Sage CEO Urges Labour to Develop AI Strategy for Small Businesses

Sage CEO Steve Hare is calling on the Labour party to create a comprehensive artificial intelligence strategy specifically designed to benefit Britain's small and medium-sized businesses (SMEs). Hare argues that these businesses, which constitute 99% of UK enterprises and are crucial for job creation, are currently hindered by fragmented digital tools that lead to significant time loss and reduced productivity.

The average SME juggles 52 digital tools and 27 logins, with nine out of ten businesses losing valuable time each week re-entering data between disparate systems. This inefficiency amounts to an estimated 19 working days per year per business, costing around £5,700 and contributing to a £31 billion loss in national productivity. Hare shared an example of one customer who had to enter new client information into five separate systems before commencing work.

Hare believes the UK is well-positioned to address this challenge due to its strong fintech sector, pioneering regulatory sandbox model, and advanced Open Banking framework. However, he cautioned that this leadership position is not guaranteed, especially as other regions, like the EU, advance their own digital identity frameworks.

He highlighted the opportunity for banks, fintechs, and software companies to better serve their existing SME customer base by integrating accounting, tax, and cash flow tools into user-friendly applications. Sage, for instance, partners with companies like Monzo, Tide, and HSBC to facilitate seamless management of banking, payments, and financial operations. Hare stressed the importance of making these connected services the standard rather than the exception.

While government has supported the ambition for UK SMEs to be the most digitally capable and AI-confident in the G7 by 2035, Hare emphasized the need for concrete delivery. He pointed to the upcoming budget's roadmap for e-invoicing, the potential of Open Finance to allow secure data sharing with lenders, and the establishment of a Digital Company ID as critical components.

The integration of AI is seen as a key area for future growth, but its effectiveness depends on access to clean, consolidated data. "AI is only as good as the data it can see, and right now that data is scattered across too many disconnected systems," Hare stated. Improving data flow and integration would allow AI to become a trusted tool for business owners, rather than just another complex system.

Hare concluded that by addressing these foundational digital infrastructure issues, Britain can unlock significant productivity gains for small businesses, create new markets for tech companies, and solidify its global advantage in AI and fintech. He noted that while these developments might seem like mere "digital plumbing," their economic impact on Britain is substantial.