SMEs and the Evolution of Business Technology

Twenty-five years ago, small and medium-sized enterprises (SMEs) had arrived at an uncomfortable realisation: if they wanted to stay competitive, they needed some form of IT capability. Few organisations actively wanted an IT department. What they wanted was speed, automation, and the ability to operate more efficiently. Technology teams were simply the means to that end.

The solutions built in this era would be considered low quality by today’s standards. They were often fragile, poorly documented, and tightly coupled to the people who created them. Yet they possessed one critical advantage: they were tailored precisely to the needs of the organisation. These systems reflected the company’s workflows, language, and priorities, because they were built inside the business, for the business.

The SaaS Shift

As the internet began to connect organisations and standardise business processes, a new model emerged: Software as a Service (SaaS).

SaaS providers identified common needs shared across many organisations and built products designed to serve them all. From accounting and CRM to HR and project management, companies could now access powerful capabilities without hiring developers or maintaining infrastructure.

For SMEs, this was transformative. They could adopt mature tooling at a predictable cost and deploy it quickly. However, this convenience came with a tradeoff: organisations were often required to adapt their processes to match the workflows embedded in the software. Instead of software reflecting the business, the business increasingly reflected the software.

The Hidden Cost of Convenience

Over time, the SaaS model introduced a new operational reality. Businesses accumulated a growing stack of subscriptions, each solving a specific problem: communication, task tracking, accounting, document management, CRM, analytics, and more.

What began as cost-saving efficiency evolved into an expanding set of monthly and annual charges. Success and growth now carry incremental costs in the form of per-user licensing. Each new hire brings productivity — and another set of seat fees.

This model remains effective, but it has shifted technology from a capital investment into an ever-growing operational expense.

Enter AI: A New Option for SMEs

The AI-driven transformation currently reshaping software engineering may signal another major shift.

SMEs are gaining access to a new possibility: bespoke business operating systems tailored specifically to how they work. These systems can be created rapidly using AI-assisted development, low-code platforms, or specialist agencies — often at a fraction of the historical cost and with minimal ongoing licensing fees.

Unlike traditional custom software, the barrier to entry is falling fast. AI tools can accelerate development, automate integration, and enable continuous evolution of systems as business needs change.

We are still in the early stages of this transition. However, as AI capabilities mature and market opportunities become clearer, the SaaS model — particularly for low-value, low-complexity tooling — may face increasing pressure.

What Comes Next

Technology adoption in SMEs has always followed a simple principle: businesses choose the tools that best balance cost, capability, and competitive advantage.

We may be approaching a new equilibrium where organisations once again shape their software to fit their operations — but this time with modern reliability, scalability, and usability.

If that shift accelerates, the next decade could redefine not only how SMEs use technology, but how software itself is bought, built, and delivered.