Setting the stage for the State-of-the-Nation working breakfast on 29th January.
Let’s be honest, 2025 has been a tough year. And what has made it feel tougher is that most of us felt things would get better after a very challenging 2024. An early election, a long gap to the first Labour budget, and then the impact of that budget made for a sticky 2024 – and, as it turns out, an even stickier 2025. So, as we look forward to 2026, we do so with an understandable sense of caution on the growth outlook.
But while the challenging market conditions have dominated board discussions in 2025, AI has been approaching landfall like the proverbial tsunami. In 2024, you could probably afford to put off the AI conversation, but now it needs to be at the very heart of all strategy discussions.
So, as we look forward to 2026, it feels like we are at something of a crossroads. In the absence of another major macroeconomic or geopolitical shock, it seems unlikely that the economic outlook can get much worse, but equally it seems unlikely to get much better – and boards will need to deal with that reality. Meanwhile, adoption of AI has accelerated dramatically in 2025. So, what will the trajectory be in 2026, and how should tech companies take advantage of AI, both in driving operational excellence and in their product and service strategy?
The 2026 Megabuyte State-of-the-Nation working breakfast on 29th January is specifically designed to support tech company boards in answering these questions. My colleague Neel Arampatta and I will review the key data, trends and insights from 2025 and give our thoughts on six key themes on which we feel boards should focus in 2026.
Importantly, our event and market intelligence research programmes for 2026 have also been constructed around these core themes at a sector and sub-sector level, which will help attendees to nail down their own plans for 2026 and iterate their strategic plans for the second half of this decade.
Megabuyte subscribers have access to the State-of-the-Nation working breakfast as part of their board subscription. We have also reserved a few spaces for guests; if you would like to be considered for one of these spaces, please email events@megabuyte.com.
In this post, I will summarise these six core themes. I should say upfront that there is a heavy AI bias in these topics, and I make no excuse for that. Some commentators seem preoccupied with talk about a bubble and how the majority of AI projects fail. Both of those statements are true in their own way, but that doesn’t mean that AI isn’t also the defining trend of this generation.
The time has come to properly understand the AI market opportunity
One of the most interesting aspects I have observed over the last couple of years when talking to tech CEOs about their AI strategies is that they have often been developed without any detailed assessment of the impact of AI on the long-term market opportunity. To some degree, I understand why. Along with the Megabuyte research team, it’s my job to work out how AI will change the market, and even we’ve struggled to do that in these formative years, so it would be understandable if a time-starved CEO has not managed it.
But 2026 is the year when AI strategies need to get serious. And in order to get serious, I feel strongly that a comprehensive AI strategy must now be contextualised with a thesis on how AI will impact TAM and competitive dynamics.
At Megabuyte, we have developed a methodology for supporting boards to do just that, and Neel and I will reprise it at the State-of-the-Nation event. At the core of the methodology is building an understanding of the pace and extent of the shift of workloads from humans to machines, and the value of that shift to the end customer in any given market. From this, we can deduce how AI adoption will impact the trajectory of overall growth in that market, as well as how demand for traditional Software and ICT Services might develop in relation to AI-led products and services.
Using a robust AI market-impact thesis, Software and ICT Services companies can move their product and service roadmaps from tactical and iterative (where most are now) to strategic and long-term, which is where they need to be.
2021 isn’t coming back – deal with it
Away from AI to some degree, an emerging theme in 2025, and one which I feel will accelerate in 2026, is how tech companies should refocus on generating meaningful organic growth in a low-growth environment. Since markets turned down, many tech companies have fallen back on driving growth from existing customers, as landing new logos has become increasingly challenging in such a nervous market.
At the same time, many CROs and CMOs seem to think the solution to the lack of new logos is to wait for the glory days of 2021 to return. But they won’t. So, tech companies need to develop robust strategies for delivering organic growth driven by new logos in a low-growth environment if they are to deliver the value creation that their shareholders expect. In most cases, the status quo is unlikely to deliver that value creation.
In doing so, tech companies will need to reimagine (apologies for using such a terrible word, but it’s fitting in this case) their organic growth strategies by developing robust processes in areas such as verticalisation, focusing on the ICP, community selling and, yes, leveraging AI to deliver cost-effective sales and marketing execution.
Operational automation comes of age
The Megabuyte research team has talked to hundreds of companies about their AI strategies this year, and one clear theme has emerged – that the focus in the early days of AI has been more on leveraging the technology for operational automation than for product and service innovation. While we do expect AI product and service innovation to build going forward, AI for operational automation will continue to be the focus for many companies in 2026.
