains, or even used by
5% of their revenue on growth outside of their industry/sector. other industries for additional insights.

These trends are emerging in multiple industries. In the consumer industry, companies can use third-party and
primary data to create more personalized experiences for
For instance, tech and consumer companies are offering health consumers. With this enhanced capability comes additional
care services through new digital experiences. Conversely, health responsibility in managing that data. Think of a retailer
care organizations are using consumer technologies to reach entering the health care space by tapping into consumer
and support patients in new ways. In one example, we helped a information through its network of physical stores and digital
medical school engage potential clinical trial participants directly platforms. There's an incredible opportunity to personalize care,
via a digital platform, allowing patients to participate remotely, create brand loyalty, and deliver outcomes for someone on a
and helping investigators and other stakeholders collaborate wellness journey.
more easily in the research process. Prior to these types of
innovations, a study participant would have had to be identified
and engaged at a medical center.
Notwithstanding, there are important
There is also a shift in technology buying behavior among ethical, regulatory, and security
customers who want to enter into new industries—they implications to be considered when
increasingly expect pre-built tech solutions and a trusted partner
to help them enter these markets and industries.
entering new adjacent industries.

This trend is evident in banking, where nontraditional financial

services providers are increasingly offering digital banking The lines between traditional industries and their competitors will
services to their existing set of customers and bundling these continue to converge—enabled and accelerated by technology.
products with nonfinancial service offerings. A recent example of It will be an exciting decade ahead as industries are reinvented
this is Deloitte’s engagement with a multinational consumer client because of this convergence.
that wanted to offer services in multiple global markets. We

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2023 Mid-market technology trends report | Convergence topples industry walls and powers growth ambitions for midsize private companies

Section 3: AI adoption
and implementation

For private companies trying to determine how to turn the hype around AI into a Where are mid-market
business differentiator, one place to look for perspective is the financial services industry.
For transactions such as billing, payments, or collections, the opportunities include companies on the AI
generative AI-powered “agents” that could deliver tailored content to customers, as well adoption curve?
as conversational Q&A using models trained on enterprise data to support new employees
through the procedures.10

There are also risks when it comes to exposure of sensitive financial data using AI tools. A
41% report
report by the World Economic Forum and Deloitte argues that by being an AI early adopter,
AI could expose the financial system to new hazards by triggering failures that damage brand exploring AI
equity and customer trust, trigger additional regulatory scrutiny, and alienate employees.

Companies in other industries may not be far behind in having to consider such issues—if
they aren’t already doing so. Nearly all respondents in our survey report they are on the AI
adoption curve, with 41% of respondents saying they were exploring AI, 30% saying they were
30% report
piloting AI solutions, and one-quarter of respondents saying they have active AI applications. piloting AI
solutions
Among industries, technology, media, and telecommunications
(TMT) and life sciences and health care (LSHC) are the most
25% report
likely businesses to have active AI solutions, while companies
in financial services and insurance (FSI) are the least likely to be having active AI
active in this area. applications

% of business with active AI solutions by industry

Technology, Media &
Telecommunications (TMT) 33%
Life Sciences & Health Care
(LS&HC) 32%
Consumer 20%
Energy, Resources &
Industrials (ER&I) 20%
Financial Services (FSI) 13%
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 2023 Mid-market technology trends report |
 Convergence topples industry walls and powers growth ambitions for midsize private companies

“There’s an infinite number

of AI use cases that
can provide value to an
organization; however,
to truly scale, companies
should start their journey
by focusing on a single
use case that’s promoted
all the way to production.
This can provide the
foundation for future AI-led AI and talent

innovation throughout the While there's been no measurable change in businesses' overall ability to hire technology
organization.” talent, respondents are finding it difficult to build a workforce with AI expertise.

Deborshi Dutt, AI Strategic Growth

Nearly one-third from financial services companies report that AI ethics officers are in short
offering leader, Deloitte Consulting LLP
supply, which tracks with an overall labor-market squeeze and evolving regulatory pressures
that are driving demand for compliance officers.

