As AI continues to transform the business landscape, mid-sized enterprises are navigating the opportunities and challenges with a cautious, yet optimistic approach. A recent qualitative study with members of the Illuminas Insight Exchange, a research community designed to provide intelligence to brand managers, marketers, and researchers, sheds light on how CIOs and other executive IT leaders in mid-sized organizations are addressing AI.

The study, conducted in early 2024, involved a diverse group of participants working in VP and CIO roles across industries such as finance, healthcare, real estate, and transportation. These organizations ranged in size from 750 to 10,000 employees.

We sought to explore several research questions, including:

• What attitudes exist about AI and AI applications among executive IT leaders?
• Where along the AI journey are organizations in terms of their maturity levels?
• What worries them most about AI implementations?
• How are CIOs and other IT leaders approaching the adoption of AI (build or buy)?
• How should vendors with AI-enhanced solutions differentiate their offerings?

Cautious, Yet Resigned to AI's Transformative Impact

The study revealed that IT leaders in mid-sized enterprises are generally cautious, with a low tolerance for risk, yet resigned to the fact that AI will have a transformative effect on their organizations.

"We are generally a risk adverse organization and as a mid-sized organization we necessarily have a limited IT and innovation budget. Nonetheless we understand that over time AI is likely to have a significant, if not transformative, impact in our industry vertical. Based on this we have begun testing, piloting, and building AI tools." CTO, Professional Services, 1,000 to 2,499 employees

The participants also acknowledged the complex and game-changing nature of AI:

"AI is a complex topic. Like most people and organizations, I find AI to be a game-changing technology that can truly transform the way work is accomplished. At the same time, there are a plethora of concerns to navigate, including ethical use, privacy, security, and the overall impact on individuals. With that being said, AI is already in our workplace through licensed software and because individuals will use it for their own purposes whether it is sanctioned or not. It is here, like it or not, and every business needs to embrace it responsibly." CEO, Consulting, 750-1000 employees

Relatively Immature AI Adoption with Limited Strategic Planning

Most IT leaders portray their organizations as being at a very early stage in their AI journey. This immaturity is characterized by a lack of existing policies and procedures regarding AI, a lack of established use cases, and a lack of a clear AI strategy to guide the organization.

"We are focused on efficiency gains and optimization around the clerical mundane tasks of email creation, documentation review, slide deck creations, etc." CIO, Education, 5,000 to 9,999 employees

A common first step in the AI journey for these organizations is the creation of an AI task force, made up of individuals from across the organization and representing diverse backgrounds and opinions. However, the development of detailed AI strategic plans and AI Responsible and Ethical Use policies remains a work in progress for most participants.

"Adapt the existing security and data governance policies to incorporate AI by extending the same protections and limitations regarding data use in place for other technologies. This group researched ethical use, and took the concepts most applicable to shape the first iteration policy. Acceptable use cases were conceptual in nature building from the revised security policy and the ethical use policy." CEO, Consulting, 750-1000 employees

Preference for "Taker" Approach to AI Adoption

IT leaders in mid-sized enterprises overwhelmingly prefer the "taker" approach to AI adoption, meaning they prefer to buy AI-enabled solutions off the shelf, as opposed to building or shaping AI models themselves. 

"Training AI models with our internal data will require the development of a more robust governance framework and other policies. Therefore, we have started with SaaS LLM APIs and AI enabled solutions. Vendors are also rapidly building AI enabled products and AI solutions -- therefore it may be challenging for us to build our own solution at the pace the market is moving forward." CTO Professional Services, 1,000 to 2,499 employees

This preference for the "taker" approach means that vendors offering AI-enhanced solutions need to be prepared to communicate their value propositions to IT leaders, who serve as the gatekeepers for these technologies.

Centralized AI Administration and Collaboration Challenges

IT leaders are seeking to centralize the administration of AI and AI applications within the IT department. They noted that other divisions, such as marketing, finance, and HR, were curious, but had not yet requested input on AI opportunities or use cases for their areas of responsibility.

As the SVP of IT at a retailer/wholesaler with 1,000 to 2,499 employees shared:

"We [IT] are the primary drivers of AI progress for our firm. We work consultatively with other departments but are leading the way."

However, the CEO of a consulting firm with fewer than 750 employees acknowledged the challenges of collaboration, noting:

"The level of curiosity is high and there is a fair amount of dabbling by people who may not be as familiar with security and data governance concerns, policies or procedures. Three items address this concern: (1) publishing an AI policy, (2) driving licensing through an IT filtering process and (3) education."

Strategies for Vendors Offering AI-Enhanced Solutions

Given the cautious yet resigned approach of mid-sized enterprises towards AI adoption, vendors offering AI-enhanced solutions should consider the following strategies when marketing to these organizations:

• Emphasize the "Taker" Approach: Highlight how your solutions can be easily integrated and deployed without the need for extensive internal AI development or governance frameworks. Demonstrate the value of your "off-the-shelf" AI capabilities.
• Address IT Leaders' Concerns: Proactively address the key concerns, such as data governance, security, and ethical use of AI. Provide clear documentation and support on how your solutions address these critical issues.
• Tailor the Value Proposition: Craft your value proposition to specifically resonate with IT leaders, focusing on efficiency gains, cost savings, and risk mitigation rather than just the technical capabilities of your AI solutions.
• Facilitate Collaboration: Offer resources and guidance to help mid-sized enterprises foster cross-functional collaboration between IT, business units, and other stakeholders in the AI adoption process.
• Provide Comprehensive Support: Ensure your sales and customer success teams are equipped to guide mid-sized enterprises through the entire AI adoption journey, from initial evaluation to implementation and ongoing optimization.

By understanding the unique needs and challenges of mid-sized enterprises, vendors can position their AI-enhanced solutions as the ideal fit for these cautious yet resigned organizations navigating the transformative impact of AI.

The Illuminas Insight Exchange study provides a valuable glimpse into the cautious approach that mid-sized enterprises are taking towards AI adoption. While these organizations recognize the transformative potential of AI, they are grappling with immaturity, a lack of strategic planning, and challenges in cross-functional collaboration. As they navigate this complex landscape, vendors offering AI-enhanced solutions will need to tailor their value propositions to address the specific concerns and priorities of IT leaders in these mid-sized organizations.