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Towards the end of 2024, there was one word that dominated conversations more than any other. Growth. It’s an ambition that has featured as frequently in boardroom discussions across the country as it has done in the new UK Cabinet Office. It comes as the economy has found itself trapped in a cycle of marginal gains, matched by similar losses, and collectively there’s now a deep ambition to see the trend reversed and the UK’s economic course corrected.
The UK’s scale-ups are taking on their fair share of the burden too. Emerging from our high-growth industries, like life sciences or technology, these organizations are intent on accelerating innovation with skilled talent. The likes of Faith in Nature and Touchlight Genetics have become proof points for their industry, and so as businesses seek to replicate this success, it’s no surprise that, according to SAP’s recent research, as many as 86% of scale-ups have indicated growth is a priority for the year ahead.
But connecting aspiration to reality is no straightforward task. They need to be digitally equipped to navigate a plethora of internal and external business challenges, like supply chain disruption or productivity decline, and be ready to embrace the benefits of emerging AI tools. This will not just aid their own growth journey but will support the wider UK economy as well.
Head of New Business, Corporate, SAP UKI.
In the way of progress
Just as with the country’s largest enterprises, the UK’s high-growth organizations acutely feel the effects of global economic disruption, with supply chain challenges, skills shortages and inflation all impacting growth. While these pressure points are not necessarily new, as businesses have faced a notable rise in costs, battle for talent, and trade disruption since the onset of the pandemic, they have become exacerbated in the last 12 months by cost-of-living and geopolitical crises.
Globalization, often the fuel for growth, has been rocked by conflict in the Red Sea, trade tariffs, slow exports and high transport costs. When asked, 15% of the UK’s scale-ups ranked supply chain weaknesses and disruption as their most significant barrier to growth. This was followed by a lack of talent and skills (13%), siloed operations (13%) and low-quality data (10%).
With UK productivity flatlining, and behind the economies of its peers, like France and Germany, the growth agenda is at real risk of never getting off the ground. The UK’s scale-ups need to be productive and operate efficiently, unencumbered by legacy processes and backed by the right IT infrastructure, grounded in AI.
Unlocking the freedom to scale
To begin with, the UK’s high-growth leaders need to realize that AI transformation can be tailored to their needs. Understandably, the conversation can feel alienating when a quick search will find the world’s largest enterprises are steering investment or driving deployments. It’s a consequence of the ‘mass hype’ that has emerged as applications like Generative AI have directed VC investment, product launches and the ‘future of work’ debate.
But the hype is cooling and AI with real utility has emerged as critical to future-proofing organizations, of all sizes and growth ambitions, and addressing the biggest challenges to resiliency and scale. For instance, the UK’s high-growth businesses have outlined the development of skills and talent (40%), automation (39%) and improved supplier and partner networks (38%), as critical to growth plans, and AI can directly lend itself to these ambitions.
As a starting point, AI can augment roles to relieve employees of routine or administrative tasks so resources can be allocated effectively and to more pressing or sensitive work. This means that talent is not under-utilized in roles that do not influence growth and can be deployed across the business to offset skills shortages and drive productivity.
But where AI is arguably most valuable is in unblocking siloed data to drive high-quality business insights across functions like supplier and partner relations. Over the last 12 months, AI co-pilots have emerged as a strategic business partner, providing comprehensive and real-time insights from across different units to allow decisions to be taken with the right context in mind.
Backed with the right, and reliable information, the UK’s high-growth organizations can confidently navigate the most pressing challenges to scale and productivity. For instance, in the context of further geopolitical disruption, businesses can use AI to strengthen their grip on their supply chains; delivering smart contingency plans, increasing their supplier options to better suit their needs, and improving visibility into the availability of their goods and services.
In a similar context, AI can also automate and adjust financial insights based on new trade tariffs and international compliance or regulatory requirements. On the path to growth, this helps scale-ups ensure they are not caught out by unexpected disruption and costs. In turn, this ensures a constant level of service availability, boosting customer experience and providing a competitive advantage.
Powering the ‘Growth Agenda’
As the UK has its sights set on the growth agenda, it can appear a near insurmountable task given current levels of productivity, fluctuating business output and a challenging global operating environment. But putting too much energy into these concerns alone can stifle progress, and so the UK’s high-growth sector needs to focus on the variables it can control. These organizations need to consider how they can operate efficiently and best utilize resources in the face of skills shortages and supply chain disruptions to unlock growth.
As many have indicated that barriers to growth revolve around data availability, weak supply chains and talent acquisition, they need the right digital infrastructure to offset these pressure points. This begins with AI adoption, not to just buy into the hype, but to drive real value throughout the business with improved visibility, decision making and resource allocation. That’s how they’ll scale faster, and more sustainably, and boost the UK economy in turn.
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