Businesses and government must build stronger foundations for tech success, says Softcat CEO

“There is always more technology spend in the world, year-on-year,” says Charlton. “But a lot of that over the last few years has been the hyperscalers building data centres, not necessarily smaller organisations investing in technology. We've seen a bit of a pause at organisations while they tried to work out what they do and how they get value.”

Identifying the AI winners and losers

“Now that organisation’s AI plans are solidifying, and people are recognising the need to get their data in better shape, attention is turning to modernising underlying infrastructure. Even if they don't know which applications and use cases will be most important, they know things such as data quality, governance and availability of the right compute and storage underpins AI readiness.”

Charlton says the meteoric rise of ChatGPT was responsible for shaping unrealistic expectations of how quickly AI could transform organisations and deliver meaningful value. But now business leaders are recognising the need to take a more staged approach to AI success, that starts with building the right foundations.

“ChatGPT was just suddenly there and people could use it on a consumer basis, and everybody thought, ‘this is easy’,” he says. “But challenges then emerged around how you use it on an organisational scale for bespoke business models. And everyone's got different data and different standards.”

However, Charlton says he is in no doubt that many organisations are close to having the right building blocks, and that AI-driven growth will begin to accelerate across the business landscape.

“The foundational layers will increasingly be in place over the next 12 months,” he says. “Then I think you'll see some really good use cases come to life, and over the next few years we’ll find out who the winners and losers will be.”

Creating the right environment for innovation

On the topic of fixing the foundations for tech-powered growth, he says he’d like to see the UK government, and governments across Europe, doing more to support innovation and growth in the tech sector.

“I don't think governments in the UK and Europe have created the right environment for entrepreneurship and investment—particularly in tech,” he says. “Over the last 20 to 30 years, the levels of regulation and the negative environment around tax and wealth creation have not created the right environment for a thriving tech sector.”

In the meantime, Softcat is continuing to focus on driving its own business forward and adding to a run of double-digit growth in recent years.

Current priorities for Charlton include investing in the systems and processes powering the business – practising what he preaches when it comes to fixing the foundations and taking a long-term view.

“A lot of the work we're doing is foundational,” he says, “It's not got an immediate ROI but it builds capability to stop us becoming obsolete in the future. We’re making lots of investment in laying the foundations for the technologies that will become really important for running businesses in the years ahead, particularly data-driven AI, and agentic AI systems.”

The importance of building and buying capability

Continued investment in its teams and culture, and a watchful eye on potential acquisition targets are also priorities.

“We're getting pulled overseas by our customers, particularly into the US,” he says. “We've organically built a team there, and we’re looking at buying and accelerating into that market, as well as acquisitions to extend our offering in the UK.”

Last year Softcat made an acquisition to expand its customer offering around data engineering. “We know that for most customers their biggest challenge is to get their data into a good state to be able to drive value out of the AI tools that will come,” he says. “So we bought a data engineering business which allows us to help customers with that data preparedness.”

However, Charlton is quick to say that any acquisitions would need to align to a culture at Softcat, which he insists is a differentiator for the business.

“We're looking for a target that has a similar ethos. So, do the management team really care about their people? Is it really a team-based organisation, and if those fundamental values and ethos aren't aligned then we probably wouldn't entertain it.”

Charlton is also clear that any acquisition would only be complementary to the company’s commitment to building capability and capacity internally.

“Our single biggest challenge is to maintain a very special culture which drives positive behaviours and teamwork internally, and manifests as terrific service for our customers.”

Key to maintaining that culture is a focus on attitude. Charlton is well-aware of the competition for tech talent in his industry but says the business has chosen to step away from a narrow definition of what ‘top talent’ looks like.

“You know that scene in Raiders of the Lost Ark where they suddenly realise they're digging in the wrong place—I feel like that,” he says. “Some companies are chasing the same candidates, but there's lots of good people out there. We'll get good people to adopt a great attitude, in a great culture, and then watch that team win.”