Looking forwards is always harder than looking backwards, but as we move into 2026, one theme is becoming unavoidable for UK SMEs: technology foundations matter again.
Not because innovation has slowed, but because AI, automation, and digital services now amplify whatever sits underneath them. Strong foundations accelerate progress. Weak ones magnify risk, cost, and operational fragility.
For boards, this means a subtle but important change of emphasis. AI remains critical, but it cannot be governed in isolation. The real challenge for 2026 is understanding how core technology decisions, AI adoption, and governance now intersect.
This article is our thoughts on what the landscape might look like. First we consider the technology trends UK SMEs will feel most acutely in 2026. Then we explore the AI-specific shifts emerging from those foundations. And finally we consider the steps boards should take to stay in control while continuing to move forward.
Tech Trends
Cyber resilience becomes a standing board responsibility
UK government survey data continues to show that cyber incidents are common across businesses of all sizes. For SMEs, the shift in 2026 is not that attacks suddenly increase, but that expectations change.
Customers, insurers, investors, and partners increasingly assume that basic cyber resilience is in place. This is reinforced by the direction of UK policy, including proposals to strengthen cyber resilience requirements and supply chain accountability.
In practice, this means boards should expect regular reporting on identity controls, patching, backups, incident readiness, and supplier exposure. Cyber resilience is no longer a technical detail delegated entirely to IT. It is part of organisational stewardship.
Third party dependency risk becomes commercial, not theoretical
Most SMEs now operate through an ecosystem of SaaS platforms, managed service providers, data processors, and specialist vendors. In 2026, the operational risk tied up in these dependencies becomes harder to ignore.
Outages, breaches, and contractual disputes increasingly translate into lost revenue, regulatory exposure, or reputational damage. Boards must assume that a meaningful proportion of their technology risk sits outside the organisation.
The implication is simple. Contracts, exit plans, audit rights, and incident notification clauses matter. Supplier risk needs to be visible and prioritised, not rediscovered during a crisis.
Data governance becomes a growth enabler
The gradual introduction of the UK Data Use and Access reforms reinforces a broader reality. Organisations that understand their data move faster and more safely than those that do not.
Data governance in 2026 is less about compliance checklists and more about practical control. Knowing what data exists, where it flows, who can access it, and how long it is retained directly affects the ability to automate, analyse, and apply AI responsibly.
This is why data quality and clarity increasingly sit at the centre of both delivery and governance conversations.
Cloud and SaaS optimisation becomes a profitability lever
Most SMEs have already made major cloud and SaaS moves. The differentiator is no longer migration, but optimisation. We have seen both highly efficient and well integrated SaaS networks, and conversely companies where a loose coalition of disconnected SaaS systems are connected through manual processes.
Boards must ask whether technology spend is controlled, whether overlapping tools can be consolidated, and whether systems integrate cleanly enough to support automation and insight. This is not glamorous work, but it is where margins are protected and resilience is built.
Identity becomes the new perimeter
As phishing, impersonation, and social engineering evolve, identity and access controls become the primary line of defence. Strong authentication, least privilege access, and disciplined management of administrative accounts matter more than ever. The philosophy and practice of identity management has evolved significantly over the last few years and this is now being reflected in commercial solutions.
For SMEs, this trend pushes security and privacy discussions away from abstract threats and towards everyday controls that materially reduce risk.
AI Trends
Expectations tighten around value and control
UK survey data suggests that investment in AI will continue through 2026, particularly around productivity, automation, and training. What changes is tolerance.
Boards, customers, and partners will expect AI use to demonstrate measurable benefit and controlled risk. Vague experimentation becomes harder to justify once AI is embedded in core processes.
Agentic AI introduces new control challenges
A significant shift between 2025 and 2026 is the rise of AI systems that do not just assist, but act. These tools can initiate workflows, update records, trigger actions, and integrate across systems.
For SMEs, this creates familiar governance questions in a new form. Who approves actions? What limits exist? How are decisions logged? What happens when something goes wrong?
Boards should treat agentic AI in the same way they would any automation that can affect customers, money, or data. Controls are not optional.
Security for AI becomes baseline, not advanced
UK guidance on the cyber security of AI systems makes clear that AI introduces specific risks across its lifecycle. Prompt injection, model misuse, and supply chain vulnerabilities are no longer niche concerns.
In 2026, boards should expect assurance that AI systems are designed, deployed, and monitored with security in mind, not bolted on afterwards.
Transparency requirements start to flow through supply chains
Even where UK regulation differs from EU approaches, transparency expectations increasingly travel through commercial relationships. SMEs supplying EU-facing customers, or partnering with larger firms, will feel pressure around disclosure, labelling, and responsible use of AI-generated content.
Although this will be new for a lot of organisations, introducing practical governance here will rapidly become a necessity, especially for organisations thinking of approaching a transaction.
What boards should do in 2026
Create a single, board visible inventory of technology and AI
Boards should insist on one trusted view of material technology and AI usage. This should include critical systems, key suppliers, where AI is embedded in tools, and which processes rely on automation.
If the board cannot see it, it cannot govern it.
Define risk appetite and red lines in plain language
Rather than abstract principles, boards should articulate clear boundaries. For example, which data AI may use, which actions require human approval, and which supplier practices are unacceptable.
Clear red lines enable faster delivery because teams know where they can safely innovate.
Make cyber resilience a standing agenda item
Cyber resilience should be reviewed regularly, with simple, consistent evidence. Identity coverage, backups, incident readiness, and supplier risk are all areas where boards can ask focused questions without becoming technical.
Preparation is a governance duty, not an admission of weakness.
Strengthen supplier assurance for critical vendors
For the most critical suppliers, boards should expect clarity on security posture, incident handling, data processing, and exit options. This aligns directly with the wider shift towards resilience and accountability.
Adopt governable AI controls before scaling
Every material AI use case should have a named owner, documented data inputs, defined controls, and monitoring for error or harm. Governance should enable scale, not follow it.
This approach also supports future diligence, investment, and partnership conversations.
Invest in skills and operating capability
Tools alone do not create advantage. Boards should sponsor role appropriate training, basic AI literacy, and a small enablement capability that makes safe adoption easier across the organisation.
This is where technology strategy becomes organisational capability.
Looking ahead
In 2026, technology is not “just” an enabler. It is part of how SMEs demonstrate credibility, resilience, and readiness for growth.
Boards that focus only on AI tools risk missing the bigger picture. Boards that focus on foundations, governance, and proportionate control give their organisations the confidence to adopt AI faster, not slower.
DigitalTeddy works with SME boards to turn technology ambition into governed execution, balancing pace with control and clarity. If you want to sense check your readiness for 2026, we are always happy to have an initial conversation.