As viewed through our ROI measurement, it

appears that businesses that have achieved
the highest success in their tech objectives
and tech ROI are more likely to have active
AI solutions in a business area. And it
turns out, AI appears to be helping these
businesses achieve an array of benefits.

40% 37% 35%

report difficulty report difficulty report difficulty
attracting AI attracting finding data and deep-
strategists engineering talent learning scientists
About nine out of ten respondents (87%)
who state their companies have active AI What did respondents say are the top worker challenges?
solutions report that those solutions are
currently generating both revenue and
saving costs.

In the past year, respondents with active AI

solutions say they’ve focused their efforts
on harnessing data, modernizing legacy
systems, and improving cybersecurity.
What’s more, respondents from companies
with active AI solutions are more likely 40% 37%
to be very confident in their companies’ report employee report ethical
cybersecurity capabilities. perception of AI use of AI

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2023 Mid-market technology trends report | Convergence topples industry walls and powers growth ambitions for midsize private companies

Challenges to AI adoption
We asked respondents to identify the challenges their companies are facing related to AI.
Leaders who responded to our survey report different concerns depending on their industry—
which may reflect how companies are struggling to align culture, ethics, and strategy in their AI
adoption journey.

AI concerns related to talent

Employee perception of AI ER&I 56%

Internal employee resistance to advanced AI ER&I 38%
Consumer/
Lack of available talent
LSHC
33%

AI concerns related to trust

Ethical use of AI ER&I 42%

Customer concerns or perceptions of AI TMT 38%

AI concerns related to business strategy

Lack of business engagement LSHC 36%

Lack of an innovative culture to take chances ER&I/LSHC 30%
Lack of enterprise strategy around AI focus TMT 29%
No real business and tech alignment around AI FSI 29%
Key: ER&I—Energy, Resources & Industrials FSI—Financial Services LSHC—Life Sciences & Health Care TMT—Technology, Media & Telecommunications

Note: These industries represent the top responses for each of the options for this question.

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 2023 Mid-market technology trends report |
 Convergence topples industry walls and powers growth ambitions for midsize private companies

Section 4: Executable strategies

for consideration

A look ahead

The top three overall technology objectives from the past year (improving cybersecurity, enabling business growth, and optimizing business
operations) remain the top three technology goals in the coming year as well. Companies in life sciences and health care represent an outlier
on this question, however. They report that recruiting, retaining, and developing diverse technology talent is their top tech objective in the
coming year. Deloitte’s research on health care executives’ views on health equity highlights how diversity, equity, and inclusion are being
considered in the product and service development lifecycle during research and development, manufacturing, and commercial efforts to
meet the needs of diverse patient populations.11

Regarding cybersecurity efforts in the coming year, respondents from the C-suite
appear more motivated by the need to build cyber resilience than their non-executive
colleagues. Nearly a quarter (23%) of executives view it as a top concern, versus 15% of
leaders outside the C-suite.
But a clear technology leader among companies that intend to spend more than 5% on technology next year is AI. It’s worth noting that
businesses in the highly regulated financial services industry report being less likely than all other industries in our survey to invest in AI.

Governance aspirations

Respondents want their boards focused on cybersecurity and regulatory compliance more than any other topic over the next year.
Respondents also want their boards to focus on growth-oriented areas: For both industry convergence and the potential risk and opportunity
with AI, 44% of respondents say boards should prioritize these topics.

Board priorities by industry

What will rise to the top of industry board agendas in the coming year? Respondents said:

Life sciences
Consumer Energy
& health care
Cybersecurity, regulatory
Diversity, equity, and
Emerging technology compliance, and the potential
inclusion for tech teams
risk and opportunity with AI

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2023 Mid-market technology trends report | Convergence topples industry walls and powers growth ambitions for midsize private companies

A special message
CISO perspective: Adapting cyber
priorities to evolving threats, new
risks, and organizational changes
Editor’s note: This is a follow-up to a conversation from our 2019 mid-market technology report to examine the
key challenges facing cybersecurity leaders.

