To thrive in the age of AI, small and midsize organizations (SMEs) must pivot from viewing technology as a utility to seeing it as a strategic engine. Data from 2025 and 2026 indicates that while AI interest is near-universal, the “value gap”—the distance between experimentation and actual ROI—is widening for those without modern foundations.
Here are the top 10 Gartner-backed insights and related market statistics to guide your modernization strategy.
1. The Proliferation of “Agentic AI”
Gartner predicts that 40% of enterprise applications will feature task-specific AI agents by 2026, up from less than 5% in 2024.
Small and midsize organizations should move beyond simple chatbots. Modernized apps must now support “agents” that can autonomously execute multi-step workflows, like processing a refund or re-routing a shipment. If you’re exploring how autonomous AI agents can transform your operations, learn more about our AI Services.
2. The High Cost of Legacy “Drag”
Up to 40% of developer time in organizations is consumed by maintaining legacy systems rather than building new capabilities.
For SMEs with limited headcounts, this is a productivity killer. Modernizing through Rebuilding or Replacing frees your best talent to focus on AI innovation.
3. Rapid SMB Adoption vs. Enterprise Scale
68% of small businesses now use AI regularly (up from 48% in 2024), yet only 29% of SMEs have reached the “scaling” phase compared to nearly 50% of large enterprises.
SMEs are faster to start, but legacy technical debt prevents them from scaling. Early modernization is the key to closing the gap with larger competitors.
4. The Rise of Domain-Specific Models (DSLMs)
By 2028, Gartner predicts over 50% of GenAI models used by enterprises will be domain-specific, moving away from generic LLMs.
Your modernization effort should focus on Data Liquidity. To use a DSLM, your internal data must be accessible and clean—something legacy silos prevent.
5. Massive Growth in Infrastructure Spend
Worldwide AI spending is forecast to hit $2.52 trillion in 2026, a 44% year-over-year increase.
Much of this spend is in “AI-ready” infrastructure. SMEs should prioritize Replatforming to the cloud to avoid the massive CapEx of trying to run AI on-premise.
6. The “Pilot Purgatory” Risk
Gartner predicted that 30% of GenAI projects would be abandoned after Proof of Concept (PoC) by 2026 due to poor data quality and high costs.
Don’t start with the AI; start with the application. A rearchitected app with a solid data pipeline is more likely to see a successful AI rollout than a legacy app with an AI “bolt-on.”
7. Modernization as a Security Imperative
AI-related security incidents rose 56% recently. Gartner predicts over 50% of enterprises will adopt dedicated AI Security Platforms by 2028.
Legacy apps are vulnerable targets for AI-powered cyberattacks. Modernizing is no longer just about performance; it’s about survival and data provenance.
8. Value Over Speculation
56% of CEOs reported seeing no financial benefit from AI yet, leading to a shift toward “proven outcomes.”
CIOs must tie modernization to specific business metrics (e.g., “Reducing customer churn by 15% via AI insights”) to maintain board-level support.
9. The Low-Code Explosion
The low-code platform market is projected to reach $264 billion by 2032, with 56% of companies already implementing them.
For SMEs, the Replace or Rebuild strategy is becoming cheaper and faster through low-code/no-code tools, allowing them to modernize without an army of developers.
10. The Return on Investment (ROI) Benchmark
Organizations successfully deploying AI report an average revenue increase of 20% and productivity boosts of up to 40%.
The winners in the AI age are those who treat modernization as a foundation for these gains. The cost of modernization is high, but the cost of staying on legacy systems is getting higher and higher.
The Path Forward for Small and Midsize Organizations
Audit for Outcome, Not Just Everything: Don’t just replace every app; transform the ones that block your most valuable data.
Get Aligned to Value-Driven Outcomes: Move from IT work to business impact by tying every modernization effort to revenue, risk reduction, or productivity.
Start Small, Scale Smart: Use the Agentic AI wave as a catalyst to pilot a modern, microservices-based project that proves ROI quickly.
The window to gain a first-mover advantage in the AI-agent economy is open now. Organizations that act to modernize their foundations today will be the ones defining the market standards of tomorrow. Ready to start your modernization journey? Talk to our experts today.
Sources
Gartner Press Release (August 2025)
Gartner “Build a Modern Application Platform” Research
U.S. Chamber of Commerce “Empowering Small Business” Report (2025) and Gartner SMB Strategy Research
Gartner “Top Strategic Technology Trends for 2025”
Gartner Worldwide IT Spending Forecast, 4Q25 Update
Gartner Data & Analytics Summit Keynote (2024/2025)
Gartner Security & Risk Management Survey 2025
Gartner 2025 CEO and Senior Business Executive Survey
Polaris Market Research (Feb 2026 update) and Gartner Magic Quadrant for Enterprise Low-Code Application Platforms