Those that have embraced AI in this way have had to dig deeper into the investment pot than perhaps they had originally planned, but as this trend develops, we expect to see the leaders in operational automation, especially in the ICT Services sector, start to reap the benefits of their first-mover advantage in terms of their business models and competitive positioning. Moreover, as AI technology continues to advance and productise, we expect to see the number of viable internal use cases for operational automation grow rapidly.
For tech company boards, the question has become not whether to invest in AI-led automation, but how much to invest and where to focus, balancing the desire to differentiate from competitors with innovative applications with the need to deliver clear ROI. And to understand this, boards will have to benchmark their existing plans against peers. Again, we will provide insights on this at the State-of-the-Nation event.
Pricing and business models are becoming the AI elephants in the room
I’m not sure if you can actually get two elephants in a room, but pricing and business models are so intertwined in this respect that they will have to squeeze in. As our understanding of the potential for AI to automate processes grows, it is becoming clear that many traditional pricing models from both Software and ICT Services companies will no longer be fit for purpose.
In the medium to long term, it will be illogical in many cases to sell software on a per (human) seat basis if humans are not the main users of the software, or to sell a consulting project on a (human) day rate if machines are doing most of the work. And taking an internal operational view of the same dynamic, if AI agents are doing 90% of your first-line support or writing 50% of your code, what does that mean for pricing power or margin profile?
Many companies are experimenting with usage or outcome-based pricing, but it’s still early days for this trend and there is really only one current certainty: that no-one yet knows where we will end up. That said, at the State-of-the-Nation event, we will provide insight on where we are now, based on our conversations with CEOs, as well as the Megabuyte take on where we might be headed.
Whatever the ultimate outcome, I am in no doubt that very significant changes in pricing and business models are coming for most, if not all, companies that we track at Megabuyte, in the medium to long term. As such, it is becoming critical that boards start building their thesis and trying new things today to ensure that they are fully prepared when clarity emerges about pricing strategies and business models in the AI era.
It’s time to start thinking about your AI talent strategy
The media is (rightly) full of stories about AI’s impact on entry-level jobs and, indeed, jobs of all kinds. But when I speak to tech sector CEOs about this topic, most largely see it as someone else’s problem. They are mainly just trying to work out how many heads they can save by automating internal processes, with little thought given to how AI might require a change in people strategy for those roles and people who are left to work with the AI they are implementing.
In 2026, I believe that forward-thinking boards, and in particular Chief People Officers and CHROs, will start to rethink their recruitment, retention and skills strategies for the AI era, to the benefit of long-term shareholder value. In doing so, they will seek to answer key questions such as: what will entry-level jobs look like going forward; what skills and attributes will we seek in graduates and other first-jobbers; and how will we upskill our current workforce to ensure that they feel empowered and that we get the right level of return on AI systems? And, critically, how will all of this be communicated in a way that enthuses employees and investors rather than worries them?
M&A is dead, long live M&A
Megabuyte subscribers and listeners of the CEOBarometer podcast will know that M&A transaction volumes have come under further pressure this year, especially in ICT Services. There are many reasons for this, but chief among them is that many CEOs have recognised that, as the cost of capital has risen and the pace of technological change has accelerated, the M&A strategies that characterised the latter part of Chapter 1 of the Cloud & SaaS era are no longer fit for purpose. Not if you want to continue to generate meaningful organic growth.
While roll-ups of legacy businesses at low valuations will always have their place in the commoditising parts of the tech sector, companies that wish to build a value-creation story based on above-market organic growth, assisted with acquisitions, will need to rethink their M&A criteria as a core part of an AI-driven product and service strategy. Key questions include: how can you use M&A to fill gaps in your AI product and service strategy; what are the critical success factors for integrating acquisitions in the AI era; and when might it become value-enhancing for AI early adopters to acquire legacy businesses to integrate into their AI platform?
Join the conversation
These six themes are clearly very material issues for any board, in some cases representing a company-defining opportunity and for others an existential threat, and I have only given the briefest of summaries here. The State-of-the-Nation working breakfast will provide much more detail, as will subsequent events and ongoing Megabuyte research.
While most Megabuyte events are applicable to a subsection of our subscribers, the State-of-the-Nation working breakfast will be relevant to all. Whether you are already well-advanced in your planning for 2026 and longer-term AI strategy, or you are just getting going, I am confident that the content and discussion will provide valuable, actionable insight to take back to your board on this most important of topics.
I look forward to seeing you there.
