A Flexible Mid-Market Is A Strong Mid-Market: A Look Into 2023 And Beyond

A Flexible Mid-Market Is A Strong Mid-Market: A Look Into 2023 And Beyond

With the turn of the year, the global economic outlook continues to provide uncertainty, as capital markets and governments take actions that seem to be motivated by the threat or reality of a recession. These behaviours reach all the way down to the mid-market firms, who share the same uncertain economic ecosystem as their enterprise counterparts. However, mid-market focused vendors have unique innate characteristics that provide them with pillars of resiliency. These range from a dedicated mission, agility around changing regulations and economic headwinds, and the ability for lean operations. Overall, these add up to an advantage when it comes to customer type and need.

With these strengths, mid-market vendor CEOs and board members can take a number of positive factors into the boardroom with them in 2023. A few of these are:

• Digitization is still a driver. While the COVID-19 pandemic definitively made the use case for a wide range of digital solutions, the acceleration of technology integration in the wider working world continues to be a strong push. This is evidenced by firms looking to move away from paper and Excel methods, as well as the potential cost that can be saved by turning to software. Regardless of organizations’ individual motivations, pressure to digitize will continue to be a significant driver of mid-market vendor success. For additional insights see Verdantix Market Insight: Winning Mid-Market Strategies For EHS Software Vendors.

• ESG pressure is trickling down. Opening up LinkedIn today, you will find a feed full of ESG-related articles and references to the alphabet soup of related organizations, coupled with information about how the SEC and other international regulatory bodies are planning to increase pressure around disclosures. This regulation is currently reserved for larger firms, but is also catching the eyes of mid-market firms who are keen planners. Mid-market vendors can take advantage of this changing tide; they can – and should – opt to incorporate the proper foundations for reporting. This shift in firm conduct will eventually be fuelled by a push from investor and stakeholder corners, as the issues of future funds and transparency of sustainability initiatives become more prominent.

• The mid-market’s inherent size will provide flexibility around transactions and company resilience. Vendors who are able to bundle pricing and modules for firms who are new to the digital ecosystem, or offer upgrades that provide overarching coverage can find niche spots that prove profitable. The market will continue to see a positive trend of acquisitions and mergers; while potentially not as large as at the enterprise stage, the continued pace of M&A alongside targeted investments by financial institutions will provide flexibility for agile vendors.

With these factors and more, Verdantix expects the mid-market to remain resilient, and see a year-over-year CAGR of 12.8% between 2022 and 2027. While this is subject to minute changes driven by governmental measures meant to stop inflation and recession fears, the mid-market resides in a strong position with good foundations that will help it exit any recession with vigorous growth.