Lamont Orange
CISO, Netskope

Cybersecurity veteran Lamont Orange looking for the “unicorn” candidate, stacks, and they don’t know generally
believes it’s more critical than ever that he suggests companies adjust their what assets their workforce and team
information security leaders and business expectations and consider nontraditional members need to access,” Orange says.
executives operate in lockstep. Orange is candidates. Organizations are starting ”But not everything related to access is
the chief information security officer at to look at ways to grow more talent a binary ‘allow or block’ decision. A zero-
Santa Clara, California-based Netskope. internally, even if candidates don’t have trust posture means that access adapts
In its recent cloud and threat report, the a traditional security background. Many on an ongoing basis based on a number
company reported that more than 400 other departments, such as finance, of factors, including the users themselves,
distinct cloud applications had delivered marketing, or technical training, include the devices they’re operating, the apps
malware in 2022—nearly triple the amount skill sets that are transferable or can be they’re accessing, the threats that are
from the previous year.12 These and a vast developed for security expertise. Orange present, and the context with which
array of other new security threats13 are also recommends partnering with schools they’re attempting to access data.”
arising as organizations emerge from a on internships and even helping academia
dramatic reconfiguration of the modern develop curriculum and considering For instance, in our survey, 97% of
workforce. product certifications versus traditional respondents report they are exploring,
degree programs. piloting, or actively using AI. Yet a
“Technology is moving so quickly, there quarter of respondents say the lack of an
is no time to rest on what we thought we “Not every company can go through the enterprise-wide strategy is their biggest
knew,” says Orange. path of reskilling as quickly as technology impediment to AI adoption.
is changing,” Orange says. “What we
In our 2019 report, Orange discussed how can do is inform the programs that are With so many new potential threats,
cyber leaders were positioning themselves producing the next generation.” Orange says he worries that security
to play more active roles across different teams simply aren’t nimble enough. “We
organizational functions.14 Since then, the Securing assets and access get into analysis paralysis, looking for
talent picture has shifted dramatically. perfect, and this is another disruption for
Executives are struggling to fill technical As indicated in this year’s mid-market tech our posture and profession, so we need to
roles such as cybersecurity specialists, survey, many companies have developed become more efficient and nimble within
and the talent drought likely has larger assets they can monetize outside their our operations,” Orange says.
implications for the threat environment.15 organizations. Industry convergence is a
hot trend, but Orange says cyber business A bright spot, and a challenge, according
“Security organizations are experiencing leaders should think about the right way to to Orange: More cyber security leaders
a talent exodus, and now we have proceed. They should identify which assets have influence within the C-suite. “We are
to understand how to rebuild those will be monetized and ensure proper gaining a lot more responsibility,” he says.
practices,” Orange says. “That directly protocols for handling data. Orange says “Many of us are speaking to the board
affects an organization’s security posture.” a “zero-trust” posture—in which no level more often than we were before. We have
of access to data is inherently trusted and the proverbial seat at the table.”
One way Orange believes companies can context governs access decisions—is key
replenish these ranks is by examining in these circumstances. “Many companies
the job description itself. Instead of haven’t modernized their technology

14
 2023 Mid-market technology trends report |
 Convergence topples industry walls and powers growth ambitions for midsize private companies

Conclusion: Private companies

embrace hyper-innovation

It’s been exactly 25 years since the title “chief innovation officer” emerged in a landmark
book on innovation practices. In this year’s report on private and family-owned companies,
the chief innovation officer is the most surveyed member of the C-suite. True to the title,
today’s innovation chiefs are working with organizations that are capturing new value in a
rapidly changing marketplace. These companies are developing assets meant to help them
create new opportunities beyond their walls. They are capitalizing on the excitement—while
acknowledging some of the unknown territory—of AI capabilities.16

What else is critical for expansion? Trust, for one:

Almost half of the respondents in our survey say

'improved customer trust and confidence' is
something they need to improve upon within their
cyber defense efforts.
Talent is also prominent: This year’s respondents tell us they plan to tap into their ecosystem
partners as needed to build their skills bench. And the fact that a majority of respondents
say they are engaging with hyperscale tech companies to achieve their technology objectives
suggests that the middle market sees value in strong external partnerships.

