Like larger enterprises, small businesses are keen to explore the benefits of AI. Around 52% of US small businesses are already using it, according to research from I4SP.org for Microsoft.1 And in the UK one-fifth of the country’s 5.5 million small businesses are now working with AI, according to the Federation of Small Businesses.2
Yet for many small businesses, understanding how and where to use AI isn’t always straightforward, with many wary of making significant investments. How can these businesses accelerate their AI projects and ensure their success? Our experts network came back with insights and ideas.
“Smaller businesses can accelerate their digital transformation with AI by focusing on key areas that offer the most immediate impact and return on investment” says Javier Campos, AI Strategist and CIO for Fenestra. “Implementing AI-powered chatbots for customer service, using predictive analytics for inventory management and leveraging machine learning for personalised marketing are practical starting points.”
Andy Birch, Head of IT and Security Services at Giacom, agrees IT leaders need to concentrate on business value. “Demonstrating a great return on investment rules,” he suggests, “and this is true not only for enterprise organisations, but perhaps even more so for small businesses.” The challenge, he argues, lies in identifying where ROI can be easily found. “This will be different for each sector and nuanced to specific businesses.”
The key, Birch explains, is to avoid a restrictive approach – where only technology or IT leaders are responsible for identifying AI opportunities. “The best solutions may be discovered anywhere in the business” he notes. “To define the AI tools that are going to be truly transformational to a business – as opposed to those that deliver small efficiencies for a specific department – cross-functional working groups are required.”
Many businesses are already adopting this approach. Foundry’s 2024 State of the CIO3 report found that 71% of CIOs were working closely with line-of-business leaders on new AI-enabled applications. While 62% agreed that line-of-business teams were actively pushing their adoption.
Most of all, Birch concludes, small businesses need time “to propose, test and trial AI tools and measure their value against clear criteria.” This enables them to select where to invest and define the best AI tools and use cases to drive productivity and efficiency.
Tom Allen, Founder of the AI Journal, suggests businesses start by looking at how the data they accumulate can be harnessed by new AI features built into cloud and online services. “Gaining insight on data is a big one” says Allen. “Every business, not matter how small or where they are in their journey will be collecting data. This could be anything from inventory management in retail to customer engagement in travel bookings. Using cloud and online platforms, which are affordable, can help them grow without big fees thanks to monthly payments. From CRMs to accounting software, these platforms are increasingly coming with built-in solutions to analyse sales, inventory, customer conversations and margins on a product, or run real-time analytics to give you a clear top-level view of financial health or customer success.”
Campos agrees this is a great path forward, adding that cloud-based AI services “can provide cost-effective access to advanced capabilities, without requiring significant infrastructure investments.”
Mark Hickman, Managing Director at Sage, notes the array of AI tools available can “seem complex and overwhelming” but feels “tools like generative AI Copilots can make digital transformation more accessible and effective”. These smart ‘assistants’ help streamline tasks, deliver quick insights and automate processes, he adds, “allowing small teams to focus on growth and embrace innovation with confidence.”
Another path forward is to bring in external help. Paul Miller, CIO at IWP UK, notes smaller businesses are “usually constrained by limited technical resources and are more reliant on off-the-shelf software, yet they can still accelerate digital transformation with AI by outsourcing key projects to specialised third-party vendors.” By doing so, he explains, they can integrate AI tools into their existing systems without extensive and expensive development in-house. “These third-party solutions can help drive efficiencies through automation in critical areas such as client onboarding, client meetings, compliance and portfolio analysis, delivering immediate efficiency gains.”
Automation is a key driver for AI in many businesses; 40% of respondents to the FSB UK survey said they were looking to AI to work more efficiently, and 29% wanted to automate basic tasks. It’s a theme picked up by Allen, though he suggests taking automation step-by-step, “as you need to test processes to make sure they work before you automate them”. However, once you figure out where and how to automate, the resulting transformation “can free up resources by flagging priority customer support tickets, updating shipping details, or making regular monthly payments such as payroll. And the great thing about automations is that they can usually be adapted to scale with the business.”
Sachin Agrawal, Managing Director of Zoho UK, concurs, adding that automating tasks such as forecasting and data analysis can be even more effective for small businesses, where resources are often limited. “AI can help accelerate digital transformation through automation” he concludes, “potentially saving hours each week per staff member and freeing them up to focus on high-level business tasks.”
Agrawal also suggests that small businesses focus on the ways in which AI can bridge the gap between them and larger competitors. “By investing in scalable AI tools that grow with their needs,” he says. “SMEs can level the playing field by implementing innovative AI tools to boost productivity and enhance the day-to-day operations of staff.” Agrawal sees AI “as a tool to supercharge business growth, improving agility and efficiency while making [the business] more competitive in the market.’
Most of all, Campos argues, small businesses need a clear strategy, but one which has space to evolve. “It’s crucial to start with a clear strategy, identify specific business problems AI can solve, and prioritize projects that align with overall business goals.”
However, he concludes, “continuous learning and adaptation are essential, as AI technologies evolve rapidly and new applications emerge.”
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2 FSB | Redefining Intelligence
3 Foundry 2024 State of the CIO Report, April 2024, https://resources.foundryco.com/download/state-of-the-cio-summary