Small and medium businesses think bigger with generative AI: Key insights into SMB adoption

Efficiency and productivity are the primary motivators for generative AI adoption, as 76 percent of SMBs state that the most immediate realized impact is operational efficiency and accelerated employee task completion. Other tangible benefits include reduced operating costs (26 percent) and improved customer experience (17 percent). Streamlining workflows,
automating tasks, and optimizing resources means that SMBs can work smarter, not harder.

SMBs are still on a tentative journey from AI exploration to full integration. While 34 percent are currently piloting gen AI, only 3 percent have fully integrated it into their business strategy. As the digital world continues to develop, businesses that hold back risk falling behind companies that are going all in on AI. Rather than an aversion to change, research suggests that digital hurdles and a lack of internal proficiency are impeding the adoption process.

Successful gen AI adoption requires investment in staff training, robust data protection, and clear governance. Yet the two most significant barriers to adoption are data privacy and security risks (59 percent) and the AI skills gap or lack of in-house expertise (50 percent).

Insight: Those who focus on plugging the gap by upskilling, hiring, and partnering will be set up to make the transition a success.

While some SMBs are navigating adoption challenges alone, over half (57 percent) rely on managed service providers for expert guidance on AI implementation. Cloud providers’ services (51 percent) is the second most common resource, positioning the cloud vendor as the essential co-pilot. The most sought-after services from third-party partners are
implementing and deploying gen AI solutions (56 percent) and integrating gen AI with existing systems and data (48 percent).

Insight: Choosing the right digital partner is key to scaling gen AI systems with evolving business demands and adapting to future shifts in technology.

SMBs’ financial commitment to new technologies is an indicator of their strategic intent and dedication to AI implementation. For many, gen AI is rapidly becoming a core IT investment as they allocate an average of 17.4 percent of their IT budget to gen AI initiatives. This commitment scales directly with size and revenue, growing from 13 percent for the smallest companies to 20.1 percent for larger firms.

There is also an exponential growth in budget allocation linked to adoption maturity. The average budget commitment more than doubles from the exploration phase (10.2 percent) to SMBs who have fully integrated gen AI into their business (24.8 percent). This data shows that overall SMBs view gen AI as a core investment, rather than an experiment, and that production success is the key catalyst for substantial investment.

Generally, businesses are optimistic about the future of AI in their operations. Although the data shows rapid adoption and rising investment among SMBs, there are also significant roadblocks to consider. To fully reap the benefits, SMBs need a well-defined business strategy and a clear understanding of both the opportunities and challenges.

What are the key takeaways for successful gen AI adoption?
Fifty-eight percent of SMBs start their journey by identifying a specific business problem. Once a use case is identified, businesses can create a clear roadmap for execution. This should include closing the skills gap by prioritizing training and investing in robust governance and cybersecurity measures. And technology alone won’t get SMBs where they want to be.

Insight: Choosing a trusted technology partner with strong AI capabilities can not only provide a competitive advantage but also help identify new markets and accelerate innovation.

With the democratization of AI, SMBs now have access to powerful solutions to transform their business from the inside out. But simply implementing gen AI isn’t enough to drive value. Those who act swiftly, invest wisely, and build the right partnerships will be best positioned for success and growth moving into a new era of business.