Convergence could offer a significant growth opportunity for private and midsize companies.
But there’s complexity that comes with that. As CIOs, CFOs, and other executives who are
driving technology priorities for their organizations prepare for this next chapter, they should
consider the following items:

1 Ensuring their organizations have a solid digital foundation with data

quality that’s sufficient to enable technologies such as AI

2 Developing plans to manage the internal ethical challenges as they relate

to technologies such as AI, as well as the external ethical complexities that
arise as they pursue growth in sectors within and beyond their industries

3 Increasing their ability to have regulatory compliance at the top of the

board and leadership agenda, especially as industry lines continue to blur

As private and family-owned firms continue to make technology investments in an era of

hyper-innovation, we will continue to share insights about their progress.

15
2023 Mid-market technology trends report | Convergence topples industry walls and powers growth ambitions for midsize private companies

Get in touch

Wolfe Tone
Vice Chair
US and Global Deloitte
A special
Private Leader
[email protected]
thank you
+1 312 486 1909
We would like to
extend a special thank
you to Chris Jackson,
retiring Deloitte
Private Technology
Contributors leader, who established the Mid-Market
Technology Trends Report in 2011—and has
Chris Jackson subsequently led the report each year—to
Deloitte Private Technology leader
Deloitte Consulting LLP
provide executives with insights and trends for
the middle market. With nearly 30 years of
Ryan Jones experience in strategy and emerging
Deloitte Consulting Private Equity leader, and technology, Chris' depth of knowledge has
Former Technology Sector leader
Deloitte Consulting LLP
helped drive value for mid-sized and
growth-oriented companies. We sincerely
Khalid Kark appreciate Chris' contributions, and we wish
CIO Research Director him all the best in retirement.
Deloitte LLP

Deborshi Dutt
Principal
Deloitte Consulting LLP

Brett Davis
US Consulting Chief Innovation Officer and
General Manager of Converge by Deloitte
Deloitte Consulting LLP

16
Endnotes
1. Aspexit, "Robotics in the field: Where are we and where are we going?", June 30, 2022.

2. Emerging Information and Technology Conference (EITC), New agriculture and ICT convergence, accessed October 2023.

3. Karen Pollitz et al., "Claims denials and appeals in ACA marketplace plans in 2021", February 9, 2023.

4. Michael Corridore, "Into the metaverse: A promising future for energy, industrials and resources", September 2022.

5. Emily Mossburg et al., 2023 Global Future of Cyber Survey, 2022.

6. Roger Nanney et al., Technology in the mid-market—Embracing disruption, Deloitte, August 2018.

7. Deloitte Insights, 2023 Global Human Capital Trends, March 2023.

8. Mike DeLone et al., "The future of life sciences will be convergence", January 2021.

9. Michael D. Shear et al., "Pressured by Biden, A.I. companies agree to guardrails on new tools", July 21, 2023.

10. Gina Schaefer et al., "The implications of generative AI in Finance", July 2023.

11. Drew Wilkins, "The case for diversity in delivering equitable health outcomes", Deloitte, July 17, 2023.

12. Netscope Threat Labs, Cloud and threat report, 2023.

13. Mossburg et al., 2023 Global Future of Cyber Security, 2022.

14. Jason Downing et al., Technology in the mid-market—Seizing opportunity, Deloitte, September 2019.

15. David Jarvis, "Tech talent is still hard to find, despite layoffs in the sector", Deloitte Insights, August 14, 2023.

16. Eileen Jacob, "Trends and outlooks: What it takes to be a Chief Innovation Officer", Berkeley MBA Blog, October 1, 2019.

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