Challenges and opportunities for IT leaders in midsize enterprises

Midsize enterprises (MSEs) occupy a unique and often misunderstood position within the business landscape. You’re expected to deliver the outcomes of a large enterprise while operating with a fraction of the staff, budget, and resources.

Your ability to balance agility with governance, cost efficiency with innovation, and scale with simplicity defines the trajectory of your organization—and your success as an IT leader.

The composition and placement of the IT function

In most MSEs, IT teams are small and composed largely of “versatilists”; multidimensional professionals who must be able to contribute across the function, including administration, support, infrastructure, security, applications, and data strategy. The CIO often doubles as the chief technology officer, head of security, or even the primary systems architect. The CIO often doubles as the chief technology officer, head of security, or even the primary integration architect.

You likely report directly to the CEO, CFO, or COO, and you’re accountable for the full spectrum of IT leadership—strategic direction, day-to-day operations, financial planning, and performance. Just as importantly, you collaborate extensively with line-of-business leaders to align technology priorities with business goals, troubleshoot operational challenges, and co-create solutions that drive value across the enterprise.

This organizational intimacy is a structural advantage. Flat hierarchies, direct one-on-one conversations, and strong interdepartmental relationships allow MSEs to move quickly, iterate often, and execute without the bureaucracy that plagues larger enterprises. Projects aren’t routed through endless layers of governance—decisions are made through close, direct collaboration that emphasizes speed, clarity, and responsiveness. This allows IT and business leaders to move from planning to execution faster than in more hierarchical environments.

But this agility cuts both ways. The very characteristics that make MSE IT teams nimble—small size, close collaboration, and multifunctional roles—also create pressure points. You’re not just expected to support day-to-day operations; you’re tasked with leading strategic transformation initiatives at the same time, with no additional resources.

This dual mandate is one of the defining challenges of MSE IT leadership. The same handful of people managing infrastructure and support tickets must also evaluate new technologies, modernize legacy systems, and drive business innovation.

According to Gartner, 73% of MSE IT spend is absorbed by operational needs, leaving only 27% available for growth and transformation initiatives. This imbalance underscores the need for ruthless prioritization and creative resourcing if you’re going to keep the business running while also moving it forward.

Strategic talent challenges

The midsize enterprise IT talent picture is complex. While 78% of MSE CIOs report that turnover and retention are not currently a critical issue, a major shift is coming.

According to a recent Gartner survey, 56% of MSE CIOs anticipate moderate to significant IT skill gaps within the next two to three years, especially in high-impact areas such as AI/ML (29%), cybersecurity (45%), and cloud (25%).

You’re not just hiring for today’s roles—you’re preparing your team for capabilities that may not yet be fully defined. And you’re doing it with constrained salary bands and limited bandwidth for onboarding and training. That’s why many MSE CIOs are shifting their focus to upskilling, platform simplification, and vendor partnerships that allow for extensibility without adding headcount.

Another growing trend is actively cultivating technical talent beyond the IT department’s boundaries. Many business teams include individuals with strong technical aptitude who can contribute meaningfully to automation and process improvement. When supported with the right tools, guardrails, and governance, these employees can become valuable allies.

By enabling business users to safely contribute to technology initiatives, IT leaders can scale innovation and extend their impact without expanding headcount. The fewer specialized resources required for less demanding projects and day-to-day management and support, the more capacity you retain to focus your core team on strategic, high-impact initiatives.

Budget constraints and the economics of IT

Budgets in MSEs are inherently tight, even if they represent a higher percentage of revenue compared to larger organizations. Gartner data shows that MSEs spend an average of 4.9% to 5.3% of revenue on IT, a figure that demonstrates the high cost of achieving parity with enterprise peers. However, with less capital to deploy, each dollar must drive measurable results.

Overbuying is a common risk in this environment. MSEs frequently adopt large-enterprise solutions that are overengineered for their actual needs, leading to underutilization and inflated TCO.

The most successful MSEs adopt “rightsized” technology strategies, embracing good-enough functionality for commodity processes while reserving strategic investments for differentiated capabilities.

The pressure is mounting. Recently, Gartner reported that 51% of MSE CEOs are requiring higher ROI on internal technology investments compared to the previous year, even as 40% say they are willing to wait longer for those returns. This expectation to deliver both faster results and smarter spending puts you at the center of complex investment conversations with finance and the C-suite.

Turning constraint into advantage

You may not have the headcount, budget, or tooling of your larger counterparts, but you do have something more powerful: proximity to the business. You’re closer to your users, your stakeholders, and often your customers. That intimacy allows you to adapt faster, align more precisely, and execute with greater agility.

To turn this advantage into a long-term impact, Gartner recommends MSE IT leaders take deliberate action in three key areas:

1. Exploit your communication advantage

Lean into the direct, one-on-one decision-making style that defines how work gets done in your organization. The flatter hierarchies and reduced bureaucracy typical of MSEs make it easier to engage with stakeholders quickly and meaningfully. Take advantage of this by fostering open collaboration across departments and teams.

Build governance and planning models that support rapid iteration, increase transparency, and keep cross-functional teams aligned around shared goals.

2. Prioritize rightsized investments

Avoid overengineering. Embrace “good enough” functionality where appropriate, particularly for commoditized services. Instead, direct resources toward technology that drives measurable differentiation or enables strategic change with an emphasis on usability and adoption.

Each dollar should be aligned with business value, and each investment must balance capability with sustainability.

3. Develop cost transparency and strategic framing

With 73% of IT spend typically dedicated to operations, you must clearly separate “run” from “change” in your budgeting and planning conversations. Use this separation to engage finance and business stakeholders with clarity, articulating how new initiatives translate into risk mitigation, revenue growth, or operational efficiency.

Ultimately, your role is not just to support transformation—it is to lead it. Constraints can be a catalyst. With purposeful execution, MSE IT leaders can turn their unique environment into a source of strategic advantage that larger, more rigid organizations struggle to replicate.

Why the right technology partner matters

The challenges and opportunities outlined above point to a central truth: midsize enterprises require solutions that are intentionally designed with their specific needs in mind. The structural, financial, and talent dynamics in your organization are fundamentally different from those in larger enterprises and so are the tools and support systems that will help you succeed.

That’s why it’s critical to partner with technology vendors who understand the realities of businesses like yours. The right partner will offer more than just flexible pricing and modular platforms—they’ll bring a shared understanding of how to enable lean teams, empower business users, and scale innovation with control.

At Celigo, we’ve built our solutions around the needs of organizations like yours.

Whether you’re navigating integration complexity, modernizing operations, or empowering business-led automation, we’d love to talk.

Schedule a discussion with our team, explore a product demonstration, or take advantage of our free trial offer to see how we can help you move beyond integration to intelligent business operations.