UK mid-market AI pilots stall despite high confidence

Klarus has published research showing that most mid-market companies in the UK and Ireland have deployed artificial intelligence, but many projects remain stuck at the pilot stage. The survey points to a gap between confidence in AI plans and the ability to roll them out more widely.

The study of 500 senior decision-makers found that 73% of mid-market businesses had partially or fully deployed AI. Yet only 10% of respondents who had explored AI said they had scaled all their initiatives beyond the pilot stage, leaving 90% with some projects still in early phases or stalled.

The findings highlight the scale of the issue for a part of the economy with significant weight. Klarus cited NatWest figures showing that mid-market companies account for 30% of UK Gross Value Added despite representing just 0.5% of companies.

A sharp contrast emerged between confidence and delivery. On average, 91% of companies said they were confident in their internal expertise across all areas of AI deployment, yet 48% cited a lack of AI expertise as a main reason projects failed to move beyond the pilot stage.

That tension is also shaping spending and planning priorities. Some 39% of respondents said building internal expertise was among their top AI priorities over the next 12 months.

Data and governance

The research found that weak data foundations are another common obstacle. Among businesses that had piloted or deployed AI, 83% reported poor data quality, and 69% said it was preventing or delaying AI activity.

Governance concerns ranked alongside skills shortages as a leading reason for stalled work. Issues around governance, ethics, security and privacy were cited by 48% of respondents, while 59% said they had yet to establish a comprehensive AI governance framework.

When AI projects met expectations, respondents pointed to the same areas as the main success factors. Strong data quality was named critical by 59%, followed by effective governance, security, privacy and ethical controls at 54%.

The survey suggests many companies are trying to address those weaknesses. Improving data quality was the joint top priority for the coming year, selected by 43% of respondents, while 35% said they planned to strengthen AI guardrails.

Workforce effects

The report also examined how AI is affecting employees, particularly junior staff. While debate around AI often centres on job losses, respondents gave a more mixed picture of its effect inside businesses.

Nearly half, or 45%, said AI was helping junior employees do their jobs better or faster. A further 24% said the technology was creating new roles and opportunities.

These results suggest that, for many mid-market businesses, the immediate workplace impact is showing up in task support and changes to job design rather than straightforward workforce reduction. At the same time, the broader findings indicate that companies still face basic operational problems before they can expand AI use at scale.

The survey covered companies with annual revenues between £200 million and £2 billion and between 300 and 3,000 employees. Respondents included owners, founders, managing directors, C-suite leaders, vice presidents, directors, department heads and other senior managers with responsibility for, or influence over, technology decisions.

Ireland's links to the UK mid-market also formed part of the report's context. Klarus cited Enterprise Ireland survey data showing that 64% of Irish companies maintain a permanent physical footprint in the UK, with 35% operating across multiple UK locations.

Alper Gunaydin, Chief Technology Officer at Klarus, said: "Mid-market companies have a real advantage because they can often move fast, particularly when it comes to technology transformation. We see this agility in action when companies are turning to AI and automation to address productivity and accelerate growth. However, our research shows that too many pilots stall because companies lack AI expertise, quality data and effective governance. Making that agility count requires clear priorities, strong foundations and access to senior expertise, all of which will help translate investment into tangible business outcomes and unlock growth without increasing the cost base."

Tim Flagg, Chief Executive Officer at UKAI, said: "The findings come as AI adoption becomes a central priority, with UK government policy now focused on closing the productivity gap by embedding AI across businesses, as well as public sector organisations. While tech giants often dominate headlines, it is the mid-market that will be the true driver of this transition. It's clear from the research that there remain some common hurdles that we need to address together, such as setting out guardrails, building capabilities and governance processes to earn consumer trust, and mid-market companies have a key role to play in turning government policy into mainstream economic reality."