The UK’s mid-market IT conundrum

Dominic Ball at Thinc argues that AI adoption isn’t failing because of a lack of enthusiasm; it’s failing because organisations haven’t learned how to translate vision into execution at board level

 

Directors of the UK’s mid-market firms are steering the productivity powerhouses this country needs for growth. They represent just 0.5% of UK companies but contribute a staggering 30% of economic output, and account for 26% of employment.

 

New research suggests that their crucial productivity lead is at risk, threatened by a perfect storm of skills shortages, budget constraints, and internal disconnects on technology strategy.

 

 

Mid-market’s revolving door of IT

A key challenge continues to be the short tenure of top IT decision-makers in the mid-market. Unlike larger corporations, IT leaders in mid-market organisations on average last just 61 months - roughly half the C-suite tenure at FTSE 100 companies.

 

This problem is compounded by the ageing core systems, which are often deemed ‘good enough’ by cash-strapped boards. Often, mid-market IT systems have been in place longer than those managing them. This dynamic stores up unaddressed technical debt due to a lack of context for the original IT requirement. This lack of access to modern IT creates significant long-term risk for the business.

 

 

The IT strategy disconnect

When faced with increased IT demand, the board response varies. Smaller organisations gravitate towards solving problems with people, extending working hours for IT and non-IT teams - risking burnout and missing long-term automation opportunities. Size matters in decision making, and larger mid-size organisations are more likely to have the funds to invest in modern IT.

 

More striking is the disconnect between IT and business leaders. IT leaders see automation and AI as the priority for boosting productivity. In contrast, non-IT business leaders favour upgrading existing technology or implementing brand-new solutions. This misalignment is further complicated by role-specific views: 

• CEOs are the most likely to favour fully outsourcing IT
• CFOs are more likely to favour simply "extending working hours" to cope with demand

These differing viewpoints and internal disagreements are a surefire way to confuse IT strategy and kill productivity. While 48% of CEOs recognise budget constraints as the cause for slow IT decisions, CTOs, who are likely to be responsible for technical recruitment, cite the difficulty in finding qualified internal talent and want to look externally. Ultimately, external recruitment will require more budget, a classic case of ‘Catch 22’.

 

 

The path forward: integration and automation

There is broad agreement on the potential of Artificial Intelligence and automation to enhance productivity. Almost two-thirds of mid-market decision makers expect AI to deliver productivity gains, with 54% of business leaders calling it a "game-changer". However, the benefits are only realised when AI is fully integrated into working processes. Too often, there are islands of automation, with AI being used in isolation by small pockets of the workforce only.

 

For mid-market firms, the top priority when evaluating core systems like ERP, very likely a core source for AI data, is seamless data integration with other software. This is the key to automating manual processes and unlocking real productivity gains. To navigate these complex decisions, firms increasingly turn to external expertise. When they do, they prioritise stronger strategic alignment and deep technical knowledge over simple cost savings.

 

 

Trustworthy vendor-independence

This is good news for consultants who can truly demonstrate value. Independent IT advisors are valued for their flexibility, adaptability, and the ability to build stronger partnerships. This trust is so significant that it allows 37% of mid-market buyers to bypass time-consuming formal RFP processes, potentially shortening project deployment times and gaining a competitive edge.

 

For mid-market boards, the message is clear. The path to securing your productivity leadership involves mastering AI and bridging the internal advice gap with the right external expertise. Leveraging trusted, independent expertise can accelerate the IT integration and process automation needed to power future growth in tougher times. 

 

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Dominic Ball is the Managing Director of Thinc

 

Main image courtesy of iStockPhoto.com and laflor