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A new report by Capital One and Morning Consult explored how middle market companies are investing in 19 strategic and emerging business priorities now and over the next 1 to 3 years to help meet business goals.

Digital transformation is guiding investment strategies for the middle market in the near and long term. Today, companies are prioritizing investment in cybersecurity (30%), data/data analytics (28%), ecommerce (26%), artificial intelligence (24%), and cloud migration (24%).

While these focus areas aren’t necessarily surprising, what does stand out is the sheer volume of investment: At least a quarter of middle market leaders plan to invest upwards of half a million dollars in these areas over the next one to three years.

Graph. Middle Market Priority Investment Areas. More than a quarter of businesses are prioritizing employee experience, cybersecurity, data/data analytics, and ecommerce. Nearly a quarter of businesses are prioritizing AI, customer experience, cloud migration, and upskilling the current workforce.

The challenge is that while nearly all leaders said their workforces had the skills and resources to reap the rewards of these new technologies and processes, one-fifth reported that technology integration is the top challenge that keeps them up at night, quickly followed by implementing and reinforcing COVID-19 safety measures (14%), employee recruitment (11%), and employee retention (10%). By comparison, just a handful of leaders pointed to challenges like cash flow, inflation, cost of labor, and taxes.

In order to drive ROI from their technology investments, the middle market needs to prepare for and overcome this looming skills gap. The good news is the middle market is taking steps to address workforce needs to help their business grow. They’re diversifying talent pipelines, removing structural and cultural barriers to entry, and upskilling their current workforce. Nearly a quarter of financial decision-makers anticipated upskilling their workforce will be among the top drivers of ROI in the next 6 months (24%), and more than a quarter of leaders anticipated upskilling workers will drive ROI in the next 1 to 3 years (27%).

The research took into account insight from 400 financial decision-makers from companies with revenues of $20 million to $500 million.

Read the full report by Capitol One and Morning Consult.

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